Examination of witnesses (Questions 100
WEDNESDAY 24 JANUARY 2001
MILLS and DR
100. Are you saying only in the last few years
or since this formula was set up?
(Mr Liggins) It is an issue that has been recently
raised but in the past we made provision for depreciation on buildings,
which is obviously a sum that is held by us, but that is not likely
to be sufficient to meet the needs that we now foresee.
Chairman: We will go to a couple of quick questions
from David and Michael and then we will have done.
101. In conclusion, can you give me a feel for
the strategic thinking you have done. A lot of the things you
have talked about are pretty nuts and bolts operations which you
had to do because of the way in which there has been a real cloud
over your potential future. What I am interested in is have you
thought through, maybe with the other markets because it is not
a one market scenario although you are in competition to some
extent with each other, the way in which the food chain could
be changing? We have got these two dramatic extremes, globalisation
which you are ideally placed to cope with, as against localisation
with the demand that consumers want to know it has been produced
locally, they can see it, they can touch it and they like to know
what it consists of. What I am alluding are some pretty difficult
intangibles. If the price of air fuel was dramatically increased,
for example, as an environmental cost, have you thought through
this? Do you talk to your fellow counterparts in the market industry
about what some of these things might do to you?
(Mr Mills) The General Manager, as I mentioned in
the memorandum, sits on the Wholesale Committee of the Association
of British Markets and is also involved in the international markets
organisation, so there is discussion at that level but, yes, we
very much talk about these trends. If you ask me for a few indications,
as I said, 60 to 70 per cent of the food that is now sold in the
market is foreign food. In my view, that percentage is going to
increase. I think increasingly the horticultural market, and to
a lesser extent other types of food produce, will be international
and there will be globalisation. It is bound to happen. But the
other trend is that whereas we were knocked by the growth of the
supermarkets and them retailing food in their superstores, I do
not think that is going to continue to the same extent because
I can foresee a big increase in the catering trade to lead and
to follow the trend for greater food consumption outside the home.
But there are two other factors, if I may. One is that increasingly
what a lot of caterers do is supply hospitals, schools and airlines.
That is an increasing market. So we see the whole of the catering
trade increasing. We see the international supply of food increasing,
unfortunately some of it to the detriment of the British farmer.
If I may very quickly, Chairman, give you the sort of difficulty
that we are facing. There is a chap in the Market who wants to
import bananas from Costa Rica and pay a considerable sum of money
on having a ripening plant in his stand in the Market so he can
control the ripening process so it gives him a longer period in
which to sell. He has to get permission from the Intervention
Board to import from outside the EU. To get permission to import
from outside the EU he has to fill in a lot of forms including
one showing how many ecus' or euros' worth of food he imported
in the previous year from outside the EU. He cannot do that because
he could not get a licence to import. That is literally a Catch
22. So that is a bit of nonsense and it is partly to do with the
WTO talks and the protection of the Caribbean farmer against the
American-backed Central American banana grower. The third point
I am making in a slightly long-winded way is globalisation and
an increase in the catering trade but I fear there might be a
lot of international restrictions like the one I have just mentioned
that might hamper the development of some of the things I have
102. If we wanted to try and compare the effectiveness
of your operation as a market with, firstly, other London markets
and other major provincial wholesale markets, would we be able
to do that? Do you undertake yourselves, where there are sensible
points of comparison, analysis to see whether you are doing well
or badly either in terms of the rent you charge, or the returns
in whatever measure you choose to compare with. How will we know
whether you are doing a good or bad job compared to the others?
(Mr Mills) That is a very fair point. Western International,
which is a big market in Hounslow, do not publish a separate annual
report and accounts, it is all part of the local authority thing,
so it is difficult to get a particular picture. The Corporation
of London do not publish separate annual report and accounts for
each of their markets so it is difficult again to do that. We
do, as you know, and we have them laid before Parliament. It is
difficult, other than anecdotally, to get a proper comparison.
I know some of the City figures are published as part of the general
City figures but it is difficult to make precise comparisons.
Obviously if you were to ask for the information you would get
103. Does that also go for other major provincial
(Mr Mills) It is an interesting point. I think the
figures are that about four years ago there were about 33 wholesale
markets around the country, Gateshead, Cardiff, Bristol, Sheffield,
and all that. I think the figure is now down to 21 because of
all the issues we have been discussing here. All, almost without
exception, are owned by local authorities so their report and
accounts would form part of local authority reporting, as in Hounslow.
104. What about the narrow question of comparative
rents because that is something you can make an enquiry of? Do
you compare your own rental levels with other London markets?
(Mr Mills) When we have our property advisers they
would take that on board.
(Mr Liggins) They would, Chairman. They are set typically
at different times. We do not all adjust our rents in the different
markets on the same day in the same year.
105. The reason I asked that question was that
you indicated that in terms of your further development there
were signs that, for example, with constraints on space at Billingsgate
there possibly would be people who would wish to move to you,
and you indicated that the same might occur as far as the new
Spitalfields Market is concerned. People making those decisions
will make them on practical as well as commercial grounds. I was
interested to know whether you represented a better buy for an
incoming tenant. In other words, apart from your central London
location are there cost advantages to a trader moving to you,
in your assessment, if you cannot be more specific than that?
(Mr Liggins) I think they would view it in the round.
Cost would be one advantage and location would be another. In
fact, within the wholesale warehouse sections of the Market we
are close on 100 per cent let and I think that speaks for itself.
106. Gentlemen, thank you very much indeed.
May I draw my Committee's attention to one detail which I suspect
did not exist at the time the monks of Westminster were running
the Market. The T&GWU gives a list of your services which
I note include ice sculptures of the highest quality and melon
carving. I have not been familiar with the art of melon carving
up to now so I suppose we learn something every day.
(Mr Mills) If you come round, Chairman, we will be
pleased to show you.
107. Does one eat this melon after it has been
carved or does it go off to the Tate Gallery?
(Mr Mills) It depends on your taste!
108. If we come we will expect to have an ornately
carved melon served
(Mr Mills) We will get some ice laid on. As I understand
it, any report on this you make on this will be made public. Any
idea of timescale?
109. Not yet. We would be aiming for before
(Mr Mills) Which Election is that, Chairman?
110. But we have to speak to the Minister because
we always talk to the Minister so we will determine that when
we have seen the Minister. But until then, thank you very much
indeed. It has been an interesting morning. Thank you very much.