MEMORANDUM SUBMITTED BY THE MINISTRY OF
AGRICULTURE, FISHERIES AND FOOD (P 3)
1. This memorandum is submitted on behalf
of the Government by the Ministry of Agriculture, Fisheries and
2. Royal Assent for the running of a horticultural
market on the original Covent Garden Market site was given in
1670. Because of increasing congestion on the site and surrounding
approaches, the market moved to a new site at Nine Elms, Vauxhall,
in November 1974.
3. The Covent Garden Market Authority was
established under the Covent Garden Market Act 1961 to run the
market at its original site and either improve the existing facilities
or provide substitute premises. Ownership of the site was vested
in the Authority, as is ownership of the site at Nine Elms. The
Authority is a statutory corporation and operates under the provisions
of the 1961 Act, the Covent Garden Market Act 1966, the Covent
Garden Market Act 1969 and the Covent Garden Market (Financial
Provisions) Act 1977. Under these Acts the function of the Authority
is to operate an efficient wholesale market for horticultural
produce, whilst ensuring that its revenues are sufficient at least
to break even taking one year with another. The Acts also allow
the Authority to carry out various ancillary activities.
4. The Authority currently consists of a
Chairman and six members. All are appointed by the Minister of
Agriculture, Fisheries and Food, although one member is nominated
by the Secretary of State for the Environment, Transport and the
Regions. Members of the Authority are expected to have wide experience
and proven ability in industry, commerce, administration, transport,
finance, law, the organisation of workers or some other special
knowledge or experience which would assist the Authority in carrying
out its functions. Their salaries are determined by the Minister
of Agriculture, Fisheries and Food and a statement of any changes
is laid before each House of Parliament.
5. The Authority is required to produce
annual reports and accounts, which are laid before each House
of Parliament and made available to the public.
6. The site at Nine Elms covers 23 hectares,
principally in the Borough of Wandsworth. There are two main centres
of activity: the fruit and vegetable market (16 hectares), and
the flower market (three hectares). The flower market is the largest
flower and plant wholesale centre in the UK.
7. The Authority employs some 40 people
(including 10 porters). There are 320 traders and around 2,500
work at the market.
8. The majority of tenants' leases were
renewed in March 2000. The new standard lease is for 10 years
but there are a few limited to five years and some extended to
9. The Authority depends on rents and service
charges for its income. It receives no finance from government.
10. The Authority pays part of any surplus
from its trading activities to MAFF, the precise amount is calculated
under a formula agreed between MAFF and HM Treasury. The payment
for the 1996-97 financial year was £543,141. This reduced
to £399,480 for the 1997-98 financial year owing to increased
vacant space and a 30 per cent reduction in market rents following
a rent review. Payment for the 1998-99 financial year is expected
to be around £914,000. Legislation requires the payments
to MAFF to be transferred to the Consolidated Fund.
11. Wholesale horticultural markets have
been in general decline because of the increasing dominance of
the retail sector by supermarkets that buy direct from growers.
To offset this decline, the Authority has encouraged more diverse
use of the New Covent Garden for other food related activities,
such as supplying food, in both prepared and non-prepared form,
to the catering trade in London.
12. The Government supports this diversification,
and the Authority's efforts to attract additional businesses.
The Minister therefore has approved the granting of leases to
the companies involved in non-horticultural activities. So far
none of the sales involving fish and meat carried out at New Covent
Garden have involved the face-to-face trading characteristic of
a true market. The Minister is, however, currently considering
a proposal by the Authority to grant a lease to a company which
wishes, among other things, to sell meat and poultry products
direct to buyers on the site. The Corporation of the City of London,
which owns Smithfield and Billingsgate markets, has indicated
that it will object to this application, on the grounds that the
common law prohibits the establishment of a market within six
and two third miles of another market selling a similar commodity.
We are currently waiting the Corporation's formal objections,
which will be one of the factors that the Minister will take into
account in deciding whether or not to approve this application.
13. The Government wishes to see New Covent
Garden continue to provide a wholesale horticultural market and
a site for other food businesses. It was with this objective in
mind, and to allay uncertainty over the Market's future, that
in 1999 the Minister encouraged the Authority to negotiate new
leases with the tenants. However, the Minister has confirmed that
he does not consider it appropriate for MAFF to continue to be
involved in the ownership and running of such a market, and it
remains Government policy to dispose of the assets of the Authority
as soon as Parliamentary time can be found for the necessary legislation.
Nevertheless, when he visited the Market in April 1999 the Minister
stated that he was keen to explore with everyone with an interest
in it exactly how the site might be developed and the conditions
under which it might be sold as a going concern. He went on to
say that in reaching a conclusion a balance would need to be struck
between the interests of the people who work at the Market and
those of taxpayers who will wish to see the best possible return
from the sale of the site and the Market itself.
11 January 2001