Select Committee on Agriculture Minutes of Evidence

Examination of witnesses (Questions 120 - 139)



  120. It is a very important point, is it not, because that would be a short-term way forward?
  (Ms Quin) As I understand it, it was a formula which was agreed with the Treasury some time ago. I would like to ask Ivor Llewelyn to comment on whether it is necessary to have legislation to change it.
  (Mr Llewelyn) No, it does not need legislation.

  121. I just wanted to be clear about that. Of the various options, one of which would be to allow the surplus to be retained and then used for investment in improving road surfaces and that sort of thing, that would be a short-term possibility which would not depend on legislation. It would not be the long-term answer, but it would at least provide a short-term way of seeing this through while longer term discussions were sorted out.
  (Ms Quin) Yes. I am not saying here and now that that is going to be changed, because obviously, as everybody here knows, these discussions are ones which can be difficult.

  122. Minister, we are not seeking to ask you to give that commitment. I just want to clarify that the legal or constitutional position is such that we do not depend on legislation for that. That would be a collective government responsibility decision.
  (Ms Quin) That is my understanding. I would also like to reiterate that although MAFF's capital ceiling is tight, nonetheless, we are also willing to discuss with the Authority, also as a short-term measure, how some of the programme of modernisation that they want to embark on could be embarked on.

  Chairman: That is very helpful.

Mr Jack

  123. The DTI changed the formula of the Post Office to reflect what you have said, to enable them to keep more of their surplus for internal investment in terms of their modernisation programme. I presume to date you have not had any discussions with the Treasury about using that flexibility in the context of Covent Garden.
  (Ms Quin) I will ask Mr Llewelyn to comment. Our main concern at the moment is to work with the Authority over costed proposals. In order to have further discussions with the Treasury, we feel that we would need to be able to put something more concrete to them than we have at the moment.
  (Mr Llewelyn) We have raised the issue with the Treasury and sought their views on whether they would agree to this change. They are still considering it. One of the points that they made was that they would like to look at it in the context of the introduction of resource accounting for the next financial year, which will have some implications. Please do not ask me what the implications would be, but it would have some implications.

Mr Mitchell

  124. I understand that you cannot pluck a figure out of the air under pressure and say "We shall introduce legislation within two years of the election" or anything like that.
  (Ms Quin) It is interesting that you say within two years.

  125. Do I take it from what you say in response to my questions and those of the Chairman that the Government is looking at ways of helping the market with its financial situation, particularly the problem of investment in the interim period?
  (Ms Quin) Yes.

  126. Let us move on to the sale. I have a question, which looks suspiciously Tory to me. You would get a lot more from selling it off for up-market housing, would you not? Have estimates been done on what the difference is between what you would get for selling it as a going concern as a market and what its development potential would be?
  (Ms Quin) I am sure those estimates were done in the past. I have not personally been involved in looking at estimates of that kind, simply because when I came into the Department the Minister had enunciated a clear policy of selling the market as a going concern, and in doing so, of course, he did listen to the views of those involved in the market, and indeed Wandsworth Borough Council. Let me say too that the issue is complicated by the fact that it is not a question of making a clear comparison with what the site is worth as a full-scale site for total development, because certainly the Borough Council have indicated very clearly that they would not want the site to be used for those purposes, and therefore planning restrictions would be likely to indicate that you could not have on that site the most lucrative development opportunities.


  127. It is a Tory council, of course.
  (Ms Quin) Although I will say, Chairman, that it was a Conservative Government which had the previous policy of selling the market in the way that Mr Mitchell has outlined, and it is this Government that has changed that policy, paradoxically, I suppose, in accordance with the wishes of the Council, but also of many other people, local MPs and others, and of people working in the market, of course.

Mr Mitchell

  128. You are satisfied therefore that the taxpayers' best interests are served by the sale of it as a going concern?
  (Ms Quin) Yes, because given the fact that developmental restrictions would be likely to be imposed by the local authority, I think our policy does make sense.

  129. Given that the profits are not high, would sale of the market as a going concern offer purchasers a potentially worthwhile return on their investment? Is it going to be an attractive proposition?
  (Ms Quin) I very much follow the evidence that the Chairman of the Authority gave on that particular issue, and I think that he was right in his assessment. Obviously, the present situation is that the Authority has a responsibility to run it as a market, but it is not a straightforward commercial company. In that sense, given that we want to sell it as a going concern, there are a number of buyers for whom it would not be an attractive or lucrative opportunity. The Chairman made this very clear, and I think he was right in what he said.

  130. It is a very worrying point. There is going to be limited competition and the best, most likely purchaser, will be somebody who already runs markets, that is to say, the Corporation. They are going to get away with paying as little as possible, are they not?
  (Ms Quin) I am not prepared to say here today that there is only one possible purchaser of the market.

  131. You would anticipate more than one?
  (Ms Quin) At this stage I simply do not know. It does not seem to me beyond the bounds of possibility that some other social consortium might somehow come together that would have an interest in running the market. I certainly do not want to look as if I am accepting that all other avenues are closed off at this stage.


  132. Does that mean a management buy-out? What is a social consortium?
  (Ms Quin) Some group of individuals and possibly organisations that would want to somehow take over the running of the market. It could be some of the people who are at present involved in the market. It could also be other local players. It seems to me that there are a number of people who have an interest in the running of the market, whether it is local authorities, the GLA or whatever. So I am not saying that there is not some other possible formula. I certainly do not want to speculate about it in any detail because I do not have any evidence that there is such a demand. All I am saying to you is I am not necessarily accepting today that there is any one potential buyer.

Mr Mitchell

  133. Of course, that is true, but it is a question of hope rather than necessarily an inevitable prospect, is it not? The possibility will be that there is one big buyer already operating markets. In that situation of very limited competition to buy, would it not serve the taxpayers' interests better to put money in and to compete more with the existing markets because Covent Garden is already proving attractive to other people coming in—it is a competition in which it is doing quite well—and therefore sustaining that to build it up to a better purchase price eventually?
  (Ms Quin) If you are saying that, you are saying that the financial constraints which at present the market operates under would have to be changed in some way or other. Obviously MAFF and the Government will look at any recommendations made by the Select Committee, but those financial constraints are not very easy to dissipate. Let me say too that in terms of the Corporation of London, obviously, given the different financial arrangements that that is able to pursue, there has, I know, been a very substantial investment in Smithfield, for example, and in that sense the Corporation has been able to successfully modernise some of its markets in a way which the present financial constraints make it difficult for Covent Garden to do.

Mr Todd

  134. Does a planning brief exist for the site? You have referred to some of the negative constraints there may be from Wandsworth on the site. Does a planning brief exist which indicates what the opportunities might be on the site, bearing in mind that it is a very large one, and one could consider a diversification within a broadly market-oriented use of the site?
  (Ms Quin) I am not aware of one, other than the ideas that the Authority itself has put forward for diversification and future use of the site. Obviously, the planning policies of the Borough Council are also relevant in this respect.

  135. You certainly will not sell the site as a going concern or anything else without a very clear statement of planning policy from the local authority on a site of such scale, and I would have thought that would have been one step towards a disposal as a going concern which appears not to have been taken.
  (Ms Quin) No, I do not think that is true.

  136. Has an approach been made to the Council?
  (Ms Quin) Wandsworth Borough Council has signalled very strongly its belief in the future of the market as a going concern.

  137. That is not the same thing, Minister. They may well say they wish to see the market retained on that site, but do they see any scope for diversification within a market use of the site? Are there issues relating to the logistics of the site which need to be explored by any future owner? It does not sound as if there have been any detailed discussions with the Council at all, other than simply getting their assertion that they would like to see the market retained.
  (Ms Quin) Those discussions take place primarily between the Authority and the Borough Council, not between MAFF and the Borough Council.

  138. But MAFF are the instruments of any sale, as we have explored earlier, so to move to base point one, one would need to have a clear package to present to anyone seeking to purchase this operation. It sounds as if after the pronouncement that was made in 1999 even those preliminaries have not been addressed.
  (Ms Quin) I do not think that is true. I think the Borough Council have welcomed the broad policy of MAFF, and within that broad policy discuss the details with the Authority rather than with us.

  139. All I am saying is, if I were someone interested in purchasing the market, I would want a very detailed planning brief on what could or could not be done within the curtilage of that site. Just simply an assertion by Wandsworth that they want to have a market there would not be sufficient for my purposes in deciding whether to buy it or not. I would have thought that that stage of exploration would need to take place well before you have even got to the stage of drafting legislation or anything else. But it has not happened.
  (Ms Quin) I will ask Mr Llewelyn to comment, but you are right. If we had identified a slot for legislation, we would certainly need to go down the avenue that you are talking about there. I think the overall framework is how I have described.
  (Mr Llewelyn) We have really not done that sort of work because we do not have a legislative slot. Until we have a legislative slot, we do not want to devote the resources. There would be two stages. The Bill itself would deal with the transfer of the Authority's assets to MAFF, so that it could then be disposed of. So there would be two stages: you would first of all have a technical change in the Authority's status and secondly, when that was in progress, a decision as to how we actually then dispose of it.

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