Examination of Witnesses (Questions 62
MONDAY 30 JUNE 2003
MILLS CBE AND
Q62 Chairman: Can we welcome our
next set of witnesses: Mr Leif Mills, the Chairman of the Covent
Garden Market Authority, and Dr Mike Liggins, its General Manager.
Gentlemen, we know you have both been to give evidence on a number
of occasions before the Committee and we are grateful for your
willingness to come again and talk to us about the difficult situation
that we have just been discussing with your colleagues from the
Corporation of London. We thought that, just as in the same way
as with the Corporation, it might be helpful to set the scene
if for a few moments you would make a statement to put in perspective
your own position on this matter.
Mr Mills: Thank you, Chairman,
and thank you for the opportunity to appear before the Committee.
We welcomed the setting up of the inquiry by Nick Saphir and we
welcomed not only his analysis but also his recommendations and
we accepted them. That acceptance was echoed by other prominent
players in the horticultural world, like the Farmers' Union and
the Fresh Produce Consortium and so forth. We were expecting to
be able to reach some sort of understanding with the Corporation
of London but that proved to be not practical for a number of
reasons, which I am quite happy to go into if you wish. In that
context we welcomed what the Minister said last Thursday in his
written statement and we also welcomed the fact that the Minister
also wrote to me at the same time giving his consent to our market
trading in fish and meat. We welcomed both Saphir and the ministerial
statement and letter in the context of the strategy which the
board has of developing the market into a one-stop food shop in
the centre of London. We think that our future is promising given
the implementation of the recommendations of Saphir and the ministerial
consent which we now have which we intend to pursue shortly. There
remain, of course, the two outstanding issues of ownership of
the market and financing capital investment terms of the market.
They are the significant issues that we are addressing at the
moment through discussions with various parties and we can see
a possible solution to both those points emerging. On the whole,
Chairman, we are fairly bullish about the future and that optimism,
I think, is justifiably shared by our tenants and by the union
that operates in the market.
Q63 Mr Mitchell: Is that bullish
on a kind of Sinn Fein "ourselves alone" basis?
Mr Mills: No, it is bullish in
the context of Saphir and particularly the ministerial statement
and his letter allowing us to go into fish and meat. It is a recommendation
and a decision by the minister for which we have been waiting,
we have now got that decision and that has buttressed our forecasts
for the future.
Q64 Chairman: Let me just follow
on from what you were saying in your very helpful summary. If
I might just say to you, you have got a track record like a lot
of survivors in a lifeboat who keep chucking bits of the market
out in an attempt to keep the boat afloat and you have moved away
from what was there originally as a wholesale fruit and vegetable
market to one where all kinds of intriguing activities take place
in the value added food business, we have got herbs down one end
and the flower market down the other and it is all desperately
in need of lots of investment. You are hanging on now like the
guys on the north face of the Eiger, one little rope and it is
gradually fraying and any minute now it is going to disappear.
Why do you not just throw the towel in? The Government has not
listened to you, they have given you no investment, these nice
people from the Corporation, the City of London, have offered
to take this place off your hands and you can be relieved of all
of this worry. Why do you feel so bullish against a background
of such despair?
Mr Mills: How much time have I
got, Chairman? First of all, yes, of course the market has changed
and it has developed. The development of catering is a significant
change from its original function when the six halls of the fruit
and vegetable market were all traditional wholesalers; now only
two of them are traditional wholesalers and the rest are catering.
That catering trade is flourishing and expanding and, of course,
it partly supports the wholesale activity that goes on in the
market. Yes, we have gone wider than horticulture, our statutes
allow us to do it, and the Minister has now said that we can sell
fish and meat products.
Q65 Chairman: He has not quite said
that. I thought what he said was that he did not see any objection
to it but thought it would have to be ultimately decided in the
Mr Mills: What he said was as
far as he is concerned, in his letter to me, he has "given
consent to the authority granting or extending the scope of leases
for the purpose of selling fish or meat or fish or meat products,
as on such parts as we consider to be appropriate". He also
said that in doing so we shall not do anything illegal, which
of course we would not, and if the Corporation of London choose
to object to us doing that then the Corporation of London will
have to take us to court.
Q66 Chairman: It does not actually
show great leadership by Government, does it?
Mr Mills: It shows exactly what
the decision can be given goodwill and intent on the part of the
Minister, which I think he has shown. The Minister has to give
consent and we then implement.
Q67 Chairman: I did a Paxman-like
interruption on you. You were explaining to me why you were prepared
to still try and keep the New Covent Garden Market Authority lifeboat
Mr Mills: I think you mixed your
metaphors with that and climbing the Eiger, Chairman. Either way,
we think there is a fundamental role that the market fulfils of
providing not only horticultural products but increasingly wider
food products to the traditional part of the market, the retail
part, and more particularly to catering. Secondly, we are a large
employer in the borough, we employ altogether about 2,500 people,
and we wish to see that employment not only continue but to expand.
We think that the Corporation's attitude to us and to Saphir and
the ministerial statement is now basically anti-competitive and
restrictive of us. It has now become clear to us that far from
being as you described them, nice gentlemen, although they are
personally, in terms of their Corporation responsibilities they
are deliberately trying to stifle the development and expansion
of New Covent Garden Market to protect their own markets for whatever
reason. We do not think they will be successful in this.
Q68 Chairman: Let us just explore
this. You have not objected to the concept of them taking over
the running of your site, but you have expressed concern about
this question of their investment position. I hope that is factually
correct, and do jump in and tell me if I am wrong. It is clear
that particular line of inquiry is not making a great deal of
progress at this particular time.
Mr Mills: Correct.
Q69 Chairman: What would the City
of London have to do, the Corporation, to reinvigorate your enthusiasm
for that solution?
Mr Mills: First of all, they would
have to completely abandon their current proposals. When we had
original discussions with them informally there was some encouragement
for the view that they would take on responsibility for the market
with all that that means in terms of liabilities and in terms
of the future, but when we saw the report that the Town Clerk
made to the City Markets Committee, and the letter that he wrote
to the Secretary of State, it was clearexplicitly clearthat
they wished to curtail the activities that currently go on in
the market, not put any significant investment into us, and the
only reason for those two things could have been that they wished
to see us slowly decline and cease to be a competitor to what
they hoped would be an expanding Spitalfields. If I can quote
the letter that the Town Clerk wrote to the Secretary of State
on 18 February this year, it talked about if they took over ownership
"there would have to be some modification of activities at
New Covent Garden". They also quoted in the report and the
letter that even if finance were available they did not believe
that creating two composite markets would be viable or desirable.
So the issue of money as the objection falls into that context.
They do not wish to see two composite markets, even if finance
were available. I can assume the only reason for that, again,
is an anti-competitive attitude to not letting us compete because
they know once the fish and meat bandwagon starts to roll, I have
no doubt that there will be some tradersI am not saying
60%, I am saying some tradersboth within and without Billingsgate
and Smithfield will want to come to us. If I may make one further
point, Chairman. When the Committee met two years ago, and more
recently this afternoon, there was a lot of emphasis about the
cost of health and safety and hygiene rules for fish and meat
traders. In one sense that is a perfectly fair point but, of course,
that applies to our fish and meat traders in exactly the same
way. We have two fish traders and we have one meat trader. Each
of those companies spent between a quarter and half a million
fitting out their premises to comply with the latest hygiene regulations.
In terms of inspection, our market is patrolled every day by Defra
inspectors who look at the quality of the produce, look at the
context in which it is sold, and clearly they have the power to
downgrade any adverse products or to produce reports if there
is anything that is not hygienic or not conforming with statute.
We are regulated, and quite rightly so, but the idea that the
Corporation has spent all this money on hygiene and somehow we
would not if we developed into fish and meat is totally false.
Q70 Chairman: Since February of this
year have you had any kind of formal meetings with the Corporation
to discuss the situation?
Mr Mills: We had an informal meeting
with the two gentlemen who have just been giving evidence but
that failed to resolve any issue.
Q71 Chairman: So, to use modern parlance,
Mr Mills: No.
Q72 Mr Mitchell: That was not quite
what the Corporation said. You quoted their Town Clerk's statement
as if it applied to Covent Garden, but what he actually said was:
"I do not believe the creation of composite sites at Nine
Elms and Spitalfields is desirable or financially viable",
he did not say anything about Covent Garden.
Mr Mills: I think you will find
there were two documents. One was a letter to the Secretary of
State on 18 February from the Town Clerk and the other is the
report that the Town Clerk made to the City Markets Committee.
Q73 Mr Mitchell: In February?
Mr Mills: Yes, 11 February was
the report. "I do not believe that the creation of composite
sites at Nine Elms and Spitalfields is desirable or financially
viable", not "and" but "or". Then he
says later on: "I would be reluctant to recommend that New
Covent Garden and Spitalfields should both be expanded to on-site
composite markets even if the necessary money were available in
New Covent Garden under the control of the Corporation".
If I may emphasise, quite rightly the Corporation have referred
to the discussions they have had with our tenants. They came and
they met the executive committee of our tenants' association and
not only did they make it clear that they were not prepared to
put any new money into Covent Garden if they assumed ownership,
they would just use the corporation tax that we pay at the moment,
but also they made it clear there would continue to be a restriction
on the existing meat and fish trade which we have through the
three companies we have.
Q74 Mr Mitchell: That is what they
mean by a "modification of some of the activities"?
Mr Mills: I assume it does. You
referred to Paxman, Chairman, and the President of our association
asked the Corporation of London people if they took over ownership
of the market would our existing meat and fish traders be allowed
to sell face-to-face; he asked the question five times and never
got an answer. The only reason he could not have got an answer
was because I assume the answer would have been no.
Q75 Mr Mitchell: You cannot raise
the money, apart from what Defra gives you from the running surplus,
the Corporation cannot either, so you are going to have to turn
to new finance.
Mr Mills: Yes.
Q76 Mr Mitchell: Your response to
the Government consultation on 3 February said: "We do not
see how Newco could be funded or would function . . . " Have
you had discussions with sources of private capital to make that
Mr Mills: No, at that time we
did not because from our informal discussions we still thought
that the Corporation of London route was the route that was practical.
There are two points. As you will have known from our Annual Report
and Accounts, last year we made about £2.2 million profit
on a turnover of £10 million. We pay corporation tax of just
over £700,000 and the balance, the £1.5 million, we
are now allowed to keep instead of remitting it to the Ministry.
In fact, that position has been confirmed not only year by year
but the letter we have from Defra says: "With the agreement
of Treasury we confirm that we are content to allow the Authority
to retain all post-tax profits at the level shown in the accounts
until major capital works have been completed". That is a
Q77 Mr Mitchell: Is it a big help?
Mr Mills: Not significant enough,
no. The idea that if the Corporation just let the Market Authority
keep the corporation tax would somehow solve the problems of capital
investment is ludicrous. It is by no means sufficient, as the
table will show, I hope, that we attached to our submission. The
other point to your question is that once it became clear that
the Corporation route was at best not helpful and at worst deliberately
unhelpful, we did start discussions with property development
companies as sources of external finance. There are some seven
companies which we have been seeing in the last couple of months.
We have not finished yet. We have been discussing how they could
be involved possibly in developing parts of the site that are
not needed for market purposes and possibly developing those for
their own purposes at the same time as accepting the capital liabilities
which we have now got. At the moment the indications are quite
Q78 Mr Mitchell: They are quite good?
Mr Mills: Yes.
Q79 Mr Mitchell: You had not done
anything about that because previously you had been thinking of
a transfer to the Corporation?
Mr Mills: Correct.