Examination of Witnesses (Questions 160
- 179)
MONDAY 14 JULY 2003
LORD WHITTY
AND MR
DAVID JONES
Q160 Mr Curry: And Defra is picking
up the lawyers' bills on this one, is it, if it is challenged?
Lord Whitty: It will not be Defra
that is challenged in the first instance. It depends on who challenges
whom. We are giving the go-ahead to the authority. We are removing
a restriction on them granting such licences. If they do then
in an individual case grant such a licence then those who feel
themselves disadvantaged by it will have to take a case, which
in the first instance would be against the Authority rather than
against Defra. It is conceivable that they may join Defra in that
and it would be the Authority's legal defence in the first instance.
Q161 Mr Curry: Would you regard a
court case, depending on the outcome, as in a sense then providing
a clear enough answer so that everybody knew where they stood,
as it were, so then things would flow from it which would form
the outcome, or do you think as a result of a court case it might
be so messy that legislation of some sort might become absolutely
indispensable?
Lord Whitty: I would separate
out the two. I think clarification is necessary for anybody to
take any long term assessment of the viability and success/profitability
of the market in the long run. It is not necessary in terms of
a potential decision to divest ourselves of the land or wind up
the Authority, but that goes back to where Government policy is.
Government policy is to get the central Government out from under
the responsibility for the market but to do so in a way which
maintains a market on that site. It is not the 62/3
issue which constrains us from that. It is the availability or
otherwise of potential partners or purchasers in so doing and
then probably the issue of primary legislation. I suppose I should
have said at an earlier stage that of course it would have been
helpful in this process if the City and ourselves had agreed not
only on the analysis that Nick Saphir presented but also on the
action thereafter, and that was our intention and indeed their
intention, when we set up the report itself, that we would have
a blueprint on which we could jointly work, in which case hopefully
legal arguments between us would be avoided.
Q162 Mr Curry: Mr Saphir noted two
things. "The market will go into terminal decline if nothing
happens", quote one. Quote two: "Many people do not
realise that we are on a slippery slope now". Do you agree
with those two statements?
Lord Whitty: I think they are
a bit absolutist. It is clear that old style wholesale trading
will be a reduced part of the way in which meat, fish and vegetables
are distributed. They already have been for a number of years.
On the other hand, the amount of food consumed, produced, marketed,
is going up. The value added of it is increasing, particularly
in London itself, in the catering and food service sectors, and
therefore a different sort of market, or a partially different
sort of market, is there for the markets to identify and develop,
but certainly as a wholesale market of the old school, then yes,
we are on a slippery slope and if the markets do not identify
and deal with the changed pattern of demand then they will go
out of business. To that extent I do agree.
Q163 Chairman: Minister, just to
be absolutely clear about your attitude towards legislation, in
paragraph 5 of Mr Bradshaw's statement, he says, ". . . and
are sympathetic to the view that such legislation should be amended
or repealed as the opportunity arises", and then you have
a more definite position on the second page of his report where
you saw his reply, where he says, "We have no proposals at
present to amend the legislation governing markets generally or
to promote amendments to the legislation governing specific London
markets". You cannot have yourself looking in two different
directions. You either are in favour of doing it or you are not.
Which is it?
Lord Whitty: I think, Chairman,
if I may say so, that you are confusing two issues, the issues
of the 62/3 rule, so-called, which is basically
a common law assertion which has to be interpreted in each case.
It would be possible for Parliament, I suppose, by statute to
delete the existence of such a rule.
Q164 Chairman: If you are concerned
that I have not understood it correctly I will always apologise,
but the full sentence from which I initially quoted says, "We
recognise that some of the legislation which governs the markets
may inhibit such developments", and it talks about the needs
for the catering trade, and then it goes on, "and are sympathetic
to the view that such legislation should be amended or repealed
as the opportunity arises". I could not find in here any
other reference to legislative change until I came in paragraph
7, "Future Action", to this clear statement saying you
were not going to do any of it.
Lord Whitty: There are two sorts
of legislative change: one, do we need—and this will probably
only be decided in the light of a court case—legislation
to enable markets effectively to operate in a free trade situation,
and that is where the 62/3 inhibits other
markets in London dealing in the commodities which the ancient
markets have kept to themselves? That is essentially an issue
of restraint of trade, and the issue is whether we need legislation
to change that. That probably will not be decided unless and until
we have got clarity in the courts as to what the current situation
is. The other is whether we would need legislation to effectively
extract ourselves from running the Covent Garden market, and even
that has two tiers. One is whether we can dispose of the site
in one way or another without legislation, and the other is whether
we can wind up the Authority with or without legislation. The
answer to the latter is pretty clearly, no, we cannot. If we were
to wind up the Authority then we would need primary legislation
so to do. The answer to the question of the disposal of the site
is that I think it is likely that we would not need primary legislation,
although of course a judgment would have to be made whether that
was in effect de facto a winding up of the Authority.
Q165 Chairman: We are grateful for
your clarification but I have to say it does not come shining
through from Mr Bradshaw's statement. Let me ask you about paragraph
10 of your reply to the Committee's report of 2000-01, and this
is what you published on 14 September 2001: "The Department
is giving further consideration to the options for the future
ownership and management of the market". Would you like to
tell us what you have been doing for the best part of the last
two years in this further consideration, or was Mr Saphir's report
a sort of ship that turned up in the night that enabled you to
say, "We have done something because we have commissioned
the report"? What else have you been doing for these last
two years?
Lord Whitty: It did not turn up;
we commissioned it jointly with the Corporation of London. What
we did on the basis of paragraph—
Q166 Chairman: It was after we suggested
you did it.
Lord Whitty: I am very grateful
for the suggestion, but we did do it, is the point I am making.
Q167 Chairman: What else have you
been doing?
Lord Whitty: The whole point of
the Saphir report was that the best solution seemed to us, in
the wake of your report, certainly to me when I came into this
job, is that we should, along with the City of London, approach
all London markets as a whole, look at the viability of the totality
of London markets, not to create some big superstructure, as I
think was being hinted at at earlier stages; we were not in favour
of that, but allowing a better context for the London markets
to develop, and for that we needed an understanding with the Corporation.
We had an understanding with the Corporation in the sense that
we both agreed that we should set up a joint inquiry to look at
the possibilities and that was the origin of the Saphir Report.
Q168 Chairman: Did you make a separate
submission as a Department to the report?
Lord Whitty: In a sense we have.
We have done our response to the—
Q169 Chairman: Yes, I know, but you
are in an unusual position. You have got the Covent Garden Market
Authority, you have got the Corporation, right? You are the owner,
if you like, of the site but you are at an arm's length. Somebody
else runs it. This report is set up by an independent consultant
to look at the totality, the universe of markets in London. Did
Defra make any kind of independent submission of evidence and
views and analysis to help inform the report of your view on the
situation?
Lord Whitty: There is not a formal
submission of views as to the likely outcome from Defra to the
Saphir Commission, if that is what you mean.
Q170 Chairman: So how did he know
what you thought about it?
Lord Whitty: The terms of reference
were agreed by ourselves and the City as to what kind of outcome
we were looking at.
Q171 Chairman: So you gave Mr Saphir
no indication of your views? You told him what you would like
him to produce but you did not then say, "In the last two
years we have been carefully considering this and here is the
sum total of our considerations for you to look at"?
Lord Whitty: Nick Saphir had available
the sum total of our information and our views, our previous views,
the City's views, the market's views, everybody's views, so it
was not as if we were hiding any blueprint from him. Mr Jones
may be able to indicate precisely what bit of paper we gave him
at the beginning.
Q172 Chairman: Let us hear from Mr
Jones. This might be interesting to know, where the Government
was coming from on this. Mr Jones, do you want to add something
to this?
Mr Jones: As the Minister has
said, we set some very clear terms of reference which we discussed
in some detail with the Corporation of London before the exercise
started. Mr Saphir operated from our offices with the help of
an appointed member of staff who came in from outside to do that
and, of course, there was a good deal of informal consultation
both with the Department and with the Corporation of London, who
also provided a member of staff to brief Mr Saphir on the starting
point. The Department sought to get from Mr Saphir a view taking
account of all the interests that had a stake in this and we were
available to tell him what he wanted to know but we did not seek
to lead him in any particular direction.
Q173 Chairman: Did he come and ask
for direction? Did he come and ask you what your attitudes were
to the various lines of his inquiry?
Mr Jones: We had a number of discussions
about the issues that were arising and the directions that might
be taken, yes.
Q174 Chairman: Would you like to
tell us a little more clearly the kind of steer that you might
have put into this?
Mr Jones: The whole point is that
we did not give a steer. We were asking for a view on the way
in which the markets might develop in the future. There were certain
things that we did not ask him to look at.
Q175 Chairman: Let me stop you for
a second and say, for example, did you tell him in terms what
the prospects were for further public investment, for example,
into the new Covent Garden market site? Did you give him the facts
on that?
Mr Jones: Yes. I think it is fair
to say that we made it clear that one of the reasons for the Government's
interest in divesting itself of the market is precisely that financing
major developments is burdensome and against the background of
an assessment of the future prospects for markets commercial decisions
about how to underpin their development or the development of
alternative facilities which might take a slightly different form
are clearly very interesting and so we wanted a background against
which to make assessments of that sort of thing in the future.
Q176 Paddy Tipping: Minister, earlier
today Mr Saphir almost used your language about how markets were
changing because of the influence of the catering sector and Mr
Curry quoted some of his remarks back about the slippery slope.
Mr Saphir told us that we had got five years to sort this out.
What is your assessment of the timescale available to sort this
out?
Lord Whitty: I am not sure what
the five years referred to but I would hope that we could reach
a conclusion on the future of the Covent Garden site in less than
five years.
Q177 Paddy Tipping: What is your
assessment then? If it is not five years, what is it? What timescale
are you setting yourselves?
Lord Whitty: That brings us in
a sense to the options which are still in play following the Saphir
Report because, as you will know, the Saphir Report recommended
that there would be more than one composite market, probably three
composite markets, one of which would be Covent Garden, and it
would be appropriate that the City took over responsibility for
Covent Garden. The City did not in effect accept that view. They
were, on terms which were never quite clear, prepared to take
over responsibility but not to develop it in that direction. The
Authority are therefore looking with our go-ahead at alternative
partners for developing that site. This is not to say that an
accommodation with the City could not be reached. It is still
an option, but not on the terms that the City are currently proposing.
There are a number of possible scenarios which will probably take
a couple of years to sort through and which may involve us at
least in committing ourselves to legislation. The key issue will
not be how soon we can get the legislation. The key issue will
be how soon can we deliver somebody who is prepared, in partnership
probably with the Authority, at least in the initial stages, to
provide a deal which provides adequate capital to run the market
on that site and fulfil Nick Brown's commitment that that is our
intention.
Q178 Paddy Tipping: So there are
a number of scenarios and Defra's preferred scenario is to resolve
this within a couple of years. Legislation may take longer. What
are you pushing for? When you are sitting across the road what
line are you going to take?
Lord Whitty: Our concern, in terms
of our public responsibility, is first of all to ensure that we
get a deal which divests ourselves of financial responsibility
for Covent Garden, but also provides sufficient resources to continue
to run a market on all or part of that site. That is our sole
dual criterion. That would apply if we re-opened negotiations
with the City or if there were to be an arrangement with a private
developer. There are, of course, other bodies which have a concern
here as well. The London Borough of Wandsworth clearly has a view
on what planning options are appropriate to that site and what
are not and they also made it clear that they wished to see a
market continue to operate there and, in a slightly arm's length
sense, so did the GLA have a view on the planning implications
of any alternative development of that site for that particular
area of London. In other words, there are joint operations between
the various local authorities and the GLA looking at that whole
area which would need to be compatible with that dimension as
well, but that is not Defra's prime responsibility. It is as I
described at the beginning of this answer.
Q179 Paddy Tipping: What I am not
clear about is that there is a problem here and who the key player
is to sort it out. I am a bit simple about these things. I just
think the Government has got a lot of power. You are the landowner
and my perception is that in a sense the Department is the key
player, but I am not entirely sure what buttons you are pushing
to make things happen.
Lord Whitty: Number one, we have
given the go-ahead to the Authority to discuss a takeover with
potential partners. Number two, we have triggered the process
which may lead to the clarification of the 62/3
rule and, number three, we are in discussion with all the other
partners or potential interests as to what the future of the markets
should bring. Yes, the Government is the landowner in an indirect
sense, and the Government also has the financial and statutory
responsibility for running the market at the moment. Therefore,
in that sense we are the key player but we do need others to act
to get a positive solution to this.
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