Examination of Witnesses (Questions 164
- 179)
TUESDAY 31 MARCH 2009
MR MICHAEL
FELTON AND
MR JONATHAN
OWEN
Q164 Chair: Good morning. We have
a lot of witnesses to get through this morning so do not feel
obliged to repeat things that the other witness may have said
if you agree with each other, if you could focus on the areas
of disagreement. Both of you seem to be quite pessimistic about
the future of markets. Could you briefly say why you think markets
are in decline and if you think there is a difference between
different types of market and their future prospects?
Mr Owen: Fundamentally
the markets are in decline because of increased retail competition
and retail consolidation and a lack of capital investment and
improvements by market owners, who are primarily local authorities.
Q165 Chair: Do you agree with that,
Mr Felton?
Mr Felton: I agree with what Jonathan
has just said but I think it is also the case that the incoming
number of traders has declined quite a lot over the past years.
Young people do not wish to follow their parents in their occupations.
They see better chances and a better form of livelihood outside
the markets. If you go around most of the markets in this country
you will see the traders are getting older and older and older.
The excessive competition that Jonathan has already mentioned
is across the board entirely. Many of the discounters and supermarkets
are selling non-food products and that seems to be spreading,
which hurts the market traders and clothing and footwear particularly
very much.
Q166 Chair: Some of the markets we
have seen do provide an outlet for traders who are meeting the
needs of the more diverse communities that have moved into areas.
Do your views about a lack of new traders apply across the board
or not in some areas?
Mr Felton: I would say it applies
almost across the board. It is difficult to say exactly why it
does, but that is the experience of going round the countryside,
the intake is simply not there. There is also a question of lack
of capital that seems to continue and capital support, overdrafts
and things.
Q167 Sir Paul Beresford: You have
both mentioned a lack of capital from the owners, which you said
are predominantly local government. Local government is under
pressure too. Why should they invest more capital in what you
say is a dying market?
Mr Owen: I think it is fundamental
to any business, if you want to maintain your competitive edge,
that you have got to reinvest constantly in your business. Unfortunately,
in my experience most local authorities have treated their market
services as a cash cow over the last 30 or 40-odd years. They
have not got a structured reinvestment policy into their service,
they have not got the capital investment in there and as a result
the competition, which plays by a different set of rules, which
have been investing heavily, which have been borrowing and investing
and improving the product and their attractiveness to their customers,
have overtaken them.
Q168 Sir Paul Beresford: You sound
so pessimistic. Why would they invest if they got nothing out
of it? Are they going to get anything out of it?
Mr Owen: I think there are a lack
of business skills often amongst local authorities and a lack
of a commercial approach towards evaluating the options that are
open to them. From a commercial point of view, I am always looking
for a return on capital invested. From a local authority's point
of view, often they regard the market service as being more of
a community provision or something that we have always done. There
has been a lack of focus in terms of why many local authorities
are actually providing the markets.
Mr Felton: I think the question
you have just put strikes at the heart of the need for a market.
The question is perhaps why does one need a market? Why should
one continue to support it? There is a great deal of community
cohesion that is needed in this country, especially in the small
towns. It is a great provider of direct and indirect employment
and it is also an earner in most circumstances for the local authority.
Markets are here traditionally. I am not saying that tradition
is written in stone, it certainly is not, but without some markets
in those smaller towns, perhaps on a Wednesday or a Saturday or
one day a week, those towns would be very much poorer without
it.
Q169 Chair: The point that you have
just made seems to apply specifically to small countryside communities.
Do those arguments equally apply in cities?
Mr Felton: Yes. I have already
said in my submission that the Saturday market in a small town,
large village or whatever with a population of 8,000-15,000 is
at risk. Unfortunately from a market point of view, people will
go elsewhere for their principal shopping. The key number of food
suppliers within markets is falling. It is my view—and it
has been for some years—that a market without a greengrocer
is not a market. One can see going round the markets that where
there used to be two greengrocers there is now one and very often
the produce simply cannot compete with the nearby supermarket
on the edge of the town.
Q170 Sir Paul Beresford: What markets
are succeeding? Farmers' markets?
Mr Owen: I think farmers' markets,
specialist markets are succeeding, but it is not day-to-day essentials
which they are selling. The prices on most farmers' markets are
considerably higher than on what I would call a general regular
market. They are a destination, a leisure activity on a Saturday
once a month or a Sunday once a month. They are not providing
day-to-day necessities for most household shoppers.
Q171 David Wright: Are there spin-offs
for mainstream markets that come from specialist markets being
in the same area? Are there examples where you get a specialist
market that ties into another market and boosts trade maybe once
a month? What are the spin-offs?
Mr Owen: Certainly part of a strategy
to run a successful market service if you are a local authority
is you need to recognise that a specialist market will not provide
the day-to-day shopping, because of the prices and the periodic
nature of the farmers' market, but they are very useful to complement
and to increase footfall at specific times of the year and to
increase awareness of the fact that there is a general market
there for the remaining four or five days of the week.
Mr Felton: I agree with Jonathan
that the question of increased footfall is absolutely critical.
One particular light on the farmers' market is that they make
no profits for the local authority as such, they are all heavily
subsidised. I am currently engaged with a medium-size town project
and having analysed the figures for costs, income and various
expenses for the farmers' market, it has been carried out at an
enormous subsidy, thousands of pounds annually. One wonders if
there is a point at which local politicians will say enough is
enough. Whether they continue to have to subsidise it is of course
their choice.
Q172 John Cummings: How do you account
for the huge success of continental markets which are now appearing
on a very regular basis in huge shopping centres?
Mr Felton: Continental markets
have their own particular uniqueness. They are very popular. They
are very successful. Again the local authority tends to subsidise
them by charging a relatively low rent but paying for substantial
advertising costs and for supplying things like electricity and
water. The continental attitude to markets is of course quite
different from what there is in the UK.
Q173 John Cummings: Are you saying
that local authorities subsidise continental markets in private
shopping centres?
Mr Felton: Yes.
John Cummings: I am referring to the
area in which I live where brand new shopping centres now encourage
continental markets to come into their premises with no involvement
at all from the local authorities. I am not quite sure what you
are referring to.
Q174 Chair: Are you suggesting that
continental markets and farmers' markets are used as a kind of
loss leader either by shopping centre management or by local authorities
to bring people into a shopping centre?
Mr Owen: Absolutely. There are
one or two of the better continental market operators, I will
not mention names, who will be quite clear and quite open with
you and they will say, "I am not going to `Mudthorpe on Sea'
unless I am paid £X thousand by the local authority to stand
there." On the other hand, if they were offered a prime pitch
in the middle of an extremely vibrant town then they would pay
a rent to the local authority to go there. The problem is that
there are relatively few what I would call quality continental
market operators. It can be a perfectly justifiable decision to
subsidise continental markets to come into your town centre, possibly
as part of a town centre promotion or events programme, to increase
footfall in the town centre and that is a perfectly legitimate
use of taxpayers' money if it is voted through the council in
that way. There is a recognition at the same time that continental
and specialist markets generally speaking do not make money for
local authorities.
Mr Felton: To some extent I would
regard the continental market as an annual or biannual star turn.
They are very attractive. People come from a long way away or
outside of the normal catchment areas and enjoy themselves as
do the traders. They catch the headlines. Good luck to them! That
is fine.
Q175 David Wright: One of the drivers
behind farmers' markets in particular is the promotion of local
produce. If you are using a farmers' market in that way to promote
local suppliers is it not a problem for market traders generally
because does that not send the message out that your normal market
does not do this? It is an open question. I am trying to understand
how you would combine the two.
Mr Owen: There is a tension between
open market traders and indoor market hall traders. There is another
tension between open market traders and continental markets. They
are turning up on the best days and saying, "They've been
given the best days. They're pinching all of our business."
There is a friction between them and farmers' markets whereby
they say, "I don't know why the council is bothering doing
that. They are giving that space to them at a concessionary rent
which they do not give to us who are paying the day-to-day bills
for the council." There are three or four completely different
businesses there and you have to understand the drivers behind
each one of them. The drivers behind continental markets is the
guy out there who is making a living by delivering to a council
a dozen or two dozen or whatever it is specialist users and his
revenue comes from either the subsidy, which effectively he is
paid by the local authority, or the money which he derives from
his traders. They are completely distinct things. The market is
this single word which encompasses a range of different types
of business.
Mr Felton: If I may say so, I
think to some extent we may be misleading ourselves by concentrating
on these so-called specialist markets. My main concern is the
smaller market town and the smaller open street market. These
are the ones which I see in distinct danger and are still currently
very much in decline. Large markets, particularly in the north-west
and north-east and the Birmingham conurbation in this country,
the big indoor markets, will certainly survive. They are very
well managed. I am not worried about them. Time and time again
when one goes to the smaller places you see nothing but problems
occurring there, i.e. a lack of traders or one week suddenly the
greengrocer vanishes and stays away. That is where I think the
greatest loss to our traditional market and our heritage aspect
on markets will in fact be suffering. That is where all those
things that Jonathan has mentioned, local authority support and
it may even be central government support and investment, are
required.
Q176 John Cummings: Can you tell
the Committee what you believe local authorities should be doing
to promote and ensure the survival of the markets?
Mr Felton: I think the short answer
is pay up.
Q177 John Cummings: Pay up what?
Mr Felton: For investment. One
of the difficulties with a small town is that you do not get local
management. You do not get one officer in charge of the market.
Those who are in charge of markets are often multi-functional;
they have more than one thing to do during the week. It needs
dedication, it needs a proper approach to things like publicity
and it means the obtaining of new traders, sorting out the market
and getting the right type of person to run it. This is a local
authority problem. It depends upon the political will to some
extent or the will of the permanent officers to keep it going.
It is lower down on the priority of a town council or district
council in many cases.
Mr Owen: I would certainly endorse
that. In my experience local authority officers are very well
intentioned, a lot of them are extremely dedicated and they are
doing a very tough job, but in this particular instance they are
up against commercial pressures which, quite frankly, often they
are not trained to respond to. Local authorities are generally
very good at regulating situations but rather poor at exploiting
business opportunities. In this particular instance, running a
market is like running a commercial operation where you are in
direct competition with the private sector and you have to adopt
the same techniques, whether it is reinvestment or training and
management skills or promotion, and unfortunately they are falling
down on that.
Q178 John Cummings: What do you believe
local authorities should be learning from the private sector in
running successful markets? You are being quite specific and very
damning of local authorities. Give me some examples of highly
successful private markets. What can we learn from them?
Mr Owen: The first priority is
whether or not you can get past the budgetary pressures on a local
authority which enables it to promote the market.
Q179 John Cummings: Assuming that
they have passed all of those hurdles, what can local authorities
learn from the private sector?
Mr Felton: There has been an increasing
trend over the past eight or 10 years for some of the smaller
local authorities that have one or two markets within their jurisdiction
to outsource it, to privatise it, that is why they are called
private markets. They will then let it on a short-term licence,
a three-year licence or a short lease to what is known as a private
operator. The difference there is quite considerable because a
private operator is driven by the profit motive and in order to
get the required profit he has got to run a decent market that
actually makes sense.
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