HOUSE OF LORDS

MINUTES OF EVIDENCE

taken before the

UNOPPOSED BILL COMMITTEE

on the

ST. AUSTELL MARKET BILL

Wednesday 11 June 2008

Before:

Brabazon of Tara, L

[Mr Allan Roberts, Counsel to the Chairman of Committees, in attendance.]

 

MR ROBBIE OWEN of BIRCHAM DYSON BELL appeared as Parliamentary Agent for the St. Austell Market Bill.

There also appeared:

MR ROBIN BAILEY, Clerk to The Commissioners of St. Austell Markets and Fairs;

MR ANDREW WARD, Manager, Treasurer and Secretary to The Commissioners of St. Austell Markets and Fairs;

MR TRISTAN SCOTT, Commissioner of St. Austell Markets and Fairs.

1. CHAIRMAN: Good afternoon and welcome to the Unopposed Bill Committee on this Bill. I think you know me. I am Lord Brabazon, Chairman of the Committee. On my right is Allan Roberts, my counsel. Would you like to introduce yourself and your colleagues?

2. MR OWEN: Good afternoon, my Lord and other members of the Committee. For the record, my name is Robbie Owen. I am a parliamentary agent with Bircham Dyson Bell LLP. I am here today with two colleagues from my firm, Mrs Pam Thompson, my Parliamentary Clerk, over on my left and to her right Mr Mothiur Rahman, who is a solicitor with Bircham Dyson Bell. Representing the Commissioners we have the Clerk to the Commissioners, Mr Robert Bailey on my left. We have Mr Andrew Ward, Manager, Treasurer and Secretary to the Commissioners. On his right we have Mr Tristan Scott, who has been a Commissioner of St. Austell Markets and Fairs for 20 years or more. Those are who appear before you today, my Lord.

3. I would like Mrs Thompson to hand out two documents for you and other members of the Committee. The first is a broad outline of what I would like to tell the Committee this afternoon and, as you will see, the second are some photographs of the Market House.

 

4. My Lord, so far as the outline of my submissions is concerned, I can proceed quickly or slowly depending on how you guide me, but I hope that indicates where I have got to in what I am saying and you can follow my course.

5. My Lord, the essential purpose of the Bill is to bring the operation and regulation of St. Austell Market into the 21st Century. The Bill is promoted by the Commissioners of St. Austell Markets and Fairs who are an association established by a private Act of Parliament of 1842. They were authorised by that Act to acquire land compulsorily for the construction and maintenance of a new Market House in St. Austell and then the running of a market within that Market House.

6. It was opened in 1844 and has been run by the Commissioners and their successors ever since under the powers of the 1842 Act. However, the powers of the Commissioners are limited by that Act, as I will be going on to mention shortly. They feel these restrictions prevent the Commissioners from making the most of the Market House and its facilities for the benefit of the community of St. Austell. Therefore, the purpose of the Bill is to make new provision for the operation and regulation of the market in St. Austell and to repeal in its entirety the 1842 Act. In particular, the Bill would transfer the market undertaking of the Commissioners to a Community Interest Company, which I will be mentioning later as well, which has been set up specifically for the purpose of running the market undertaking if the Bill is passed. That company is named St. Austell Market House CIC. May I perhaps refer to it later as "the CIC" in these submissions. Therefore, if it is transferred to the CIC, the future regulation of the market would be achieved by the very establishment of the CIC and how CICs generally are regulated. I will be touching on that later as well.

7. Once the transfer of the undertaking to the CIC has occurred, the Bill would repeal the 1842 Act and the Commissioners would no longer exist as a statutory association, although some of them would continue to be involved in the running of the CIC as directors and it is hoped furthermore that the directorship of the CIC, which currently is restricted to Commissioners, will involve the wider St. Austell community over time.

8. By way of concluding remarks in opening, the key to what is proposed is to ensure future flexibility whilst preserving the assets and future operation of the market. Specifically, there are three things to focus on. First, the physical conservation, restoration and refurbishment of the Market House. Secondly, to revitalize and restore the role of the Market House at the heart of St. Austell's social, economic and cultural life. Thirdly, to improve the awareness and understanding of the historical significance of the building whilst ensuring its long-term viability. In other words, the purpose is to preserve, maintain and improve the Market House for future generations.

9. My Lord, if I can turn now to the location of St. Austell Market. I hope the photographs before you and other members of the Committee will assist. Clearly, you may appreciate it is situated right in the centre of St. Austell, in between Market Hill and Market Street. It is a Grade II* listed building situated in St. Austell's conservation area and its historic core. The listing describes the building as, "One of the best market halls in the county, with good elevations and an exciting interior". I believe the reason why the interior is regarded as so exciting by English Heritage is because of the free-standing timber roof structure which I have been told is the largest of its kind in Europe.

10. I think it is fair to say the building is a reflection of the prosperity and resulting civic and other fine buildings arising from the discovery of china clay deposits in the mid 18th Century. The building is important because it is clearly one of the architectural gems in the town in terms of its quality and contribution. Its setting is in the heart of St. Austell and also because of its past and present social significance.

11. It may be appreciated from the photographs that the Market House operates more like a series of shops, from fixed, lockable units with no open areas used for stalls and tables. The charges for the shops are collected weekly and there is currently no certainty of what income will be available from one week to the next for reasons I will come on to mention. That in itself demonstrates in part the market's current financial vulnerability. It is fair to say, in recent years it has been less of a success commercially as competing developments elsewhere in the town have grown up. The centre of the town is now considered to be one of the most deprived areas in the South West and this in itself has led to significant regeneration plans, which include two new public squares in the town centre, new shops, pubs and restaurants, an improved cinema and new office space.

12. It is in this context that the Commissioners believe there is scope and space for more traditional market type activities, such as the specialist food market or farmers market, together with scope for community activities which is an aspiration very much supported by Cornwall County Council in a recent urban survey conducted on their behalf, which recognises the potential for additional uses of the Market House and the part the building can play generally in the area. In addition, the local authority, Restormel Borough Council, fully supports these proposals to widen the use of the Market House as do other members of the local community which I will be mentioning later.

13. However, under the limited powers of the 1842 Act, which I will now be turning to, it has not been possible to obtain sufficient finances, both to maintain the building and also develop and expand the functions of the Market House and neither are there the legal powers to do so.

14. If I could turn now, my Lord, to briefly mention some of the key provisions of the 1842 Act from which the powers of the Commissioners to run the Market House derive and which we consider to be limiting. It is in this context that the preamble to the Bill alleges that the 1842 Act is outdated and restrictive in scope and that in order to secure the preservation of the Market House, the financial viability of the market and the management of the Market House and the market to the best advantage the undertaking of the Commissioners should be transferred to a CIC with commensurate objectives.

15. The first point I would wish to draw to the Committee's attention in terms of the restrictive provisions of the 1842 Act which restrict the undertaking from being managed to the best advantage comes from section one. It is a point relating to governance and leadership.

 

16. The Act does not establish the Commissioners as a body corporate with a separate legal identity. I have referred to the Commissioners as an association and that their position is akin to that of trustees. For example, there is no provision for a Chairman and committees of Commissioners can only be established for up to one year only. Being an association of individual Commissioners makes it difficult for the market to be run under proper leadership or direction in accordance with modern day principles of governance and leadership. It is considered that establishing a body corporate to run the market, under what is hoped will be a directorship which will eventually be widened out to include members of the community, in addition to the Commissioners, that should provide a modern management structure within which the market can be run with sufficient leadership and direction. My Lord, that is the first point in relation to governance and leadership.

17. The second point comes from Section 45, which provides that the Commissioners can borrow on the collateral of the rents et cetera they receive. However, the amount borrowed at any one time cannot exceed 6,000 and that is still the limit today. In addition to 6,000 not in itself being a large amount of money these days, the further difficulty is that 6,000 was borrowed at the time when the Market House was built by way of 60 loan notes of 100 each which have not been paid off and on which the Commissioners continue to pay the interest. Attempts have been made to pay these off but difficulties and differences have arisen in relation to the value of these loan notes, therefore the position remains today that they have not been repaid and therefore the Commissioners are currently unable to borrow any money at all from anyone to secure improvements to and development of the Market House. A schedule of these improvements has been drawn up to ensure the preservation of the building with the intention that they should be funded by a combination of income, grants and loans if what we are proposing is permitted to proceed.

18. I should add that the status quo so far as the loan notes themselves are concerned is maintained by the Bill in that they would become a liability transferred to the CIC, although I do know the Commissioners want to have another look at whether in fact they can finally repay these instruments.

19. Thirdly, my Lord, Section 129. That provides that the Commissioners are only entitled to build, maintain and improve one or more market place or places on the land purchased under the Act. As I have mentioned, the Commissioners do now see very much a prospect and purpose for the Market House encompassing other community activities as well, which are fully supported by the local community. Given that under the Act the Commissioners are limited to holding a market within the Market House, that would not be permitted either.

20. Fourthly, my Lord, Section 144. Under Section 144 the Commissioners are limited to charging rents and tolls, as the Act puts it, for the items mentioned in Schedule F to the Act and then limited to the maximum amount specified in that Schedule, which is around about two shillings. In reality, agreements have been reached for the Commissioners to charge different rents but even so at a relatively low rate based on the area of the stall, its frontage and place within the market. You will appreciate immediately that the legal basis for doing so is clearly not as satisfactory as it might be.

21. The fifth provision, my Lord, is Section 160. Under that provision the Commissioners are restricted to leasing any stalls, standing places, benches or other conveniences in the market place to a maximum of three years. This limits the flexibility that the Commissioners have in running the market and is one element of making it financially vulnerable. In reality, at the moment most of the stalls are rented on a weekly basis with no fixed-term leases or proper legal documentation and income is collected each week, which can vary from week to week. The Commissioners have experienced very recently cases of people taking space in the Market House and then for unexplained reasons vacating it pretty quickly afterwards to do obviously with fluctuation in the market and their market and that is clearly a situation the Commissioners would wish to rectify.

22. As part of that they are now looking at the possibility of having a number of anchor stalls which would attract customers, but at the moment the inability to have tenants on leases of more than three years they believe has acted as a disincentive to invest in the market.

23. My Lord, one further specific provision, Sections 169 and 170. Those sections provide that any profits arising from the Market House in essence must be applied in aid of the rates of the parish of St. Austell. We looked into this and following correspondence with Restormel Borough Council, the local authority, it is common ground that there never has been, until now, a body which is the parish of St. Austell. There is no parish council, although that position will be changing shortly. Therefore, we believe the Act is referring to those inhabitants which live within the physical boundary of the then parish of St. Austell. Therefore, in the meantime we think it would be the borough council as a local authority for the area who would be entitled to enforce the provision. In our view, it is clearly unsatisfactory to have a situation where if the Market House makes profits in law those profits should be remitted to the borough council. Indeed, the borough council are very supportive of the wish to repeal this provision. They were served with the requisite notice under Standing Order 19 informing them of the intended repeal of this provision and their ability to petition against the Bill. They have not done so and, in fact, they very much welcome the Bill and the Commissioners' proposals for the Market House in this respect and more generally.

24. There are other remaining provisions of the Act which, whilst they might have been appropriate in Victorian times to regulate a market and market undertaking, for example the holding of specific pig and cattle markets and the weighing of carts and carriages, nowadays we feel it is inappropriate because certainly public general legislation, such as weights and measures and food hygiene, can certainly deal with those matters as it does elsewhere in the country, together with the regulatory framework for CIC more generally.

25. In summary, therefore, my Lord, on this point of the Act, we feel that in order to be able to run the market as the Commissioners would wish as a commercial undertaking with a modern management structure, with better borrowing powers and the ability to provide long-term fixed leases, the 1842 Act needs to be repealed. As you will be aware, this can only be done by a private Bill.

26. My Lord, turning briefly to the St. Austell Market House CIC and CICs more generally, clearly the question arises, having as I hope demonstrated that the 1842 Act is inadequate and that the undertaking needs to be run under a different type of structure, what is the best type of structure that should replace it. This has been given a lot of thought by the Commissioners. The Community Interest Company structure was chosen by them last year as it is a structure which has been specifically and recently designed by Government for social enterprises which want to use their assets and any resulting profits for the public good.

27. The Commissioners are mindful that they do hold the Market House on trust for the people of St. Austell, so they must preserve the market's assets and protect them from misuse or dispersal.

28. CICs are a relatively new form of company and their essential feature is that the company's activities must be for the benefit of the community rather than for the individuals who own, run or work in them. The legislation providing for their creation is the Companies (Audit, Investigations and Community Enterprise) Act 2004. By March 2007 over 850 CICs had been formed, which I think indicates how popular they have been. The legislation establishes this specific and independent regulator for CICs appointed by the Secretary of State whose role is, amongst other things, to make sure that CICs meet their obligations, both to the law and to their community and to take enforcement action where serious infringements occur, for example the CIC is not working in the interest of the community or the asset lock provisions, which I will mention in a moment, are not being observed. The CIC is seen as significant in really facilitating the development and expansion of community orientated activities and a very much welcomed additional legal form for social enterprises adding to what is already available.

29. It is worth pointing out to the Committee, my Lord, that before you can be registered as a CIC the application documents must satisfy the Regulator that it passes the "community interest test". A company does so if a reasonable person might consider that its proposed activities are carried on for the benefit of a defined community, in this case obviously the community of St. Austell rather than the company's directors, employees or service providers. Importantly, the CIC must then continue to satisfy the community interest test for as long as it remains a CIC by publishing, together with its annual accounts, a community interest company report which shows what it is doing is still very much in the interest of the community.

30. In this case, the CIC was registered on 30 April 2007 in anticipation of the promotion of this Bill. There are currently four directors who are all currently Commissioners. As I mentioned earlier, it is anticipated in due course that the directorship will be widened to the broader St. Austell community.

31. In registering the CIC the regulator has shown her satisfaction that the community interest test has been met, and the activities of the CIC were identified by the relevant Community Interest Statement as benefiting the community of St. Austell in four ways. I think it would be helpful to briefly mention those:

32. First: Enabling continued trading at the heart of the town centre, ensuring support for local employment;

33. Second: Enhancement of the community spirit of the town by making the Market House available for community based activities;

34. Third: Protecting and strengthening the heritage of the building and developing museum-like facilities appropriate to the Market House's listed building status and its place in the town centre's historic core; and

35. Fourth: Reinvesting any surplus from the trading activities of the company in the Market House.

36. My Lord, a fundamental feature of CICs is the statutory "asset lock", which is a general term used to cover all of the articles of association of the CIC designed to make sure that the assets of the company, including any profits or other surpluses, are either permanently retained within the CIC and used for community purposes or if they are transferred out of the CIC, they are only done so in accordance with strict conditions and under the supervision of the regulator. Therefore, our view is that these asset lock provisions provide the confidence which we recognise needs to be provided for the assets of the CIC and profits will be devoted to the benefit of the community rather than rewarding the owners or investors and the regulator will be responsible for making sure that the asset lock is maintained. Any member of the community can ask the regulator to look into any alleged infringement which may be felt to exist.

37. The objects of this CIC, which are set out in its memorandum of association are: "... to carry on activities which benefit the community and, in particular, to ensure continued trading activity in and around the Market House building, enhance the community interest of the building and increase awareness of the building's heritage commensurate with Grade II* listed status". The memorandum goes on to provide that the Market House CIC can do anything else which is incidental or conducive to the furtherance of that object. We feel that there are six key things that the CIC structure will allow the company to do:

38. First: It will be able to borrow, as appropriate, to secure improvements;

39. Secondly: It will be able to let parts of the Market House out for terms that are longer than three years where appropriate;

40. Thirdly: It will allow the company to develop the use of the Market House to hold non-market type events which are of a social and community nature;

41. Fourthly: It will allow the company to run the market undertaking under a more appropriate and modern structure than the current association of Commissioners;

42. Fifthly: It will allow the directorship to widen to include, either as executive or non-executive directors, members from the wider community whose skills and expertise could help in developing the facilities and use of the market, maintaining the building structure; and

43. Finally, but not least, charge rents at appropriate commercial levels.

44. My Lord, there are two other small matters, albeit important ones to mention if I may. Consultation: in June 2007 the Commissioners carried out a local consultation exercise on its proposals, including the proposed Bill and a draft Bill was made available at the time. The proposals met with a very positive response from the local community, including Restormel Borough Council, as I mentioned earlier. English Heritage fully support the project as the proposals were to secure a sustainable future with an improved community role for a Grade II* listed building. The South West of England RDA also supported the proposals as it was firmly committed to the regeneration of the area in St. Austell and hoped that the proposals would act as a catalyst for private sector investment in that part of town. The Cornwall Heritage Trust gave support to any move that would be to the advantage of the people of St. Austell as long as the historic building is preserved. The St. Austell Brewery was unequivocal in its support for the proposals and finally Matthew Taylor MP was enthusiastic in his support for the proposals and, in particular, was keen to see the Market House's potential realised through a variety of uses, especially for support of local produce and local community groups. It is also the fact that no petition has been deposited against the Bill in your House or indeed in the other place.

45. The human rights aspect: Of course we have addressed these and, as you will know, the Promoters are required to make a statement of compatibility with the European Convention on Human Rights. The relevant Minister is then required to report on this and quite separately the Joint Committee may also consider the position.

46. The Commissioners' statement can be found on the Explanatory Memorandum in the usual terms. Gareth Thomas, Parliamentary Under-Secretary of State for the Department for Business, Enterprise and Regulatory Reform, reported on 8 February this year that he saw no reason to dispute the Commissioners' conclusions. There is no other Government report on the Bill that I am aware of.

47. In summary, my Lord and other members of the Committee, perhaps I can conclude by saying these words. In essence, the Commissioners wish to preserve, maintain and improve the Grade II* Market House. They wish to widen activities being carried out there to include community activities as well as trading activities. They want to run the Market House under a more modern corporate structure. They want to be able to borrow more appropriately to fund improvement works to the building and the regeneration of the market. They want to be able to attract "anchor" tenants by being able to offer leases for longer than three years in combination with more short-term ones so ensuring diversity of offering in the Market House. They wish to charge rents for the use of the market facilities without being found to be acting ultra vires of the 1842 Act.

48. They are prevented from doing the majority of these activities, if not all of them, due to restrictions imposed on them by an Act of Parliament passed 166 years ago. Therefore, they are asking Parliament to repeal that Act and to allow them to transfer their undertaking to a Community Interest Company, which they submit is the appropriate recipient. For these purposes it is necessary for a private Bill to be enacted.

49. In conclusion, we therefore submit on behalf of the Commissioners that the Bill is considered to be in the public interest and it is therefore expedient that it should be enacted. Therefore, we ask that the Committee allows it to proceed today.

50. My Lord, you may have some questions for me. I ought to say, before you do, that there are no amendments proposed to the Bill, as the filled up Bill, as it is still called, confirms, if you would like me to take you through some or all of the clauses of the Bill, of course I would be very happy to do so.

51. CHAIRMAN: Mr Owen, thank you very much indeed. I think I am happy as far as the Bill is concerned and, indeed, the fact that there are no amendments. The Bill has been through the House of Commons without any opposition.

52. MR OWEN: That is right, my Lord, there is no opposition at all.

53. CHAIRMAN: It is not being opposed in this House and there are no Petitioners against it.

54. MR OWEN: That is right.

55. CHAIRMAN: If anybody was going to petition against it, it could be the tenants and they are not worried about what is going on as far as their situation is concerned.

56. MR OWEN: I know of no concerns from the tenants and, indeed, I am told that they are supportive of the proposals. If it would help I could ask one of the representatives to confirm that, if your Lordship would wish that.

57. CHAIRMAN: I think that would be an interesting thing to hear.

58. MR OWEN: Perhaps Mr Ward would help on that.

59. MR WARD: The tenants have been involved in the discussions about the future of the Market House. They are obviously concerned at the moment because the conditions in the market area are fairly poor. The Commissioners find themselves in a position where they have an extremely valuable building.

60. CHAIRMAN: I was going to ask about that. The photographs are very interesting. It is a very fine looking building as well. How many tenants are there in it?

61. MR WARD: There are 20 independent businesses within the building.

62. CHAIRMAN: In independent stalls, as it were?

63. MR WARD: Yes. The conditions are not that special. What the Commissioners set out to achieve was a Market House which would be of a good condition and really reflect the quality of the building and improve the conditions for the traders generally. The traders recognise that there is bound to be disturbance in that process, but the Commissioners did employ consultants when we were working with the Heritage Lottery Fund. They awarded a project planning grant and that was one of the things that came out of their conservation management plan. As and when we are able to proceed with the regeneration, then we will have to try and build into the whole process some way of creating temporary accommodation for the existing businesses around the town whilst the regeneration process continues in the Market House. It does give us the scope to have almost a blank sheet of paper and refurbish the Market House as we would wish for modern conditions.

64. CHAIRMAN: You said a moment ago that it was an extremely valuable building. What I am not quite clear about, maybe it is me, is who owns it now?

65. MR WARD: If I may, I think that is probably Mr Bailey's responsibility.

66. MR BAILEY: The title to the building is registered at the Land Registry in the name of four of the market Commissioners as trustees. When it was bought in 1980, because they have occupied it since the 1840s, for various reasons that I will not go into, it did not come into the actual ownership of the Commissioners until 1980. At one stage I think there were 16 Commissioners listed. I regret to say, about two-thirds of those have died, so we have just got four of the remaining ones and we registered the title of the market Commissioners at that stage as trustees.

67. CHAIRMAN: This is one of the complications which can take place over a century and a half, things like this. I was interested to hear Mr Owen say that, in fact, you are borrowed up to the hilt, the six loan notes to the 6,000 which are presumably held by the heirs and successors to the original borrowers.

68. MR BAILEY: That is correct, Sir.

69. CHAIRMAN: Is there a rate of interest on those loan notes?

70. MR WARD: Five per cent.

71. CHAIRMAN: You have been paying that duly to the current holders?

72. MR BAILEY: Yes, my Lord.

73. CHAIRMAN: They would not claim or be able to claim any ownership, would they?

74. MR BAILEY: My understanding of it is no, they cannot. I have to say, there has always been an air of mystery about the bonds.

75. CHAIRMAN: I dare say!

76. MR BAILEY: The main reason why it has not been paid off before now, because they could afford to do it, was because there was a mistaken belief, which came from goodness knows where, that you could not pay off some of the bonds without paying all of them off at the same time. When I became the clerk I suggested that was not correct, that was a misunderstanding and they should try and do something about it. It has always been left in the balance to sort out one day because their powers are so limited to do anything in the modern world and whatever. I think the "whatever" is coming now. The answer is I believe the market Commissioners will want to pay it off and I believe they can do so.

77. CHAIRMAN: What I am really getting at, and I think for one thing you have not had a petition against the Bill by any of the land note holders, so I think one can assume they would not claim to own it.

78. MR BAILEY: No, they cannot. They are simply rather legal sort of IOUs with money earning interest.

79. MR ROBERTS: One supplementary to that. I can see that is probably a murky and unclear situation, but so far as anybody thinks they might have a claim, is it your understanding that under Clause 6 that bond would simply pass and therefore the position, whatever it is, vis vis the Commissioners at the moment, will be exactly the same against the community interest company for the future.

80. MR OWEN: I can confirm that it will be exactly the same with no change at all.

81. CHAIRMAN: They might have petitioned presumably by now already if they had felt it was not yours to dispose of, so to speak. As I said, there are no Petitions and no opposition to the Bill, so I think we can give it a fair wind. Therefore, if I could ask you to move to the formal part of the proceedings and prove the preamble.

82. MR OWEN: Thank you, my Lord. The preamble will be approved by Mr Bailey. If I could ask him first to take the oath, please.

 

MR ROBIN CHARLES BAILEY, Sworn

Examined by MR ROBBIE OWEN

83. MR OWEN: Are you Robin Charles Bailey?

(Mr Bailey): I am.

84. Are you the clerk to the Commissioners of St. Austell Markets and Fairs?

(Mr Bailey) I am.

85. Do you hold the responsibility for the promotion of the Bill on behalf of the Commissioners of St. Austell Markets and Fairs?

(Mr Bailey) I do.

86. Have you read the preamble to the Bill?

(Mr Bailey) I have.

87. Is it true?

(Mr Bailey) It is true.

 

The witness withdrew

88. CHAIRMAN: Thank you very much. That concludes our proceedings and I will report the Bill to the House. We will have a formal Third Reading if I am not very much mistaken in the not too distant future and then you will be able to proceed.

89. MR OWEN: Thank you, my Lord and members of the Committee.

90. MR SCOTT: On behalf of the Commissioners, as the eldest and oldest most miserable man, thank you very much for your support! I will convey that to the other Commissioners as well.

91. CHAIRMAN: It is very good of you to come up here to London.

92. MR SCOTT: Thank you very much and thank you for your hospitality.

93. CHAIRMAN: Thank you.