Examination of witnesses (Questions 120
THURSDAY 7 MARCH 2001
QUIN and MR
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
(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.
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.
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
(Ms Quin) It is interesting that you say within two
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
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.
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
(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.
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
init is a competition in which it is doing quite welland
therefore sustaining that to build it up to a better purchase
(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.
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
(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
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
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