Examination of witnesses (Questions 280-302)
WEDNESDAY 14 MARCH 2001
MR RICHARD ADAMS, MR DAVID BUTCHER, DR JOHN MANN AND MR MICHAEL CULVERWELL
280. But there is still room for growth in your markets, is there?
(Mr Butcher) Yes, there is. We have one merchant who is in the process of building a stand-alone storage unit. He has got his planning consent and so on and he is in the final stages of that enterprise, with some EU grant money. But there is a limited amount of space within our site. We are becoming increasingly under pressure from the surrounding developments at Canary Wharf and the residential developments in the area.
281. Even though that space is contracting and there is more pressure on space, you would still object to traders being given licences to trade at Covent Garden?
(Mr Butcher) It is inevitable that people will wish to take up business where the customers are going to appear. Mr Jack asked me a question about the commodities sold at Billingsgate and we already have, in a way, a one-stop shop for fishmongers or people in the fish trade. So for me to say that catering should not go down that line would be inconsistent because caterers would also like to take the opportunity of buying his products in the most convenient location that he can. If he does not buy it from us, he will go to one of the commercial traders based on Purley Way, the Chinese emporium there, Win Yip. He can buy most of his supplies there. So there are facilities elsewhere in competition with markets and what the markets have to do is to try and meet that competition in a similar way. That is what the fish trade tried to do in Billingsgate years ago with its poultry and its potatoes and so on and probably that would seem to be where Covent Garden wishes to go now.
282. On the other hand, this kind of objection is likely to hinder an economically orientated market system?
(Mr Butcher) We have merchants in Billingsgate that I am aware of who would like to trade in other places as well. They will do so and there is nothing that we can say that will stop them. They want the opportunity to do that. If they decide to take up residence in a one-stop market, then that is what they will do.
283. Let us look at location. The chairman of Covent Garden Market Authority told the Committee that "the great advantage we have is the location of the Market". You have moved Billingsgate and Spitalfields markets away from their original sites in central London. You would say that the main argument for that was to get away from the congestion in the sense of access.
(Mr Adams) The site is bigger as well, but there is also the off-highway servicing and so on.
284. You have emphasised the problem of congestion at Smithfield. The chairman of Covent Garden told us that the introduction of congestion charging could result in a total cost to the market being between £5 million and £10 million a year. Have you carried out any estimates on the impact of congestion charging on your markets?
(Dr Mann) Not in any detail.
285. Are you gearing up to do that? The chairman of Covent Garden became quite agitated about it.
(Mr Adams) The chairman of Covent Garden said that he had the problem of having to start spending £20 million. Clearly, one must take account of that before embarking on such an enterprise. We are in the unfortunate position of having started our journey. We have spent the money and, therefore, we are stuck where we are.
286. Let me turn to Dr Mann as I did not follow the final series of questions. You said something interesting, Dr Mann. We are back on the old subject of how you responded to the application to diversify Covent Garden. You said that either you wait until you have a plan or you go to court and fight it out. I hope I am not misrepresenting what you said. That is what I interpreted you as saying. Mr Adams is nodding. At least he thinks that is what you said. Would you like to amplify that? What is the plan?
(Dr Mann) All I am saying is that we all know that if we are to give best value in this part of the world, what is needed is for someone to sit down, analyse what is needed, analyse what we have and to decide how best to rationalise those facilities. That would take some time.
287. Let us be clear about this. You have said that Spitalfields works well. It is relatively way out of the centre of town; it has good communications which is why you moved it out there; and people like it. So Spitalfields is a successful market. Mr Butcher has said that Billingsgate is successful, although it is closer in.
(Dr Mann) But it is coming under pressure.
288. Yes, he made the point that is coming under pressure. We all agree that Smithfield has a serious problem because trying to move it out would be too complicated. At the end of the day, you are condemned to try to improve it on site, but you have to respect the planning rules and the hygiene rules which means that you have had to spend a King's ransom on it and it is not paying you back. In a sense, it may never be able to pay you back, simply because of the problems that it has. Then you are talking about some vague scheme of someone having a look at it at some time.
(Dr Mann) You misunderstand me. In my view, the corporation is quite happy to run its existing markets in the circumstances in which we find ourselves. If New Covent Garden is to change its stance and become a one-stop shop for caterers, an area in which we are all developing and growing, that will disturb what may be an equilibrium. In those circumstances we would say that before doing that we should look at what is needed and do it all together. If you do not do that, and if Covent Garden develops on its own, that may damage the other markets beyond repair.
289. Do you regard the application that we have been discussing, to which the Minister has given a qualified consent, one could say, as having moved over that frontier?
(Dr Mann) Yes.
290. Or are there other factors?
(Dr Mann) I think it is already moving over the frontier because I am sure that no one in this room believes in this non-face-to-face selling.
291. If we have moved over the frontier, therefore the condition that you set down for the need to have an overview is fulfilled.
(Dr Mann) It could be too late for the overview. Already it could be too late.
292. You say that it could be too late now?
(Dr Mann) It could be too late now. If Covent Garden goes ahead with what is planned it could already be too late.
293. But a year ago you were suggesting to the Minister that it may be a good idea to have an overview, providing it was sponsored, as it were, by someone with sufficient money to pay for it, but now you say it may be too late in any case.
(Dr Mann) It may be too late now. It depends on what happens at Covent Garden.
294. Where does that leave us?
(Mr Adams) The rule concerning six and two-third miles was because one market could become a nuisance to another. We all know that nuisance can be a bee buzzing around your head, but that does not mean you start litigation because the man next door keeps bees. We are saying that it becomes a nuisance when we decide to say, "Enough is enough, we are going to court to try to stop it". The fact that someone has started on the journey
295. Dr Mann has just told me that they thought that they were already over that frontier. Are you saying that you are not over the frontier?
(Mr Adams) He said it is possible.
(Dr Mann) If it continues as it is, we are over the frontier. If as a result of your investigations Covent Garden does not go ahead, as it is planning, and we stop and think where best to go, then it is not too late. That is the point of these meetings, is it not?
Chairman: The point of the meeting is to try to get clarification, but I am getting more and more confused as this meeting goes on.
296. Can you think of any other country in the world where this sort of muddled, incremental, ad hoc decision-making, without any proper strategic grasp, would take place? I cannot imagine that any country that I have visited would tolerate such a situation. I see a few smiles which probably indicate that I am right.
(Mr Adams) I was just thinking of the countries that I have visited. Places like Argentina, which is not renowned for being part of the first world, would not put up with this. They would think more strategically. Perhaps it comes with free enterprise.
297. It is the English disease of having big decisions creep up on you and suddenly they leap on you so that you make a sub-optimal judgment at the end. This looks like that.
(Mr Adams) When big decisions are taken, for example, in France, someone like the Government is required to provide the resources to take that big decision.
298. Perhaps I can conclude by asking you to make a statement about the criteria that determine the Corporation's continued wish, or objectives, to carry on in the business of running markets. I think, Mr Adams, on a number of occasions in your commentary, you said that it was providing a service to London, that you have been doing it for a thousand years and that you have a long and proud tradition of the facilities being within the responsibility, if not physically within the City of London. You also said about Smithfield that you were something like £7 million down in terms of difference between costs and receipts. New Covent Garden has a statutory financial framework defined for it which basically says, "We've got to run a market and break even, taking one year with another". I hope that I have paraphrased that correctly. What criteria drives the City in the context of its market operation? Do you have a business plan that says that you have to make such a rate of return over such a period, or is it more general?
(Mr Adams) It is more general.
299. Could you elucidate that so that I understand what the guiding principles are when the market committee meets to decide its future?
(Mr Adams) It is not the market committees that would decide. It was the Policy and Resources Committee and/or the Court of Common Council itself that decided, or endorsed the proposal to spend £75 million. The corporation does not often give reasons, like many things, for why it has done something. It believes that it was right to do it and said, "Yes, we are prepared to spend that money and, as it happens, we can find the money". To show that we are not just a bottomless pit, at the moment, for instance, at Billingsgate we have had requests for extra facilities to be provided and we have said, "No, we are not prepared to spend that money at the present time because we do not think it is financially justifiable", and as it happens we still have a disputea friendly discussiontaking place with Tower Hamlets to ensure that the site is under our control if we want to spend further money improving that market. At the moment there is split ownership at Billingsgate. The corporation does not have restrictions that it has to break even. If it did, Smithfield would just have run into the ground and the Minister would have stopped it some time ago on the grounds that it did not meet the hygiene requirements. While it can, the corporation has continued to comply with the law and say that it is a service that we are providing and it is not corporation policy to provide substandard services. Therefore, I do not know how many other markets in the country, meet the current European and UK hygiene standards; I suspect that a lot of them do not and I suspect that a lot in Europe do not. However, the corporation has said that it will make the markets come up to those standards. It costs us a lot of money and at the moment it is part of the philosophy of the corporation. It is prepared to provide that facility.
300. I have a concluding point for clarification. I think Dr Mann has said that it may not be too late. Would the Corporation agree that it is not too late for us to pursue the investigation and seek to establish the strategic perspective on the provision of markets with their diverse facilities in London?
(Mr Adams) No. As long as the position at Covent Garden is not, in our view, made worse by granting consent that would change the status. We have objected to the destination that Covent Garden is going to; we have not objected to them taking the first step. If they start making it clear that they are going down that route, at some point we shall say that we do not like it. We may be forced into the position of taking on the market authority and/or the Government through the courts, as being the only body that could protect our interest.
301. I am sorry to appear like Banquo's ghost at the end of this session to make judgments on what you have been discussing. You may have covered this in detail already, but clearly there is a need to get proper consultation among all the different parties. What discussions have you had with the Greater London Authority and the Mayor, in particular, to look at this as a localised problem? I accept that there is a wider strategic issue that no one has addressed, but I am interested in the narrow London focus. What discussions have you had with the Mayor?
(Mr Adams) The answer is none. The markets that we run serve an area that is larger than Greater London. Fish comes from all round the country and so we believe that it requires someone bigger than the Mayor or the GLA to look at the matter, if someone is to do that.
302. They could do some serious damage to you with congestion charges and so on.
(Mr Adams) They can join the queue. So many people can influence the financial viability of our markets rather than us. They are just one.
Chairman: Gentlemen, thank you very much indeed. I was going to say that this has been an illuminating session, but I shall choose my words slightly carefully. It has been a very singular session. Thank you very much.