THURSDAY 8 FEBRUARY 2001 _________ Members present: Mr David Curry, in the Chair Mr David Drew Mr Michael Jack Mr Austin Mitchell Mr Lembit pik Mr Mark Todd Dr George Turner _________ MEMORANDUM SUBMITTED BY MAFF EXAMINATION OF WITNESSES THE RT HON JOYCE QUIN, a Member of the House, Minister of State, and MR IVOR Llewelyn, Head of Horticulture & Potatoes, MAFF, examined. Chairman 111. Minister, welcome once again. You are becoming our most faithful recidivist, but we are pleased to see you. If you did not know, I will tell you, you have the serried ranks of the Covent Garden Market Authority traders sitting behind you. As you know, we are conducting a brief investigation into the future of the market. Some of us went there yesterday to look around and have breakfast, and I declare an interest in that my daughter, as a garden designer, goes to Covent Garden regularly as a customer. Would you agree that the market urgently needs investment for modernisation? (Ms Quin) Certainly the infrastructure of the market is somewhat dated, and therefore I think it is important for discussions to take place between the management and board of the market and ourselves on how best to move forward in future to ensure that the market can survive and flourish. 112. How does it raise the money? (Ms Quin) That is something that we are discussing with the market at the present time, and we hope that some specific proposals will be put forward which we can examine with them. 113. Is it true to say that, whatever discussions you have and whatever conclusions you reach, those conclusions could not be implemented without legislation? The market cannot use its own surplus without a change in the law, because at the moment the Treasury takes it; it cannot borrow against it for the same reason; and it cannot be privatised - we will come on to what we mean by that later - without legislation. So what can the market do without legislation? I will turn the question round: is there anything the market can do without legislation? (Ms Quin) I think it can borrow without legislation, but even if it is involved in a borrowing arrangement, it still comes within the limits of MAFF's capital receipts, and it is fair to say that is something of a constraint because obviously the Ministry has to look at its overall budget with regard to its own capital ceilings. 114. I realise the situation has appertained for a long time, and I am not wishing to attribute this to the omissions of any particular government, but it is true, is it not, that the market is imprisoned in a sense by its constitutional relationship with the government, and that unless there is a change in that, there is no serious option available for it to take itself forward? (Ms Quin) Firstly, I think the market is certainly constrained by the way it is set up and the way it has to operate on a year on year basis, although I feel that the present Government, the present Minister, has at least by his statement in 1999 about his policy for the future of the market, allowed a greater degree of certainty about the future. That statement certainly allowed the renewal and renegotiation of leases to take place, and gave the market the feeling that there was a commitment by the Government for the market to continue as a going concern. I note that in evidence submitted to the Committee that has been welcomed by everyone. However, in terms of the large-scale financial investment for the future, there are constraints, which is why the Minister's policy is to try and sell the market as a going concern. That does depend on legislation and a legislative slot being found in the Government's programme. 115. My final question is precisely about that. There is going to be a General Election shortly. Whichever government emerges from that will want to fulfil its manifesto commitments, so it is difficult to see how a government might wish to devote legislative time to an issue which it will see as not being central to the purposes for which it was elected. When you have your discussions, what sort of assurances do you think you might be able to give in the perspective of your party winning an election that this issue would be addressed with sufficient urgency, so that the market might feel that the Minister's promise to sell the market or reassurance to the market would be backed up by the necessary action to give substance to it? (Ms Quin) It is a high priority within the Department. Obviously, as everyone here knows, the Department's bids for legislation have to be taken alongside the bids from all the other departments and government priorities decided as a result. But certainly it remains a priority for the Department for the reasons that I have briefly alluded to. We recognise very much local feelings about this issue - and I mean local feelings in terms of the views of the people running the market itself, and indeed the views of the surrounding area and of Wandsworth Council and so on - and they very much welcome the fact that we have said that any sale of the market should be as a going concern, but we are also aware that the market, and indeed the borough, are keen to see the market flourish and have the possibility of expansion for the future, and therefore we do have a responsibility to try and respond to the concerns about the financial constraints which you have referred to. That does mean that we have to give a priority to this issue. Mr Mitchell 116. I do not think there can be any doubt that it will be Labour that will be taking this decision, contrary to what the Chairman infers, but we are in a mess, are we not? Here you are in a Treasury trap, the market cannot raise money to invest, you cannot sell it without legislation - selling it is in a sense a way of abdicating responsibility for it - and you could not sell it as a going concern unless there was some investment to re-vivify and update it, otherwise you will get a knock-down, rock-bottom price. (Ms Quin) I do not accept that we are in a mess. 117. Do you find it difficult to take decisions in this area because of the constraints on you? (Ms Quin) I do not believe that the Minister found it difficult to make the decision that he did, which was a change of policy, in other words, to say that he wanted to sell the market as a going concern. He did that very much on the basis of consultation with all the interested parties, and felt that was something that he could do without going down the legislative route, at least to give the market a sense of stability, a sense of assurance, while saying at the same time that we would look through legislation to provide a better framework for the market for the future and allow some of the financial constraints, hopefully, to disappear. Nothing is ideal. I do not think any of us would regard running a market as a core responsibility of the Ministry of Agriculture, but at the same time the current Minister has responded to the representations that were made to him, sensible representations, and is keen to explore with the Authority both the way forward in terms of the immediate future, and also the way forward in terms of legislation. 118. One can argue about what is a core responsibility, but you have got it, and having got it, you have to make the best of it. Given the fact that there is going to be a substantial delay in passing legislation to sell it, there is a major need to renovate and update. The market has not been modernised, it has an investment backlog, it has problems which need money, and it just cannot be left to go on like that until some distant sale date. (Ms Quin) I do not believe that we are just leaving it to go on like that. I think we need to, as we are, work with the Market Authority in looking at both the immediate future and the medium term. I also do not believe that the prospects for legislation are remote. I think it is possible to bring legislation forward at an early stage, but what I cannot do today, for very obvious reasons, is give an absolute guarantee of when legislation could come forward. It is also possible to look at ways of making a start on some of the works that the Authority is keen to carry out, but that does depend - and I know this is something the Authority itself is working on - on quite a detailed, costed programme, which we do not yet have, and looking at ways, within the financial constraints, of at least beginning the process, which I fully accept is important to the market. It is also fair to say that the market has identified already a number of ways of bringing new trade on to the site, and this, of course, was very well outlined to you in the evidence session from the Chairman himself. Chairman 119. Could I interrupt on a point of clarification? Is legislation needed to enable the market to retain its own surplus? Would you agree within discussions in government, without legislation, to permit it to retain its own surplus? (Ms Quin) It is my understanding that that relates to the formula which has been agreed with the Treasury. It would be possible, I believe, to change that without legislation. 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 decision. (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. Mr Jack 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. Mr Mitchell 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 like that. (Ms Quin) It is interesting that you say within two years. 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 opportunities. Chairman 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. Mr Mitchell 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 proposition? (Ms Quin) I very much followed 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. Chairman 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. Mr Mitchell 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 in - it is a competition in which it is doing quite well - and therefore sustaining that to build it up to a better purchase price eventually? (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. Mr Todd 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 been taken. (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 concern. 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 Borough Council. 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 would 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 of it. 140. It is bizarre sequencing, to be honest, because the precise planning brief on this site will certainly have a material effect on its value. If you are going to persuade the rest of the Government to give you a legislative slot, I would have thought that people would be interested in the value you are likely to achieve by its sale, because they might be prepared to consider the appropriate use of parliamentary time. If you have not done that first stage, it would be rather speculative. We have already had the speculation as to how much or how little you might get for that site as a going concern. I would have thought that, to strengthen your arguments with the Treasury and others, you would at least need a better basis of information on this. I am rather startled it has not happened. (Ms Quin) There certainly has not been a rejection by other departments of government of the need for the legislation. There has simply been a debate about the prioritisation of the Government's timetable. There has not been resistance to the idea of the legislation in itself. 141. Can I move on to the discussion of capital investment on the site. When was the last time that the Authority submitted a programme of capital investment to MAFF? (Ms Quin) We are awaiting details of what the Authority is proposing to do in terms of capital investment. 142. Yes, I understand that, because you said that earlier, but when was the last time they actually put in a programme of capital investment? I know they are due to do another one. (Ms Quin) They have not. 143. They have never submitted a programme of capital investment on the site? Is that right? (Mr Llewelyn) No, not that I am aware of. There was obviously a major programme of capital investment when they moved to Nine Elms. 144. That was 25 years ago. This is the typical British approach. "We have thrown a lot of money at this. Now let's see the place crumble before we do anything about it." Is that roughly the characterisation? (Ms Quin) It is certainly not my approach to it. 145. But the Authority appear to have followed that path. (Ms Quin) I do not believe it is the Authority's approach either. Obviously, in recent years the Authority has had to look at various options for the future, both in terms of diversification and in terms of improvements to the site. I have to say, there was a great deal of uncertainty in the market as a result of the previous Government's policy of selling the site completely. If you have that threat hanging over you, you are not going to be producing a lot of programmes of capital investment, and while I am not aware of a programme coming forward during my time as Minister, and therefore it is rather difficult for me personally to answer your question, nonetheless, I assume that the reason why there was not such a programme was because the future of the market as a whole was so uncertain, and it is very difficult to plan for the future in those circumstances. 146. The answer to my next question, which is "What is the process of approval of capital investments?" is presumably, "We have not had one yet so we will have to work that one out." What is the process that will follow when they eventually do put together a programme? (Ms Quin) We need to look at the overall costs of that, how that fits within MAFF's own capital ceilings, and if it does not fit within MAFF's capital ceilings, what negotiations we then need to pursue - and as Ivor Llewelyn has said, we have already had contacts about this - in terms of the financing formula for the market, and also in terms of the likely timetable of legislation. 147. The Authority has said that it sees its difficulty in embarking on a programme of capital investment as a major problem. One would have to turn that back to the Authority and say if a bid has not been made, it is certainly a major area in which they need to scrutinise their own behaviour. It certainly appears to be a substantial problem in their perception. (Ms Quin) I have to say I think you are being rather uncharitable towards them, simply because I feel strongly that, given the fact that the previous policy was to sell the site entirely for possible wholesale redevelopment, it was very difficult for the Authority in those circumstances to even know that it had an assured future, and therefore planning in the kind of way that we hope it will be able to do now in submitting a programme to us was simply not much of an option. 148. Effectively, they did not do it because they thought it would be a waste of time, because no-one really knew what was going to happen to the site. (Ms Quin) No, because they thought the site would be sold for development. 149. It would help if one could say to the Market Authority that any capital investment programme that might be submitted would need to be placed in the context of the strategic future of the market, its relationship to other markets within London, and the Government's own intent. Of course, there are several unknowns in that equation, but you would want any capital programme of any size to be put together in the context of a strategic appraisal of what was attempted to be achieved. Otherwise, you would be talking about sinking money into the possible waste of investing in something which a new purchaser might say was totally inappropriate and was unhelpful for their goals. (Ms Quin) Yes, I think that is a fair point. In a way, there are three strands to this. There is the Authority's need for capital investment, there is the policy of selling it as a going concern, but there is also the overall view which is not primarily for MAFF, but which MAFF needs to be involved in in terms of a wider strategy for the future of London markets. The Minister did hold a meeting with representatives of other markets and has certainly expressed his interest in being involved in the development of such a strategy. But I have to say, that strategy has not developed to any significant extent at the present time. Dr Turner 150. Could I go back to the legislation question. You have reminded us that it remains government policy to dispose of assets as soon as parliamentary time can be found, and we were told by the Market Authority that in fact, the disposal of the assets has been government policy since 1990. Do you know when MAFF first asked for parliamentary time? Would that be kept secret from you? (Ms Quin) Obviously, it was under the previous administration, and there are others in this room who therefore may be in a better position to answer that question than I am. But I understand that it has been a feature of the Department's legislative priority for most of those years. I think that is fair to say, but because it is largely information under the previous government, I do not have absolute chapter and verse on that. That is my understanding of the position. Maybe I can be contradicted by others who might know better, but I see a shaking of heads, so I guess that is the situation. 151. Perhaps you can tell us thought when the last occasion was that it was sought. (Ms Quin) In the last session, but of course, the Government has had other priorities in MAFF. 152. I was only seeking a short response. (Ms Quin) Obviously things like the Food Standards Agency Bill and Fur Farming and so on were ahead of that. 153. In all those years has anybody even looked to see how long a Bill it would be, done any drafting, ready to go if you got the chance? (Mr Llewelyn) Apparently a first draft has been done. 154. So you might not need too big a time slot to go in. Could I just ask how much money does matter? Mr Todd made the very sensible point that sometimes urgency depends upon what the gain might be, and if you have some feeling for the amount of money that can be released, it might change the Government's view of the urgency of legislating. It has been suggested that some of the urgency would depend upon that. Earlier in this parliament you were under pressure within the Department for your budget. Would you consider this a way of easing that pressure and therefore raise its priority? (Ms Quin) I suppose the answer to your question is, in terms of the financial implications for MAFF, there is possibly less urgency now than there was, because our baseline was adjusted in the last year's Comprehensive Spending Review, so that no longer did we have the baseline for capital spending reduced by some 44 million to take account of the expected receipts from the sale of Covent Garden. But that does not mean to say that we are not committed to selling the market, simply because what we are strongly committed to in MAFF is finding a way forward which allows the market to flourish in the future in a way that would free it from some of the constraints that it is at present under. That is the driver rather than a financial driver. 155. One of the ways which has been suggested is diversification. (Ms Quin) Indeed. 156. We have been told that there has in fact been a proposal which would allow diversification in front of Nick Brown since 15 November. In the memorandum we have received, it tells us that you are waiting for objections, based upon some ruling which sounds as though it is from ancient times to me, about how far away from each other markets should be. We have been told in evidence to the Committee that in fact you have been waiting for objections for two years, which pre-dates even that application. So it does sound as though you have been asking the Corporation what the problems were for some time. Can you confirm that you have in fact been waiting for two years? (Ms Quin) Not in relation to that particular application. 157. The general question of objections. (Ms Quin) I understand that it is one year, not two years. 158. Is there not a timescale for this? The objection is there in principle. Is there no timescale? Is there not going to be a cut-off? is it not sensible to have a timescale and say you want to move this process forward? Why do they not know when they have got to object by? (Ms Quin) On the particular request, further to the memorandum that we submitted to the Committee, the Minister has allowed the request with the proviso that face-to-face selling is not permitted. 159. So a decision has been made? (Ms Quin) An interim decision has been made in order to allow the request to go ahead, but it is subject to that proviso. I know that this is something that the Committee itself has followed, the fact that these ancient statutes and requirements which you quite rightly refer to, which go back to the 14th century, do not cover the instance where we are talking about non- face-to-face selling, and since a lot of selling in the modern era is non- face-to-face, and of course, we have the phenomenon electronic selling, the request has been able to go ahead on that basis. However, on the wider issue of the objections of the Corporation of London to face-to-face selling of that nature in Covent Garden Market, it is true that we are still awaiting a properly stated and reasoned case. 160. My question was on the timescale and a deadline. This needs to be got on with. Why are they not given a reasonable time and told "We must have your objection in by then"? (Ms Quin) I am not sure that we are in a position to impose a deadline, but certainly I know that the Minister has taken up the issue again with the Corporation of London. Mr Jack 161. Before I ask you some questions about the site, in schedule 3 of the accounts that were submitted to the Committee from the Covent Garden Market Authority, there is a note saying that out of 2.5 million of short- term investment in 1999, 2.3 million was on short-term loan with an unnamed local authority. Are you happy with the use of that money, and if so, why can that not be used to meet some of the immediate investment requirements of the Authority? (Ms Quin) We are happy with the way that the Authority has acted in that way. It is to do, as I think you are aware, with the money that covers the contingent liability for the sale of Market Towers. 162. The Chairman told us that that was a diminishing, almost minimal liability in his evidence to the Committee, and therefore it seems an over-provision of quite a substantial amount. (Ms Quin) It is not diminishing. It remains in force until there are none of the original tenants left. 163. How many are left? (Ms Quin) I think only two or three. 164. They cannot have 2.3 million worth of contingency. (Ms Quin) Nonetheless, I think that those tenants do have leases until at lest 2010. 165. What are the value of the outstanding leases at this time? 2.3 million? (Ms Quin) I am not able to answer that. (Mr Llewelyn) The liability does not cover the leases. It is the liability for anything that went wrong in Market Towers. 166. For those three tenants or in total? (Mr Llewelyn) In total. The Authority carries a contingent liability if a problem should arise in Market Towers and if any of the original tenants are still there. 167. There does seem to be a difference between the Chairman's analysis, if I have understood it correctly, and what you have just told us. When was this last examined to see if this is a correct figure? (Ms Quin) I was asking questions myself about this before coming along today, and the information that we have given you is the information that I understand to be correct. 168. Perhaps you might care to re-appraise that in the light of what appears to be a difference of opinion between that and the Chairman's evidence. (Ms Quin) Let me just say that we did look at that, and that is why I have come with the information today. 169. You have indicated to us your wish to, in due course, sell the market and therefore its site, as a going concern. Can I ask therefore does that rule out any kind of piecemeal disposal of the site? In the report of the Authority it indicated that at some time recently you as a Ministry had discussions with the Ministry of Defence about selling part of the site for Chelsea Barracks, and that was rejected on practical grounds, but clearly that pre-dated the Minister's position of selling it as a going concern. Does that statement by the Minister mean it is all or nothing? (Ms Quin) My understanding is that yes, the decision that the Minister made refers to the whole of the site that the market has. 170. To be clear, at this juncture, you would entertain no proposal either from the Authority or by virtue of an approach from a third party to dispose of part of the existing assets, which are the site and the market? (Ms Quin) No. If the Authority came up with a proposal which was part of its future plans for keeping the market as a going concern, we would look at that. 171. What do you mean by the words "going concern"? (Ms Quin) That it is able to survive and has the potential for expanding economically. 172. But not physically? (Ms Quin) If you mean could the market be put in a position in the future where it might acquire land or physical premises, then we would not rule that out. 173. In the sense that there are spaces on the site, the site could be redeveloped, it could be more intensively used - there are a whole variety of formulations of what you could do even on a restricted area, or by making better use of the whole site. There is just doubt in my mind. In this context of selling it as a going concern, would you put into the sale arrangements, legally or otherwise, a requirement parallel to the current requirement that Covent Garden market has which requires the Authority to run a market? Would you require the person who acquired it as a going concern in perpetuity to run a market? (Ms Quin) That is an interesting question. We would certainly want to safeguard the market as a going concern for the foreseeable future, and I think we would also want to safeguard our financial position if it was sold to some organisation which then tried to un-do some of the conditions within a short period of time by, say, trying to get a huge amount of money from developing the land in a way that was not originally foreseen. In other words, some kind of claw-back provision, which is very common in government. 174. This relates to Mr Todd's line of questioning, where he was talking about what you could do with the site. (Ms Quin) Indeed. We would certainly need to look at that angle very closely. 175. Some time ago the Chancellor started what I call a "Domesday Book" exercise, in which I gather he was collecting a list of assets held by the Government. The first question is: I assume the Covent Garden Market site is on that list, is it? (Ms Quin) I am sure it is, yes. 176. Have the Treasury, since you have put it on the list, positively come to you and said, "What are you doing with it?" So far this discussion has centred on your overtures to the Treasury, but have they come back to you and said, "You are on the list here. You have 56 acres of prime London site. What on earth are you doing with it?" (Ms Quin) Ministers have not approached ministers about that. 177. That is a very Delphic answer. What about officials to officials? (Ms Quin) I might be able to answer that. (Mr Llewelyn) The Treasury are extremely well aware of this, because in the Comprehensive Spending Review settlement of 1998 the MAFF baseline for capital spending was reduced by 44 million pending receipts from the sale of Covent Garden. You may recall that we did have some difficulty over the past few years because of the reduction of the MAFF baseline and the failure to get receipts from Covent Garden. So the Treasury are well aware of our desire to sell Covent Garden, and indeed took it into account. 178. So that is pending. Let me move on to one other aspect of selling it as a going concern. The question of congestion charges was raised with us by the Chairman in unequivocal terms, and I wondered what evaluation you had done to deem the effect of the introduction of congestion charging on the value of the market. Certainly traders made it clear to us in our visit that they thought there would be a substantial on-cost. There are a large number of vehicle movements in and out, where UK vehicles would have to pay the charges but continental vehicles, I gather, would not, so there would be some very interesting questions raised by tat. But it is potentially a big extra cost on to the market operations. What is your opinion and what have you done about it? (Ms Quin) We have not made a separate assessment from the assessment that the Authority itself has done, and indeed, I would say that it was the Authority's responsibility to make that assessment. Obviously, however, we share the Authority's concern if congestion charges were introduced in a way that made life both difficult and expensive for the operation of the market. 179. Have you or are you planning to make a submission to the Mayor of London and his experts about this matter? (Ms Quin) We do not rule it out, but the Authority has taken the initiative on this so far and has kept us informed. Chairman 180. The Mayor has not replied to any of the letters the Authority has written, and any attempt to get anybody from the Mayor's office to visit the market has failed. They just do not turn up or cancel at the last minute. Can you seize his attention in some manner on behalf of the Authority? (Ms Quin) Certainly if the Authority wants us to take an initiative in this area, we are open to doing so. Mr Jack 181. You might get a bunch of flowers from the flower market if you were to do just that. (Ms Quin) I already have one. Dr Turner 182. Can I just conclude by asking are you content with the fact that there is a market-based activity on the current site at Nine Elms? There are all kinds of formulations as to whether in fact you could uplift Covent Garden and put it somewhere else. Are you content that this is the right thing to be doing at that particular site? (Ms Quin) Yes. I think the point that the Chairman made about the location of the market, particularly with regard to the catering trade in the West End, is a very sound one, and certainly when I look at that market in comparison to other markets, I think that it is in a good location. 183. I would like to know whether you think there is an important and precedent-setting application, the one which I was referring to, which would open up meat and poultry products into the market. I would be inclined, and others would be inclined to see this as being setting precedent and being very important to possible diversification. Is that the way it is regarded within MAFF? (Ms Quin) It is regarded s an important issue. However, because of the changing nature of trade and, for example, the growth in e-business and so forth, I do not think it is the only significant element in diversification. 184. Could you just explain a little bit more the response you gave to me earlier in which you seemed to imply that it might not be within MAFF's powers to set a timescale for the making of a decision, or did I misunderstand you? (Ms Quin) To sell the market as a going concern? 185. No, to say to the Corporation, "We want your objections in by this date, and if you do not get it in by then we are going to make the decision without taking them into account." You implied that the Minister could not lay down a timescale. (Ms Quin) That is my understanding. I will reflect on this question, and if I feel in the light of my earlier reply that I would rather refine that, I will certainly write to the Committee, but I do not know of any power that MAFF has to legally oblige the Corporation to reply by a given deadline. 186. Perhaps you could just make a decision and grant a licence. (Ms Quin) We could, but that would certainly, in my view, take us into the territory of legal disputes. We would then obviously need to get some very detailed legal advice as to how much the provisions in the ancient statutes that we were talking about before might be affected by other more recent legislation, for example, the competition legislation, either domestically or at European Union level. That would be quite a complex legal route to go down. Given that I have talked about the parallel process of trying to encourage dialogue between the different markets, it might complicate that process as well. If I am being open with you in the replies, we want to see the best way forward in terms of minimising conflict but also, as MAFF, enabling Covent Garden Market to have a good future. In that respect, I welcome the fact that the Minister did have a discussion with representatives of the different London markets. I also, of course, welcome what the Chairman said in terms of the starting up again of the Association of London Markets, which he himself is chairing. I think that those fora are useful in providing avenues for dialogue. On the whole, I prefer that to complex and perhaps long time-consuming legal wrangles. Nonetheless, depending on how the Corporation of London respond, we will ourselves also obviously be able to commission legal advice. 187. In your memorandum, you say that the Corporation's objections will be one of the factors that the Minister will take into account. Are there any other factors which have not already been raised in this session? (Ms Quin) No. They are basically the ones that I referred to. There are the ancient statutes, but there is also other more up-to-date legislation, and how those things relate to each other, and also the other initiatives about trying to ensure some cooperation and coordination across London markets. Chairman 188. The High Court recently ruled that the European Convention on Human Rights cast doubt upon whether the Secretary of State for the Environment should be the ultimate authority in planning decisions. You have to make a decision as to whether or not you will permit some new activities in the marketplace. If that happens, that will have an impact upon the revenues the market generates, and MAFF is the beneficiary of those revenues. Is it right that MAFF should therefore be taking a decision on cases in which it has a financial interest? Would that stand up to the European Convention on Human Rights on the analogy of planning? (Ms Quin) I am not aware of a Human Rights problem in relation to that. It is certainly not been flagged up to me by our legal services. I think it is unlikely. I think the way that that system operates has been in existence for some considerable time without challenge. 189. But the incorporation of the European Convention is new and might have sparked a whole new set of case law in Britain. (Ms Quin) Incorporation into our national legal system, yes, but the European Convention has always been an approach which potentially people adversely affected by something have been able to pursue. 190. If I were advising the Corporation, which I am not - and I have not been put up by the Corporation either - I would doubt whether MAFF were not in an invidious position in being the judge on an issue from which it is set to benefit. (Ms Quin) That is true, although the Corporation's own statutes were established well before the Human Rights legislation as well. Chairman: I leave it as a subject of debate. Dr Turner 191. Governments also benefit from their legislation. (Ms Quin) I do not think the position has changed legally, because if it is possible to pursue it, it would have been possible even before incorporation. Mr Drew 192. Talking of the relationship between MAFF and the Market Authority, one of the issues that has not been addressed yet is other uses of the site other than a market use. Clearly the local authority has a huge development area there, not just the site of the Covent Garden Market but also the old Battersea Power Station and so on. Has no-one as yet done any work in terms of looking at the enterprise potential of that site - keeping the market but looking at what other enterprise could be brought on to the market site or the related sites? (Ms Quin) My understanding is that the Borough Council itself has looked at this issue, quite understandably, given the potential of the power station enterprise and the effect on the area as a whole, including the effect on Covent Garden. My understanding is that the Borough Council sees the continued existence of the market as contributing to their overall strategy for the area. 193. Unless I misread lots of the correspondence and submissions, I suppose I would characterise what seems to be going on as everybody waiting for somebody else to take the lead. Somebody has to break this impasse. You have the Council, you have the Authority, you have MAFF, you have the Corporation, and you have the other markets. Everybody is waiting for somebody to make a move, and presumably the first response would be "Let's block it", because the objectives seem to be preventing anyone else taking the initiative. Somebody has to break through this miasma. (Ms Quin) Firstly, I think that as far as MAFF is concerned, we did take the initiative, and a very welcome one, in announcing the change of policy. This is an important point, it seems to me. As far as MAFF is concerned, we took an initiative with the change of policy and the Minister also convened a meeting of representatives of different London markets, so we have shown that we are willing to be engaged in this process. But, of course, it is true to say that there are many other actors involved in the process, and no doubt they are weighing up their own future strategy, particularly in terms of London markets, as to how much is competition and how much is cooperation and coordination. With the best will in the world, while I would like to see things move along in a satisfactory way in terms of Covent Garden Market and indeed in terms of the situation of London as a whole, MAFF does not have the primary responsibility to deal with that wider issue. But I believe strongly that we have signalled our willingness to be engaged in the process. 194. We have already touched on the legalities of this. Clearly major legal problems could arise. It is a lawyer's breakfast. They would love the possibility of this getting into the courts. It could be there for years if it is not handled correctly. How much of a problem is that? Clearly you have taken advice already, though not detailed advice. There is a temptation to do nothing, because if you do something, somebody is immediately going to put an injunction on somebody else about what rights you have to be handling this at all. (Ms Quin) I do not think there is an incentive to do nothing and, indeed, insofar as MAFF is concerned we have been taking the initiatives that I have outlined to you. However, if you say, "Would you prefer to avoid a lawyer's breakfast?" I think anybody would want to avoid a lawyer's breakfast particularly if that breakfast extends to an all-day meal. Chairman 195. Apart from a lawyer. (Ms Quin) Apart from a lawyer, yes. It is true there are a lot of legal aspects to this, nonetheless, we have a commitment to press ahead with legislation in the way that we have described and it certainly does make sense for dialogue to be facilitated and therefore again I welcome the initiative the Minister took and also the renewal of the Association of London Markets because I think that does at least offer a forum in which these issues can be addressed. Mr Drew 196. It is an observation but I would hope you would respond to it to take up Dr Turner's point about forcing the objection from the Corporation. Clearly MAFF could just take the initiative and say, "We are going to force this issue, we are going to ignore these threshold arguments about where one market is in relation to another and what one market does in relation to another because under the Government's modernisation agenda we are out of the 15th Century now and have at least got to the 19th Century." I hope I am not putting you in an impossible possible but, as somebody said earlier, this has got to drive us on even if it means taking the legal threat off. (Ms Quin) I think we have taken initiatives along the way, as I have described. We cannot ignore even very old laws and therefore we do have to take --- 197. These are very old laws. (Ms Quin) Yes, laws can be old laws but if they have not been repealed they still have a legal force. What I did say, however, in answer to George was that we are obviously getting advice about how much the ancient laws also inter-relate with much more up-to-date laws on competition and so on. These are complicated issues and if the avenues for dialogue that I have described can work I think personally that that is a better way forward. Chairman 198. It sometimes takes you more than a day to travel six and two-thirds miles in London like last Monday morning. (Ms Quin) I think somebody said that six and two thirds miles probably takes longer today than it did in the 14th Century. Mr Drew 199. If I can ask you to portray the relationship between MAFF and the Market Authority not in terms of whether they are nice people but on a day-to-day basis what is the relationship, and on a more strategic basis what is the relationship between the Department and the Authority? (Ms Quin) Of course, the relationship is very good and I say this in order to at least provide some comfort to those who are sitting behind me. The day-to-day relationship, I believe, is excellent, but the statutory relationship between MAFF and the Authority was covered very much in the Memorandum that we sent to the Committee. The Authority does run its affairs itself on a day-to-day basis but obviously the Covent Garden Acts do impose some of the framework and indeed some of the constraints that we have discussed to some extent this morning with regard to the treatment of surplus revenue investments and so on. Obviously the Market Authority submits its Report and Accounts and that has to be approved by us and there are the arrangements which I know you are all familiar with in terms of the appointment of the Chairman and the members of the Authority, but in terms of the working relationship between MAFF and the Authority that seems to work very well. We certainly have not come across problem in terms of the way that the Acts work at present in a practical sense, and they certainly have not hampered dialogue between either Ministers and officials at MAFF on the one hand and the management and Board of the Authority on the other. 200. If the Authority came to you and said, "Minister, the current formula by which MAFF siphons off so much of the money is wrong and we need to renegotiate this formula. In fact, we need to get rid of this formula and to make any sense of this market we have got to reinvest our surpluses. We have had 25 years of depreciating assets, there is a backlog of work that needs to be done, and the only way we can deal with that is to plough surpluses back in and maybe borrow much more extensively", how would you respond to that? (Ms Quin) With respect, I think we did deal with this issue before. We talked about the discussions that take place regarding trying to get more flexibility in the short term but also the fact that overall the financial constraints are such that the policy of selling as a going concern is the route that we feel should be pursued in the medium term as soon as the legislation can be given a slot. I think we have discussed that. 201. You have discussed it but in terms of the actual money has it made any difference? (Ms Quin) We have discussed it here already this morning. 202. I am trying to tease out what does that mean. I know in theory you have discussed it; I want the practice. The formula is there, it is being operated, but clearly it is a nonsense if you want to keep that asset up to its current or past life. (Ms Quin) As I said earlier, the formula is there but we are discussing with the Authority ways of allowing at least some of the new capital investment to go ahead. That, however, does depend on a more detailed costing than we have received so far from the Authority, although I know that is something they are looking at. 203. I know you went through it and I understand what it says. It is just that I am trying to ascertain whether it is a flexible formula because, as we all know, if you move a figure and put it in one column rather than another it can make a significant difference to the Authority having surpluses that it could start to replenish that site with. In terms of selling it as a going concern the more valuable it is as an asset the better and the easier it is to sell as a going concern, surely? (Ms Quin) There is not a great deal of flexibility in the current formula. In order to get flexibility I think I am right in saying there would need to be changes to the formula. 204. Just on that, who makes those changes then? That is a pure MAFF decision? (Ms Quin) No it is MAFF and the Treasury. Chairman 205. Which means the Treasury. Austin? (Ms Quin) I do not altogether share your cynicism, Chairman. Mr Mitchell 206. Can I clear up one point because Mr Mills told us that the Authority has to get MAFF approval for spending anything more than a quarter of a million on capital investment in one year. I got the impression from you earlier that you are more liberal. That is correct, is it? (Ms Quin) I think the Chairman's statement was correct. 207. Okay. We can perhaps round it off by looking at the general situation vis- -vis the number of markets in London. I came to the impression, and indeed it was reinforced by the evidence from Mr Mills and others, that London is "over marketed". Would you agree with the Authority's view that there are too many markets in London? (Ms Quin) Not necessarily --- 208. Given the fact that the supermarkets are taking away an increasing tranche of business and that there are all kind of casual arrangements in car parks and "flying Dutchmen" and I have even heard of "flying fish" in a car park in East London. This is under-cutting market business and rather than having a larger number of markets pegging away at half cock, it might be better to have a smaller number working more efficiently and competitively. (Ms Quin) Let me say on that I think there are a number of uncertainties. The Chairman himself talked about the potential on the catering side and I think that that is certainly there. I think there is also potential on the e-business side. I also think that if you, say, compare the situation today with the worries that existed in 1990 or so at the time of the move of Spitalfields Market, there was more of a declining and under-usage of markets then than there is now, in my understanding. I think there are generally uncertainties, as you would expect in a commercial environment, as to how things might progress in the future. I have to say also that I do not see it as my ministerial responsibility to decide on the future of London markets as a whole. That goes much wider than MAFF. Our responsibility here is to Covent Garden Market and we feel that the Authority's view of both potential business in the catering sector and its overall view on diversification is something that we would agree with and support. 209. There are two points in that. Your position therefore is let's wait and see. (Ms Quin) No, it is not. The position is, as I have said before, that both in the short term and medium term will look at ways of allowing Covent Garden Market to attract business and invest for the future and do what we can to provide the long-term framework in which that activity can take place. At the same time we have signalled our interest and support for initiatives which look at the market strategy for London as a whole, but that is not something in which we would be the lead body. 210. What is the role there? Surely MAFF is the main department in these matters, it has some responsibility and if there has got to be a concentration of markets, a reduction in the number of markets, then it is surely up to MAFF to give a lead? (Ms Quin) We have taken initiatives of the kind that I have described, but that is not case. Obviously MAFF has a huge interest in horticulture and its success in this country and I would certainly say that that is something that I feel strongly about, but in terms of the delivery of wholesale markets in London that is not something that MAFF has lead responsibility. It has inherited this responsibility with regard to Covent Garden, it has also signalled through the meeting that the Minister had and the other initiatives I mentioned that it is happy to see the question of the future of London markets being addressed but it does not have the main responsibility for that. That has got to lie elsewhere - with the Corporation of London, with the Greater London Authority, with the Government Office for London, and so on. 211. So MAFF does not feel the kind of responsibility that has been exercised in France where there has been a closure of certain markets and the build up of one big market outside Paris which provides most of this produce, in other words, a logical decision-making based on planning? (Ms Quin) It has to be said that the legal position and departmental responsibilities are different from the situation in France. Nonetheless I will say to you that I think particularly the development of the Rungis Market does have a lot in common with some of the ideas that the Authority has in Covent Garden. 212. It is outside and Covent Garden is inside the conurbation. (Ms Quin) Yes, but I am not sure of the relevance of that. 213. It affects the congestion charge for a start. (Ms Quin) I have already answered the question on congestion charges. 214. But the location is crucial. It would seem sensible to put it outside with access to motorways, but one of the traders pointed out that most of the business comes from inside the M25 so it is therefore more logical to have a central market which I would have thought was wasteful. (Ms Quin) This is to do with the economy of London and MAFF is not the department for the economy of London. 215. The economy of food, at least an oversight. Do you intend then to publish the conclusions of the study into the possible harmonisation of London markets? (Ms Quin) MAFF is not undertaking a formal study into the harmonisation of London markets. What happened was that the Minister had a meeting with representatives of London markets but in terms of the future of London markets the main responsibility of that lies elsewhere. 216. Having a meeting is taking a lead, is it not? (Ms Quin) It is taking the initiative but the Minister certainly did not claim to be the lead. We can hold meetings about anything we want pretty well but he certainly was not claiming to be the lead authority in terms of the future market provision for London. Chairman 217. Normally, if I may say so, MAFF issues a press release if the Minister so much as eats a piece of cheese. There was no press release about the outcome of this meeting. (Ms Quin) I think there was a press release saying that he had met --- I stand to be corrected on that but I know that when the Minister visited Covent Garden Market he certainly spoke of the work he had been doing in this respect. I am informed that there was not a press release about the meeting, so I have to eat humble pie on that one! Mr Mitchell 218. Apart from convening this meeting, which seems a very sensible thing to do to me, MAFF's position is that basically the question of the survival of a larger or smaller number, a concentration or not, all of this will be decided by commercial sites slugging it out to the death between existing markets? (Ms Quin) No, I did not say that at all. 219. That is the logical conclusion from what you said. It is not your responsibility therefore that is the way it will have to be decided. (Ms Quin) Certainly not. I think the logical way is for commercial interests, the markets themselves, the Corporation of London, the Greater London Authority, the Government Office for London and so on to look at what they want to see happen in this domain. It is not just a question of commercial actors being involved. Obviously given the planning and other decisions that would be involved there are a variety of authorities that would have and would wish to have a real say in this. 220. You would be happy to send Covent Garden naked into the battlefield? (Ms Quin) As far as I know we do not send Covent Garden naked into any forum. We work closely with the Market Authority and I would have thought that was very clear from what I have said so far. 221. To come back to my earlier point, it does need investment and some pump-priming to get it into a really effective, competitive situation against, say, the power of the City Corporation? (Ms Quin) Let me say I think the market has in any case shown a lot of initiative and enterprise in the way it has brought in some new activities in recent years. Let me say too, I hope I have made it clear that we are working with them both on the immediate future and on the longer term in terms of disposal of the market. 222. It is still comparatively minor. (Ms Quin) I have not denied that. I have said at every stage that it is subject to these legal and financial restraints. Mr pik 223. It sounds to me strategically - and everyone agrees - as if there is a co-ordinating role to be played when one looks at long-term planning of markets in London. Would Ministers be willing to discuss with the GLA who would lead the co-ordinating role? (Ms Quin) Certainly, but our main priority for the moment is to discuss with the Authority itself its plans for the future. Chairman 224. Minister, are you conscious that the decision which you will have to take as to whether to permit these new activities - face-to-face activities as you have described them - coming to the market is not just a decision about the future of Covent Garden and, in a sense, it is a statement about how you see the London markets themselves developing? Would you accept that is the case, that the implications are really quite important about this issue; it is not a local decision? (Ms Quin) I would accept that it does have competitive implications for London markets. 225. So when you take that decision, in a sense, the whole issue of the future of the markets is bound to come into focus. Let us say you were to approve the installation of new sorts of business at Covent Garden and then you would, by doing that, be signalling a competition within the markets in a sense which they do not at the moment have in that full competitive sense. That would be true? (Ms Quin) I accept that there are implications there and for that reason I think we would need to look carefully at what legal advice we received and whether or not, as a result of that, further discussions needed to take place either with other departments or other authorities. 226. If that were to be the case then the whole issue of your relationship with Covent Garden and the whole programme of liberating both itself and yourself from that tie might become a more urgent matter? (Ms Quin) Possibly but there is a commitment to early legislation so I am not sure that it would materially affect that timetable. 227. I wanted to clarify that issue and just to point out that I think the Committee would feel that that decision is a hinge of where the future of markets lies. (Ms Quin) I am not in control of how the Committee interprets my answers. 228. Thank you very much for coming. I think it has been an extremely helpful session. Are we due to see Joyce again? It may well be but none of us know what manifestation or status we will have when we next meet, at least in this sort of forum. Thank you very much for being such a regular interlocutor of the Committee and thank you very much, in particular, for coming for this inquiry, which I think we have all found very interesting indeed. We are going to, no doubt, wade our way through the next batch of representations that shower upon us following today's session. Thank you very much indeed and thank you Mr Llewelyn for your supporting role. (Ms Quin) Thank you very much.