Background
1. The wholesale horticultural market at Covent Garden
in central London was privately run until it was brought within
the remit of what was then the Ministry of Agriculture, Fisheries
and Food in 1961.[1] The
Covent Garden Market Act 1961 set up the Covent Garden Market
Authority (CGMA) to operate the market on behalf of the Government.
The Act replaced the pre-existing legislative framework covering
the market which was deemed inadequate to cope with the various
problems of planning and traffic congestion at the site. These
were making it difficult to operate a modern market in Covent
Garden.
2. In the Second Reading debate on the Bill which
became the Covent Garden Market Act 1961, Christopher Soames,
then Minister of Agriculture, Fisheries and Food, set out the
Government's reasons for taking over Covent Garden. In doing so,
he stressed that there were problems particular to that market
and its site, and the Government was making a special case:
To concentrate the present sprawl of the market
and, in due course concentrate it, there must be control by licensing
over the premises used for marketing … The powers required
even for this limited scheme at Covent Garden go far beyond any
used by local authorities in running markets, let alone private
enterprise, and the problem in Covent Garden involves several
different authorities.
For these reasons we believe it necessary to
have a statutory Authority set up specifically for the purpose.
This is a special Authority constituted for one market for special
reasons, and it in no way indicates any thought on the part of
the Government that markets in general should be run by statutory
authorities of this character.[2]
3. Subsequently, the decision was reached that the
requirements of the market could no longer be met at the Covent
Garden site and the market should be moved from its central London
location. The CGMA supervised the market's move to its present
site at Nine Elms, Vauxhall, in 1974, since when it has been known
as New Covent Garden Market. It is clear that the original
reasons for Government involvement in Covent Garden Market have
long ceased to be relevant. We believe that it is no longer appropriate
for the Government to be involved in the ownership and management
of a wholesale food market.
4. The Nine Elms site covers 22.7 hectares (56 acres)
and hosts 250 companies employing approximately 2,500 people.
There are two main centres of activity at the site: the fruit
and vegetable market and the flower market. The total turnover
of market activity in the calendar year 2001 was £396 million.[3]
This was made up of fruit and vegetable wholesaling (38%), fruit
and vegetable catering distribution (34%), and the flower market
(16%). The remaining 12% is accounted for by non-horticultural
food distribution.
5. Ownership of the Nine Elms site is vested in the
CGMA. The Secretary of State for Environment, Food and Rural Affairs
appoints the CGMA's Chairman and Board members. The function and
responsibility of CGMA is to operate an efficient wholesale market
at Nine Elms while ensuring that its revenues are sufficient at
least to break even.[4]
It provides essential services such as the management, supervision
and security of the site, heating, electricity, cleaning and refuse
disposal, and maintenance of buildings and roads. The Authority
also handles the letting of trading premises and offices to tenants.
6. New Covent Garden Market is one of the five main
wholesale food markets which currently service the Greater London
area and beyond. Brief details of each market are set out in the
table below.
| | Product
| Number of tenants | Location
| Landlord |
| Smithfield | Meat and poultry
| 41 | Smithfield
| Corporation of London |
| Billingsgate | Fish
| 62 | Canary Wharf
| Corporation of London |
| Spitalfields | Fruit and vegetables, and flowers
| 149 | Leyton, East London
| Corporation of London |
| New Covent Garden | Fruit and vegetables, and flowers
| 240 | Vauxhall
| Covent Garden Market Authority
|
| Western International | Fruit and vegetables, and flowers
| 82 | Hounslow, West London
| Hounslow Borough Council
|
Source: Review of London Markets
7. New Covent Garden Market requires modernisation. The CGMA's
latest Report and Accounts notes that the facilities are three
decades old and annual expenditure on maintenance is increasing.[5]
Much of the infrastructure and plant require replacement. In 2001,
the CGMA submitted to Defra a £35 million programme
of capital refurbishment. Defra agreed to the first phase of the
programme, valued at £1.68 million, and this will be completed
during 2002-03. This initial phase of work, and work in the following
year, will be funded from the CGMA's own resources using depreciation
and retained profits. CGMA's post-tax surplus in 2001 was £1.5 million.
8. The Authority usually pays part of any surplus from its trading
activities to Defra with the exact amount decided by a formula
agreed between Defra and the Treasury. These payments are transferred
to the Consolidated Fund. In his evidence to the Committee, the
chairman of the Authority confirmed that Defra and the Treasury
have agreed to allow the Authority to retain all post-tax profits
until major capital works have been completed at the site.[6]
But the Government has indicated that further monies, of the scale
required for completion of the refurbishment plan submitted by
the CGMA, would not be "forthcoming from the Treasury".[7]
The funding of any further capital investment therefore appears
to be dependent on a change in the ownership of the market.
9. It has been the policy of successive governments since 1990
to sell New Covent Garden Market. In 1999, the Government clarified
its position by stating that it would "explore the conditions
under with it might be sold as a going concern".[8]
This statement was intended to offer a greater degree of certainty
about the future in the context of the renewal and renegotiation
of leases. Previous statements had simply confirmed Government
plans to sell the site with no commitment for it to be sold as
a going concern.
Our inquiry
10. In early 2001, our predecessor Committee, the
Agriculture Committee, decided to carry out a short inquiry into
the future of New Covent Garden Market. The Committee published
its Report in March 2001.[9]
The Report noted that the future of New Covent Garden needed to
be considered in the context of a strategic plan for the future
of the other wholesale markets in Greater London. Therefore, one
of its main recommendations was that the Government, together
with the other relevant bodies, should instigate an independent
review to "take a rapid, rational and strategic view of the
provision of wholesale markets in London".[10]
The Government accepted this recommendation.[11]
11. In June 2002, Lord Whitty, Parliamentary Under-Secretary
of State at Defra, announced that the Department and the Corporation
of London had jointly commissioned Nicholas Saphir to carry out
a review into the Future of London Markets. Mr Saphir farms in
Kent and is a director and advisor to several international farming
and food companies. He was chairman and chief executive of Hunter
Saphir plc, a family fruit and vegetable distributor, until 1992.
Mr Saphir is currently chairman of the Agricultural Forum and
he was the founder chairman of Food from Britain.
12. Mr Saphir published his Review of London Markets
(the Saphir Report) on 22 November 2002.[12]
The Government sought views on the main recommendations of the
Saphir Report and invited responses by 22 February 2003. Following
this consultation period, in a Written Ministerial Statement on
20 June 2003, Ben Bradshaw, Parliamentary Under-Secretary of State
at Defra, set out the Government's response to the main recommendations
of the report.[13]
13. We decided to carry out a brief inquiry into
New Covent Garden Market to follow-up on the work of the Agriculture
Committee in 2001 and examine developments in the context of the
Saphir Report and the Government's response to it. In May we appointed
a Sub-committee, under the chairmanship of Rt Hon Michael Jack
MP, to carry out the inquiry. It took oral evidence from the Corporation
of London, Covent Garden Market Authority, Nicholas Saphir and
Lord Whitty, Parliamentary Under-Secretary of State at Defra.
It also received written memoranda from the Covent Garden Market
Authority and the Billingsgate Fish Merchants Association. The
Sub-committee received various papers from the Greater London
Authority and examined responses to the Government's consultation
exercise on the Saphir Report. We are grateful to all those who
assisted during the course of the inquiry.
1 Responsibility passed to the new Department for Environment,
Food and Rural Affairs (Defra) on its creation in June 2001 Back
2
HC Deb 7 December 1960 cc1285-6 Back
3
CGMA, Annual Report and Accounts 2001-02 Back
4
CGMA, Annual Report and Accounts 2001-02, p 2 Back
5
para. 31 Back
6
Q 76 Back
7
CGMA submission, para. 3 Back
8
CGMA, Report and Accounts 1999/2000 Back
9
Agriculture Committee, New Covent Garden Market, Eighth
Report HC 173-1 2000-01 28 March 2001 Back
10
para. 24 Back
11
Environment, Food and Rural Affairs Committee, Reply by the
Government to the Eighth Report from the Agriculture Committee,
Session 2000-01, "New Covent Garden Market" (HC 173),
First Special Report, HC 272 2001-02, para. 12 Back
12
Available from http://www.defra.gov.uk/corporate/consult/markets/review.pdf Back
13
HC Deb 20 June 2003 cc 25-27WS Back
