Examination of witnesses (Questions 80
WEDNESDAY 24 JANUARY 2001
MILLS and DR
80. You are slugging it out and in saying you
want to provide a one-stop shop for catering you are really trying
to grab a section of their business, are you not, because it is
not the destination of the food to the catering industry you want
to supply, it is the kind of food that determines which market?
(Mr Mills) That is a fair point.
81. You are trying to grab a large chunk of
(Mr Mills) That is a fair point but if you look at
it from the point of view of the individual trader, the trader
wants to set up where he can sell better than anywhere else in
terms of access, location, his supply, where his customers come
from, where he is delivering to. This Corporation evidence seems
to say they spent all this money on refurbishing the markets,
which they have, and the traders have spent all this money on
their premises, perfectly true, but if a trader wants to come
to us I fail to see why the Corporation of London should try and
82. Fair point. In the interests of overall
economic efficiency and rationale should you not be merged and
the numbers of markets reduced to make the whole business more
efficient? Instead you are all sitting there defending your cushy
(Mr Mills) That is a fair point. I am sure Mr Jack
will remember the Strathclyde Food Report of 1994 which made the
very valid point that there were too many markets. We have to
be careful on this. It is not a question that the market for food
is declining, quite the contrary, the market for food is expanding
overall and particularly for the different types of food from
overseas and all that. So we are not all fighting for a share
of a diminishing total market. What we are trying to do is to
rationalise where you can buy and sell all different types of
food. That is why we are into the one-stop food shop. Yes, there
are too many markets. If you ask me about what should happen to
the Corporation of London Markets I have got my own views, which
are worth no more or less than anybody else's I suppose, but in
terms of our Market we have the unique advantage of being bang
in the centre of London and a major part of the catering trade
is in the West End of London.
83. Which of course adds to economic pressures
and congestion. Is not Spitalfields which you objected to the
expansion of in 1990, the more logical place for such a market?
(Mr Mills) No, it is not because it is stuck out at
Hackney Marshes. We are bang on the door of the West End. Billingsgate
is out at Canary Wharf. We have had a couple of enquiries from
people who wanted to set up shop in Billingsgate and there was
no space for them and the people at Billingsgate referred them
to us and then the Corporation steps in and says no. You cannot
defend that really, in my view.
84. There is intensified competition. Individual
MPs have had complaints about food being sold from lorry parks.
You have talked to the "Flying Dutchman", no doubt if
you get into the catering trade you will get the "Flying
Frenchman" coming in as well, and the supermarkets have taken
a huge slice of business away from all of you. Amidst those pressures
who in the competitive situation stands to suffer most, you or
the Corporation's markets?
(Mr Mills) We could all suffer if we do not behave
85. Who is going to be hardest hit?
(Mr Mills) I am not trying to dodge it, it depends
how much the total market expands. If you push me I think with
the changes in food distribution, more eaten outside the home
than inside the home, the development of the catering trade and
all that, we are better placed than any other market in London.
One other thing, if I may Mr Mitchell, the supermarkets have had
a huge impact on the retail greengrocer, there is no doubt they
have, but the supermarkets themselves are affected by the increase
in consumption of food outside the home. That is why they are
developing into things like home delivery, new types of things
to maintain their customers to make it easier, pre-packed meals
delivered to the home and all that stuff, so it is a competitive
business all round, but I think we are in the best position to
meet those future challenges.
86. Can I move on to your relationship with
MAFF. You are a public corporation within MAFF's responsibility.
How closely does MAFF supervise your activity and plans for diversification
into this market or that market?
(Mr Mills) They do not supervise as such. We have
to, and we are quite pleased to, give MAFF copies of all our board
minutes. We write to them each time a non-horticultural possibility
opens up. We keep in formal contact with the horticultural officials
at MAFF and I think we have a good relationship, but they do not
supervise us as such. We have restrictions on investment monies.
For example, if we want to spend anything more than a quarter
of a million in a year on capital investment we would have to
get MAFF approval really. In relation to Mr Jack I said we have
got this big issue we are trying to grapple with where we need
about £21 million over the next few years in terms of basic
infrastructure. Obviously we are discussing that with MAFF but
in day-to-day terms they let us get on with it.
87. You are essentially a quango rather than
a commercial operation?
(Mr Mills) I do not think we are a quango as such.
We are a public statutory corporation. We are not an NDPB, either
Crown or non-Crown
88. But MAFF appoints the members?
(Mr Mills) MAFF appoints myself and the other members
of the board.
89. Does that mean in 18 years of Tory administration
they were appointing thrusting, dynamic entrepreneurial types
to be members of the Authority?
(Mr Mills) Pass!
90. What kind of person gets appointed?
(Mr Mills) To be fair, my predecessor who I metunfortunately
he died shortly after he leftseemed to me to do an excellent
job and his predecessors include Sir Henry Hardman, who died the
other day, and Sir Ian Jacob was the first one, the former DG
of the BBC. To be fair, the Authority has been very well-served
both by the previous Chairmen and also by the individual members
of the board, very well-served.
91. The Department does not seek to influence
the Authority by the nature of its appointments?
(Mr Mills) No, I do not think so. They appoint largely
through different backgrounds. On the current board we have somebody
from the City, somebody from the property world, somebody from
transport, somebody from the trade union, it is mixed.
92. What restrictions do your legal obligations
to MAFF impose on your activities and your plans?
(Mr Mills) There are the financial restrictions about
capital monies. There are also restrictions about investment,
I think I am right, in terms that we cannot play the equity market
so there are restrictions there. But in day-to-day operational
terms, particularly outside the non-horticultural stuff, we have
got a free hand but obviously there are all sorts of other factors
limiting ushealth and safety legislation, and all that
sort of stuff we have to take account of.
93. We have agreed that there is intense competition
between you and the other wholesale markets and you have said
you think your prospects in that competition are probably better
than that of the others.
(Mr Mills) Yes.
94. Does the fact that your surpluses are paid
to MAFF mean that MAFF has a vested interest in supporting your
development and prospects as against theirs?
(Mr Mills) No, I do not think so. Obviously that is
a question for MAFF rather than us but I do not think so. MAFF,
in my view, if you could start from square one, would not want
to own a wholesale market, but you know the reason why they do
own a wholesale market? It used to be the Monks of Westminster
Abbey in the 13th Century. Charles II gave a Charter to the Duke
of Bedford and his family to run the Market and the Bedfords ran
it for ages, but in the 20th Century the owners prior to ourselves
were the Beecham Group and when the decision was taken that the
old site, a lovely old site but it was not really suitable in
the transport arrangements for the Market, had to move the Beecham
Group did not want to organise the move and lost interest and
so Harold Macmillan's Government in a sense nationalised the Market.
And this goes back to your earlier point, that we are a nationalised
industry that has not got a penny of taxpayers' money in it, we
have got no public debt and make a profit.
95. In terms of instructions, the current monks
are Trappists! How is the share of your surplus that goes to MAFF
determined and how much of last year's profit will accrue to MAFF?
(Mr Mills) I will ask the General Manager, if I may,
to explain the detail of this. It is a complicated formula of
MAFF which is a bit esoteric.
96. This is your chance to break from the Trappist
(Mr Liggins) It is a formula which was worked out
many years ago and essentially we start with the pre-tax profit,
we deduct from that the monies that we have previously discussed
related to Market Towers, the earnings on the contingent liability
fund. We deduct obviously the Corporation Tax we have separately
paid on the Market account profits and we also add to that the
depreciation shown in our accounts on plant, for the simple reason
that we fund the purchase of capital for plant from revenue and
profits and therefore the depreciation should return to the Government
as and when it is made and that gives a figure at the end of the
day which is deemed to be the surplus payable to the Ministry.
97. Can I ask why has there not been any provision
for the sort of capital investment you are now saying you desperately
need? It does not sound as if you have been been doing that.
(Mr Liggins) It is something that we have considered
from time to time but it has always been implied and made clear
to us that the payment over of the surplus was deemed to be rather
98. Is it an issue you raise regularly that
you should be making provision for capital investment?
(Mr Mills) It is an issue that we have raised a number
of times in the last few years, yes.
99. In the last few years only?
(Mr Mills) About the retention of the monies for investment
purposes and also other possibilities?