The submission of Mills - in full - reads: '1.We welcome the opportunity of making a submission to the Select Committee on developments since the Saphir Report was published. Inevitably, our comments take into account the recommendations of the Select Committee in its report of March 2001.
2.Following the Select Committee report of March 2001 - and a subsequent DEFRA Corporate Governance Review of CGMA in 2001/02 - the CGMA Board adopted (at its March 2002 meeting) the following strategy: CGMA, which runs New Covent Garden Market, is a public corporation - not a commercial company (though we do make a profit and do pay corporation tax). New Covent Garden Market is the biggest wholesale horticultural market in the country. The statutes that govern us set out the parameters of our activities and our financial targets. Within that context the CGMA Board has formally adopted the following long-term strategy: (a)to maintain and develop New Covent Garden Market into a one-stop food shop for London and the wider community while continuing to observe our prime statutory duty of running a wholesale horticultural market.
(b)to continue to improve the infrastructure and facilities to allow for this (to the maximum extent permitted by financial or other constraints).
(c)to expand the range of food products - both horticultural and others - available in the Market.
(d)to encourage face-to-face selling of all produce available in the Market where appropriate.
(e)to maintain good working relations with all other London markets.
(f)in doing the above, to fulfil our statutory duties and responsibilities. We publish this strategy in our annual report and accounts.
3.When the Saphir Report was published on 22nd November 2002 I, as Chairman of the Authority, issued a statement welcoming it. The Board of CGMA at its meeting in January 2003 endorsed this approval of the Saphir Report and its recommendations, and also endorsed our formal response to the seven consultation questions posed by DEFRA and the Report).
4.In that response we had stated 'in our view the most obvious current solution for implementation of the Report would be for the Corporation of London to take over ownership of the site here'. Informal discussions with the Corporation of London subsequently encouraged this view.
5.However, the report of the Town Clerk to the City Markets Committee in February 2003 - and the acceptance of his report by that committee - fundamentally changed the position.
6.In that report the Corporation had made it clear they did not favour New Covent Garden being developed as a composite wholesale market: indeed, the Town Clerk in his report stated: 'I do not believe that the creation of composite sites at Nine Elms and Spitalfields is desirable or financially viable'. Furthermore, in the Corporation's letter to the Secretary of State it was stated - somewhat ominously - that the Corporation's proposals for New Covent Garden 'would amount to a modification of some of the current activities at New Covent Garden'.
7.On 7th April officials from the Corporation of London met the Executive Committee of the Covent Garden Tenants' Association. The Corporation outlined their proposals for taking over ownership of the Nine Elms site, developing it for catering and then moving Smithfield and Billingsgate traders to Spitalfields Market, which would be developed as the only London composite food market. The Corporation also made it clear that they would not spend any new money on developing the Nine Elms site other than the money normally generated by profit on running the Market: the difference from CGMA would be that the Corporation - as a local authority - did not pay corporation tax on its profit.
8.On 28th April the Executive Committee of the CGTA met to consider the Corporation's proposals and the discussion that had taken place on 7th April. The CGTA unanimously agreed 'we would not want to go forward with the Corporation under its present proposals for us'.
9.The CGMA Board, the CGTA and the Union (TGWU) in the Market are all of the view that the Corporation's proposals are unacceptable, and all three bodies maintain that the Saphir Report recommendations are still appropriate.
10.One of the issues highlighted in the Select Committee's report of March 2001 was the need for significant capital investment in the Nine Elms site and where such investment would come from. The current proposals by the Corporation of London do not envisage any significant capital investment in New Covent Garden.
11.Preliminary estimates of the amount of monies needed were discussed with DEFRA officials that summer, and in September 2001 we submitted a detailed investment programme which had been drawn up following discussions with our architects and specialist advisers. The programme has overall a capital spend of some £35m: some £18m in the period 2002-07 and the balance in the immediate years thereafter. We believe that is necessary to bring the Market facilities up to date and allow the Market to flourish - both objectives being in line with the statutory duties laid upon us by the Covent Garden Market Acts and the Board strategy.
12.There are really only three possible sources of capital: DEFRA, the Corporation of London or outside finance. DEFRA have made it clear that, while we can continue to retain the surplus that CGMA makes on its annual income and expenditure, it is difficult to see how monies of the scale outlined above would be readily forthcoming from the Treasury. The Corporation of London's proposals only envisage spending the annual surplus (including the amount that we currently pay in corporation tax) but nothing else. The issue of outside finance is now, in our view, the most viable source of capital expenditure.
13.The other main issue arising from the Saphir Report was the removal of current trade restrictions: in particular, the operation of the 6 2/3 miles market franchise area and the opposition of the Corporation of London to New Covent Garden Market being able to allow fish and meat traders based with us to trade face-to-face with customers.
14.The recent ministerial statement by Lord Whitty (20th June 2003) and his letter are both timely and welcome to us. The ministerial clarification on the sale of meat and fish at New Covent Garden Market is a major boost to pursuing the Board strategy. However, the other two key issues of the Saphir Report - ownership and expenditure - very much remain.
15.We welcome the fact that it is current Government policy that, while the Government wishes to sell the Market, it would only do so if the Market were to remain a going concern, and again the recent ministerial statement is welcome confirmation of this. If the Corporation of London is no longer seen as a possible owner of the Market - and given the Government's wish to dispose of us - then what are the options for future ownership? 16.We do not consider that the option mentioned in the Saphir Report of possible equity shares by the tenants in a new ownership structure as being practicable. We do, however, see some realistic possibility of property/development companies acquiring the site, committing themselves to running the Market as an efficient and thriving market -and accepting the capital liability involved - and at the same time being able to finance such an arrangement by developing parts of the 56-acre site not currently being fully utilised. We are involved in discussions with some eight different property/development companies on the above basis, and several have expressed firm interest in pursuing the matter.
17.The analysis of the situation facing London's wholesale markets contained in the Saphir Report was perceptive. The emphasis placed in that report upon competition is again welcome and the fundamental point of the Report in regard to London being served by three wholesale markets is appropriate.
18.In the context of the Mayor of London's proposals for London, it is clearly important that the role of New Covent Garden Market is recognised. We know that Wandsworth Borough Council are strong supporters of the Market here at Nine Elms, and we look forward to discussions with all bodies on how to carry forward our strategy for the progress of the Market in the interests of the trading community, its work force, its customers and the London - and wider - economy.'
