New Covent Garden Market — [Mr Philip Hollobone in the Chair]

– in Westminster Hall at 3:54 pm on 2nd July 2019.

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[Mr Philip Hollobone in the Chair]

Photo of Chris Heaton-Harris Chris Heaton-Harris Conservative, Daventry 3:57 pm, 2nd July 2019

I beg to move,

That this House
has considered the redevelopment of New Covent Garden market.

As a fellow Northamptonshire MP, Mr Hollobone, you might be slightly surprised that I am interested in this subject, but I hope to enlighten you in my contribution. The first records of Covent Garden supplying food to the population of London are from around 1200. By the 1800s, the market had expanded to cover more than 30 acres, with a covered market being built in 1834. In 1887, a foreign fruit exchange opened, which handled imported produce that was distributed widely beyond the capital city. By 1890, the market had become the most important fresh produce market in the United Kingdom, but space was tight and the market became a chaotic place. According to the Covent Garden Market Authority, people were complaining about congestion.

In 1904, the Jubilee Hall was built and in 1918, the Duke of Bedford sold the market and its trading rights to a property company. By 1929, the amount of produce flowing into the market had doubled since 1910 and congestion in the market area was getting worse. That congestion problem seems to be a recurring theme.

In 1961, with no space to grow, constant traffic jams and overcrowding, the market needed to move. Accordingly, the Covent Garden Market Authority was set up to modernise the market, and it passed into public ownership. Nine Elms, in the constituency of Marsha De Cordova, was identified as its new home. Construction of the new market began in 1971, and in 1974 the largest wholesale fruit, vegetable and flower market in the country moved to the new site at Nine Elms, which was officially opened by Her Majesty the Queen the following year.

At about that time, a young David Heaton-Harris went about setting up his own business with the help of some Lincolnshire farmers. What4 Ltd was the family business that I eventually went on to run before entering politics. I worked nights in the wonderful New Covent Garden Market for the best part of 11 years. Back in the day—this is relevant to the debate—we tried, as tenants, to buy the market from the Government, with other tenants, but they were not keen to sell such a prized asset.

For the past 45 years, the market has supplied fresh food and flowers to London and the south of England. According to Daniel Tomkinson, the chief executive of the market authority,

“New Covent Market plays a vital role in London’s hospitality and foodservice sectors. No award ceremony or major sporting event takes place in London without the input of one of the tenants. From quality fruit to flowers and amazing veg, this iconic Market is a key part of London’s life.”

Currently, 167 businesses trade on the market, employing 2,500 people. The aggregate turnover of businesses operating in the market in 2017 was about £626 million. That is a lot of fruit and vegetables. The market is expanding, and it is no surprise that that figure is a 6% increase on the 2016 numbers, as it is feeding a growing city.

The Mayor of London updated his final London food strategy in December 2018, and specifically commented on the need for “highly efficient supply chains” for the city of London. He committed to:

“Champion business support to food entrepreneurs and start-ups, and support London’s markets to increase their supply of fresh, local and seasonal produce to meet all Londoners’
cultural needs through the London Markets Board.”

New Covent Garden Market plays a huge part in filling those requirements.

From my conversations with the Minister, I know he understands how important the continuing existence and success of New Covent Garden Market is to the food supply chain for London and the south-east, and indeed the whole of England. He knows that there is a dispute between the market authority and the tenants of the market over its redevelopment. The Covent Garden Tenants Association was incorporated in April 1922. Its members are the traders on the market, and it has represented their interests for nearly 100 years. It represented my interests when I was a tenant on the market with What4. There is now the possibility of action, based on the infringement of traders’ rights under the terms of their agreements to occupy space in the market. That could easily be substantially expanded to incorporate claims that the market authority is acting in breach of its statutory duties.

Photo of John Howell John Howell Conservative, Henley

Given what my hon. Friend said about the current state of things for the tenants, I wonder whether this is an opportunity to go back and look at the idea of the tenants taking ownership of the market.

Photo of Chris Heaton-Harris Chris Heaton-Harris Conservative, Daventry

I am sure the tenants would be delighted to have such an opportunity, but there would obviously have to be some sort of procurement process. That is not a possibility or a probability at this time because there are already contacts signed for the redevelopment of the market. It is a very good piece of real estate in London, where fantastic businesses are sited.

The market’s moves over the years have been driven by congestion more than almost anything else. On each occasion, the market’s success has meant that it needs more space. Ultimately, it moved to its current site because of the lack of space and because of the congestion in the area in the 1960s. Its redevelopment will mean that, for the first time in its 800-year history, in a growing market environment, its size will be reduced substantially.

Photo of Marsha de Cordova Marsha de Cordova Shadow Minister (Work and Pensions) (Disabled People)

I congratulate the hon. Gentleman on securing this important debate. I was not aware that he was a former tenant of the New Covent Garden Market. It is great that there is somebody here who has extensive knowledge and experience of this issue. He makes a really interesting point. New Covent Garden Market plays a huge role in my constituency of Battersea: it brings economic advantages to the local area and employs 2,000 people. Given that it has been growing and the income it generates has been increasing, does he agree that a new development that reduces its size is going backwards? It will not allow the market to thrive and go forward.

Photo of Chris Heaton-Harris Chris Heaton-Harris Conservative, Daventry

I agree. I thank the hon. Lady for her contribution and the way she represents the market in this place. I regularly speak to various of my old friends—I think they are friends; lots of them were customers or people I bought things from, so perhaps they are business associates—and I know that she is a very good representative of the market who talks to the tenants a great deal and represents their concerns wisely.

We are squeezing a big, successful business into a smaller space. The market had a massive footprint, and when I was trading there a lot of it was not used effectively, so it is possible to understand some sort of consolidation, but the scale we are talking about now makes that an interesting prospect. At a time when the turnover of the businesses in the market is growing, it seems odd to reduce the market’s footprint. Although the tenants are not over-happy with the overall reduction in size, they have tried their best to make it work. Various pieces of land have already been sold off, and in some instances they are sold on again. The market area is to be reduced even more. Among other changes, the temporary flower market site will be incorporated into the main site. In essence, we are squeezing a quart into a pint pot and hoping that the businesses inside the pot do not get squeezed.

Over the years, the tenants have repeatedly raised concerns through their association that the proposed end-state configuration of the market that the authority is now engaged in building will not be able to operate successfully because the proposed layout and footprint simply will not accommodate the vehicle movements needed for the market to operate effectively and efficiently. The tenants of the market are very knowledgeable—and, indeed, vocal—about how the business of the market works, and their opinions about whether what is proposed will work should carry significant weight. They have retained the services of a specialist transport consultant, who advises that there are significant failings in the transport analysis and planning undertaken by the market authority. The Minister is well aware that the market authority is a public body that has a statutory duty to provide functioning market facilities and prevent traffic congestion on the market land.

The market authority is currently redeveloping the market under a contract entered into with the developer, Vinci and St Modwen Properties, in 2015. The developer commenced the main works in October 2018. Since then, an independent logistics consultant, instructed by the tenants association, has confirmed that, as designed, the market will not be operationally viable in parking and loading/unloading terms, and will therefore constrain the businesses it contains. The market authority has allowed the developer to start the construction works, but there are problems, because the tenants say that that has happened without the authority having taken the tenants’ logistics consultant’s advice about the design, and without its waiting to see the final report prepared by Arup, a logistics consultant instructed by the developer, which confirmed that the new market, as presently designed, would not be operationally viable. Arup’s final report said that to make it viable certain measures identified in a list contained in that report would need to be adopted. I am told that Arup had been asked by the market authority to use transport data that was known to be out of date and inaccurate when assessing the viability of the options, but it still came to that quite drastic conclusion.

The market authority has power under its contract with the developer to require changes to be made to the design of the market, but it has yet to decide to follow up Arup’s advice. Instead, the developer presses on with the works as they stand. I wonder whether my hon. Friend the Minister is comfortable with that decision. I also wonder whether the Department for Environment, Food and Rural Affairs has been provided with a report from a logistics consultant—or any report—confirming that, contrary to the view of either the tenants association’s logistics consultant or Arup itself, the current design will be operationally viable. If so, would it be possible for the tenants to see it, to give them some comfort that these changes will work?

This is where my old life as a tenant of the market comes into its own, because battles over rent were legendary back in the day when I worked in the market: in April this year, the market authority sent notices to terminate the tenancies of market tenants and threatened, in a letter from its solicitors, that if tenants did not immediately agree to give up their statutory right to apply for a new tenancy and agree to vacate their units at the expiry of the notice, they would not be offered tenancy of a unit in the newly developed market and would have to depart the market instead.

Photo of Teresa Pearce Teresa Pearce Labour, Erith and Thamesmead

It is my understanding that one of the key roles of the Covent Garden Market Authority is to nurture good relations with tenants. How do such actions nurture good relations?

Photo of Chris Heaton-Harris Chris Heaton-Harris Conservative, Daventry

I know that changes at the top of the market authority have been welcomed by the tenants, and that much better conversations are being had now than have been had for many a year, but I do not believe that this is an appropriate way for a public authority to behave.

Additionally, the new draft leases issued by the Covent Garden Market Authority are removing the rights of the wholesale tenants to operate in the critical and traditional way on the bit of the market that everybody loves so much, the buyers walk or trading floor, turning that essential space into a corridor rather than a market. I can honestly tell the Minister that removing that space will almost completely remove the heart, soul and character of the market.

In the new leases, the market authority has also changed the rent negotiation process and general service charge calculations, as it has now declared that it is in fact a commercial landlord. Those actions will inevitably result in many of the smaller companies based at the market closing as the site becomes unaffordable.

Since the whole process started, there have been vast changes in how the market operates. Goods are now mostly chilled instead of being stored at ambient temperatures, and businesses’ being able to unload big lorries, repick orders and deliver in quick time continues to reduce the number of large vehicle movements required on London’s roads. However, that makes the traffic studies more important than most people believe. There is yet to be a traffic study conducted that says the future design of this important food distribution hub for London will work; indeed, all those that have been done, or at least those that are in the public domain, say that it will not. If it does not work, the market will eventually die. All the catering outlets, restaurants and food businesses currently served by the market will not go away; they will simply be catered for by businesses that travel many more miles to get into London, further adding traffic and pollution in this great city of ours.

I do not think we can ignore the facts, stand back and allow the developer and the market authority to build a market that is functionally inoperable. Action must be taken. I hope that the Government have given due consideration to the effect on tenants, businesses and the wider economy if the market were to go into decline or fail altogether. There is no need for that to happen.

I would like to think that the Minister, whose knowledge of and commitment to solving these issues is both impressive and welcome, will continue to ask those on all sides of this debate to come together to find a mutually agreeable and workable solution—all sides meaning the market authority, the tenants, the developer and the Department itself. This needs to be sorted before millions of pounds are wasted in court and one of the most vibrant parts of London’s market culture possibly ceases to be.

Photo of David Rutley David Rutley Assistant Whip (HM Treasury), Government Whip 4:15 pm, 2nd July 2019

It is an honour to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend Chris Heaton-Harris on securing the debate. I know him well; we have discussed the matter on several occasions, and I could not think of a better person to bring the debate to the Chamber today. I note that the local MP, Marsha De Cordova, is also here and understandably shares many of the same concerns, but I think it is fair to say that, given my hon. Friend’s time spent working at the market, his knowledge and experience are second to none here, so we are delighted that he is with us. It must have been a real privilege for him to follow in his family’s footsteps and run that business so successfully for that period of time.

My hon. Friend can be reassured that the Government are committed to ensuring that this iconic market continues to thrive at Nine Elms, both during the development and into the future. We are in absolute agreement that that means it must be a profitable market that works logistically and operates fairly and transparently for both landlord and tenants, and that we need to get on and build it at pace. I am as concerned as he is about the current situation. It is simply untenable for the market authority and the tenants to be in disagreement on such important details. I am clear that both sides should be spending whatever time it takes to resolve these issues, and quickly.

Photo of Marsha de Cordova Marsha de Cordova Shadow Minister (Work and Pensions) (Disabled People)

The Minister is absolutely right that the matter needs to be resolved and that we cannot continue like this. Chris Heaton-Harris has already asked this, but I want to ask it again: will the Minister commit to meeting tenants and the market authority, and any other relevant persons who need to be around the table, to begin to move things forward? I know that he has already had meetings, but we need to get something nailed down to ensure that we can begin to resolve this. As he rightly points out, we must get the market to a place where it is fit for purpose, but that has to be done right.

Photo of David Rutley David Rutley Assistant Whip (HM Treasury), Government Whip

Of course I will help to facilitate that. As I think the hon. Lady knows, we have already had a roundtable meeting, but we can have more in the future. The next step is to ensure that we have a second meeting of the experts on both sides of the debate to move things forward, but if further facilitation is required, I will do it.

My personal view is that there are enough experts on both sides of the table, both the tenants, who are formidable traders, and the market authority. We must bring the two together with their experts. If I were in charge of the situation, I would probably put the key in a very safe place and let the two sides just get on with it, because, as I will go on to say, this has gone on longer than Brexit and, as complicated as it is, it is not as complicated as that.

Hon. Members here are all speaking with a similar voice. Certainly I, as the Minister responsible for this fantastic and iconic institution, echo the sentiment that we need to get on. These are difficult issues, but they are not insurmountable. It is clear that the market is a national treasure. Anybody who is interested in food only has to go along and see this amazing institution, smell it and soak up the atmosphere, because it is unbelievable.

I am fortunate that my second job, after my newspaper round, was working in a greengrocer’s shop every day after school—except for Wednesday, which was early closing, if anybody remembers that—and then all day Saturday. I was pretty good at stacking the oranges and enjoying the seasonal smells of those russet apples—food at its best. I was fortunate enough then to go on and work in Asda, running its home shopping business, as well as doing various other things in the food sector. The market should be cherished, and anybody wanting to go along should do so at 2 o’clock in the morning, as I was fortunate enough to do myself, just to feel that buzz. There is a huge amount of experience and a wealth of knowledge there, and some fantastic activities going on. It supplies the food—the very best fruit, vegetables and cut flowers available—to London, the south-east and the country.

However, the area needs to be transformed. It has an ageing infrastructure and needs to move to a more modern and flexible place to do business, fit for the 21st century. The old business structures and facilities are 45 years old now, and although my hon. Friend the Member for Daventry looks young—sorry; perhaps I should not have said that, because he has been here a long time—even he would agree that the infrastructure needs to be improved, a bit like the facilities here in Parliament. However, the difference is that although we can decant, that is not possible for the market, given the space constraints.

There are big opportunities at the site, and we want to ensure that the market has a bright future for many generations to come. There are second and third-generation traders there, and it is part of their lives as well as their livelihoods, and we know that it is important for them to be able to carry on that important work. Refurbishing the site was looked at but did not offer good value for money, not least as the infrastructure would have to be replaced at some point in the future anyway, so there was a view that we needed to move on. The fact that the Government chose to invest in the market’s redevelopment is clear evidence of the value we place on it. A far easier option would have been simply to sell the land, but we chose not to do so because of our commitment to the market’s mission and its place in the food economy.

There are challenges for the market authority and the traders alike, and sadly it is not possible to rebuild the busiest wholesale horticultural market in the country while it continues to operate and not expect some disruption for all the players involved. That is unfortunate. It is true that the new market will occupy a smaller site when complete, as my hon. Friend highlighted. Smaller does not mean that it cannot be as profitable and effective in the future—indeed, it is vital that it is—but it does mean that it needs to change, not only in how the market is laid out but in how it operates.

I have every confidence that, working together, the market authority and the tenants can find a way to make sure that the market will thrive in its new design. This is not a question of whether it will work, but how. That means looking at both the operational design of the market and how the tenants operate within it. Between them, the market authority and the tenants—representatives of both are here today; they are outstanding people—know the market better than anyone else and must surely be best placed to solve the issue together.

None of this is insurmountable. An earlier challenge arose when the market authority, in discussion with the tenants, became concerned about how the developers would ensure that construction would not disrupt trading. It responded by stopping construction and insisting on more detailed plans from the developer to tackle this. Construction then recommenced, with work starting on the first of the main new market buildings last October.

All of this, along with some unexpected ground conditions, means that the project will take much longer than anyone envisaged or wanted—possibly up to three years longer. That is hard for the tenants, the market authority and everyone who comes to the market for business or pleasure. However, when things are tough, strong leadership is vital. In February I appointed a new chair of the market authority, and I am delighted that we have, in David Frankish, a chair who truly understands the business of the market, having built his own highly successful business in the food logistics industry. I am in regular dialogue with David and know that he shares my desire to do all that is necessary to resolve the current difficulties. Indeed, I am seeing him again in a week’s time, and we will absolutely focus on his plans to make urgent progress on these issues.

My hon. Friend the Member for Daventry made a number of specific points about logistics that I will respond to in the time available. The market authority tells me that it shared the ARUP report on logistics that he referred to with the tenants association and its solicitors last November. That report was based on a comprehensive new traffic survey that ARUP conducted in December 2017. ARUP also installed automatic traffic counters, which are still in place, to provide an ongoing ability to monitor vehicle flows. The data is continually shared with the tenants association’s own traffic experts, and I recognise that this data is part of the ongoing discussions. I hope that is helping the situation. If it is not, clearly we need to find other ways to share the data and to make it more meaningful.

I also understand that, while the ARUP report raised a number of logistical issues with the final design that needed to be addressed, it did not conclude that the new market would be unviable. The report shortlisted 12 proposals to resolve operational issues. The market authority, in discussion with the tenants, has already adopted some of those, including making changes to road layouts and adding a second exit slip road to provide better operational flexibility at peak times. The market authority advises that none of the other proposals have been dismissed; some will be implemented later on in the redevelopment, and others will need further review, depending on how the market adapts to the changes already made. Although I understand that there is work still to do, it is important to recognise that changes have been made, and that the market authority has the flexibility to continue to adapt the design as the build progresses.

My hon. Friend raised questions about the market authority’s actions as a landlord. Even he indicated that, during his time as a tenant, there were some frictions and tensions, as there often are between landlord and tenant. However, we are committed to running a market that operates as a business and is fair for both the tenants and the landlord. The market authority is a public corporation that operates as a business with a high degree of autonomy from the Government and has a statutory duty to break even. We also need to ensure that taxpayers get a fair return for the public investment in the market.

Clearly the tenant-landlord relationship is a legal one, but it is not just about following the letter of law; it is also about working fairly and transparently together. It is not possible for me to go into the detail of individual tenant’s situations today, but the market authority has sought to assure me that it has worked to move tenants on to new leases in a fair way. Indeed, it has highlighted that, as part of the move, it has offered a landlord compensation package over and above any statutory compensation due, amounting to an equivalent of between three and half and four years’ rent at current levels.

I do not underestimate the complexity of the issues here and the strain that the current situation is putting on relationships. The stakes are high and the frustration is all too evident—again, it sounds a bit like Brexit. I am as disappointed as anyone that the market authority and the tenants have so far failed to reach a shared understanding of how the new market will operate successfully, but surely legal action is not the way to get there. I utterly agree that is a waste of everybody’s time, energy and money—except the lawyers’. I know that my hon. Friend does not want their pockets further lined.

I firmly believe that sitting down together and working through the issues is the only way to find solutions, avoid legal disputes and move on, and there needs to be more of it—more sitting down together, more listening, more communicating, more understanding and absolutely more pace. I am sure that every challenge that this project presents can be overcome by continuous, open and respectful communication and a sincere approach to collaborative working. I am fully committed to helping to make that happen in any way I can, to reiterate the point I made to the hon. Member for Battersea.

The next meeting with traffic experts is planned for 10 July, and DEFRA officials will absolutely be there. I urge both sides to use that meeting to make real progress. They should use the whole day or the rest of the week if needs be—whatever time it takes—but they should not leave that room until they have found ways to move things forward.

We have serious players on both sides, and we all—the market authority, the tenants and absolutely all across Government—want the same thing: a thriving market now and into the future, where logistics work smoothly and both tenants and landlord work together fairly and transparently to create a profitable market where these vital businesses can grow. The best way to secure that is through working constructively together. I know that that is the call that my hon. Friend the Member for Daventry wants to hear, and I think that all of us in the House feel that, so let us get on with it.

Question put and agreed to.