HC Deb 15 March 1976 vol 907 cc1091-102

11.29 p.m.

Mr. Ray Carter (Birmingham, Northfield)

As we move from the problems of local government loans to the problem of the new horticulture market in Birming-

Question put:

The House divided: Ayes 111, Noes 7.

Division No. 87]. AYES [11.19 p.m.
Armstrong, Ernest Flannery, Martin Roderick, Caerwyn
Ashton, Joe Fowler, Gerald (The Wrekin) Rodgers, George (Chorley)
Atkinson, Norman George, Bruce Rooker, J. W.
Bagier, Gordon A. T. Golding, John Ross, Rt Hon W. (Kilmarnock)
Bates, Alf Graham, Ted Sandelson, Neville
Bean, R. E. Grant, George (Morpeth) Selby, Harry
Beith, A. J. Harper, Joseph Sillars, James
Bennett, Andrew (Stockport N) Harrison, Walter (Wakefield) Skinner, Dennis
Blenkinsop, Arthur Howells, Geraint (Cardigan) Small, William
Boardman, H. John, Brynmor Smith, John (N Lanarkshire)
Brown, Hugh D. (Provan) Kerr, Russell Snape, Peter
Brown, Robert C. (Newcastle W) Kilroy-Silk, Robert Spearing, Nigel
Buchanan, Richard Lamborn, Harry Stallard, A. W.
Callaghan, Jim (Middleton & P) Lamond, James Steel, David (Roxburgh)
Canavan, Dennis Leadbitter, Ted Stewart, Rt Hon M. (Fulham)
Cant, R. B. Litterick, Tom Stoddart, David
Carter, Ray Loyden, Eddie Stott, Roger
Cartwright, John Lyons, Edward (Bradford W) Strang, Gavin
Clemitson, Ivor McElhone, Frank Taylor, Mrs Ann (Bolton W)
Cocks, Michael (Bristol S) MacFarquhar, Roderick Thomas, Ron (Bristol NW)
Cohen, Stanley McGuire, Michael (Ince) Tierney, Sydney
Coleman, Donald Mackenzie, Gregor Tinn, James
Concannon, J. D. Mackintosh, John P. Urwin, T. W.
Cook, Robin F. (Edin C) Maclennan, Robert Wainwright, Edwin (Dearne V)
Craigen, J. M. (Maryhill) McNamara, Kevin Walker, Terry (Kingswood)
Crawshaw, Richard Madden, Max White, Frank R. (Bury)
Cryer, Bob Marks, Kenneth Whitehead, Phillip
Davidson, Arthur Marquand, David Whitlock, William
Davies, Denzil (Llanelli) Marshall, Dr Edmund (Goole) Wilson, Alexander (Hamilton)
Dean, Joseph (Leeds West) Maynard, Miss Joan Wise, Mrs Audrey
de Freitas, Rt Hon Sir Geoffrey Mellish, Rt Hon Robert Woodall, Alec
Dormand, J. D. Millan, Bruce Woof, Robert
Duffy, A. E. P. Morris, Alfred (Wythenshawe) Young, David (Bolton E)
Eadie, Alex Murray, Rt Hon Ronald King
Ellis, John (Brigg & Scun) Oakes, Gordon TELLERS FOR THE AYES:
English, Michael Ogden, Eric Mr. James A. Dunn and
Evans, John (Newton) Ovenden, John Mr. James Hamilton
Ewing, Harry (Stirling) Parry, Robert
Fernyhough, Rt Hon E. Peart, Rt Hon Fred
Carson, John Morrison, Hon Peter (Chester) TELLERS FOR THE NOES:
Clark, Alan (Plymouth, Sutton) Rees, Peter (Dover & Deal) Mr. Nigel Lawson and
Cooke, Robert (Bristol W) Tebbit, Norman Mr. Ian Gow
Dodsworth, Geoffrey

ham, I say to the Treasury Bench that it is not so much a Government loan that we want as a straightforward cash grant.

The problem I am about to raise is a long-standing one, particularly as it affects the move from long-established horticultural market to the new market and the consequent rent increases.

This is a problem involving the City Council, the Government and the traders. It has principally been brought about by inflation, which has wrecked the whole project of the new horticulture market, as it has wrecked the Nine Elms project in London and numerous other market projects elsewhere. At present the difficulties we have in Birmingham are centred on the rents that have to be charged by the City Council to the traders to recoup the enormous costs involved in the building of the market. The reason why I have raised this subject is that the whole problem is coming to a head on 13th April—not a Friday, I might add-when the market will be officially completed.

I shall give some financial background to the problem. It is estimated that the final cost of the market will be £11,657,284. If we subtract from that figure Government and other grants we are left with a figure of £6,881,356. That adds up to an economic rent—if we are to recoup the total cost of the construction of the new market—of £3.10 per square foot per annum. Everyone in the city of Birmingham knows, and the Minister and everyone else associated with the problem recognises, that that is a totally unrealistic figure. The traders could not be expected to pay it. What is more, the City Council could not expect to see it paid. Recognising this, it has said that it is prepared to subsidise the whole project to the tune of £210,000 per annum, which gives an effective subsidy of £1 per square foot per annum.

The point is that the Birmingham ratepayers will be paying that money. It is a fairly hefty sum—£250,000. They should not have to bear any cost at all, bearing in mind that the old market made a profit. It is my opinion that it is quite unreasonable and totally unfair that the Birmingham ratepayers, private and commercial, should be expected to support a venture of this kind to that extent. Even with the subsidy, the figure is considered by the traders to be too high. The authority has been engaged for well over a year in negotiations with the traders to try to resolve this problem.

I have written numerous letters to the Government on behalf of the City Council and the traders, appealing to the Government to give assistance and to recognise our problems. I have, with other colleagues, two of whom—my hon. Friends the Members for Birmingham, Perry Barr (Mr. Rooker) and Birmingham, Yardley (Mr. Tierney)—are here tonight, been to see the Minister of Agriculture. We have laid our problems before him and he has always appeared to be sympathetic. But we have always come away empty-handed. In spite of all of our efforts it has not been possible to find a compromise.

I can see some strength in the traders' point of view, particularly when we compare the rent required by the City Council—even the subsidised rent of £2.10 per square foot—with rents charged elsewhere. In Manchester the rent is £1.96 per square foot. In Bradford it is £1.87; in Liverpool, £1.55; in Leeds, £1.28; and at Nine Elms, £2.47. The Nine Elms figure is not entirely realistic because the service charge is involved, as it is not in Birmingham, but adding 7.5p per square foot in Birmingham gives a rent there of £2.85 per square foot, and that is well in excess of anything being charged in the rest of the country.

I do not want to go over all the background, because I hope that one of my hon. Friends will be able to do that if he catches your eye, Mr. Speaker, at the conclusion of what I have to say. However, it is generally recognised that this is a matter of Government responsibility. It was the 1964 legislation that made it possible to get the project off the ground in the first place, as it did other markets. By that legislation the Government guaranteed that they would meet one-third of the cost of the construction of the market. That was in the balmy days of 2½ per cent. to 3 per cent. inflation per annum.

Since then we have gone through rates of inflation of 5 per cent., 10 per cent. 15 per cent. and almost 25 per cent. per annum. That has completely wrecked not just the costing of the market but the rents envisaged back in the 1960s, when the project was started.

Other factors are involved, quite apart from the clear commitment of the Government to supporting markets such as this. I have mentioned them on many occasions. One is that, like so many others, Birmingham market no longer caters only for the immediate area. There was a time when, because of the restrictions of transport, marketing, and so on, Birmingham would have been a regional market, but that is no longer the case. It caters for the national community. People come to Birmingham to buy the Evesham produce, and produce from the north-east, the west and south of the Midlands. To that extent it has become a national market and it has to compete with other national markets throughout the country, even as far afield as Glasgow.

Anything done to impair the ability of Birmingham to compete with those other markets will naturally undermine it, and one would not have thought that the Government, having put so much into the project, would condone or stand to one side to watch its failure.

Another market started at the same time was Nine Elms, which is known to be in desperate financial straits. It is known that, sooner or later, because of the problems of Nine Elms, the Government are likely to come forward with legislation to put that market on a sound financial basis. If that is so—and most people in Birmingham believe that it is—we should like the same treatment, with the problems of Birmingham being similarly recognised and catered for.

Another problem is that Birmingham market caters for an area much wider than simply Birmingham. To some extent, it is a national market, and we do not see why the city ratepayers alone should have to bear the cost of supporting a market that covers a much wider area than just Birmingham. Something should be done to assist the Birmingham ratepayers and to relieve them of this burden.

We already know that, on the basis of the £2.10 rent, subsidies are needed from the rates. If traders are driven away because of the rent, less space will be taken in the market and even greater subsidy and more support from the rates will be required.

In Birmingham, we believe—and the traders support us—that additional costs, whether in commission fees or anything else, will inevitably have to be passed on to the consumer. That means that Birmingham families will have to spend more, because of the cost of agricultural production. Why should we have to pay more for a problem that is a regional and national responsibility?

I hope that the Minister will seriously consider what is said tonight and, even at this eleventh hour, give the new market additional support to enable the City Council and traders to reach an amicable agreement and remove the threat of the very high rents that will have to be charged to make the project a worthwhile concern.

If we do not get a satisfactory reply, some traders will carry out their threat of moving to cheaper accommodation, leaving the new market, if not a white elephant, at least an under-used and costly item of public expenditure from which no one will get out precisely what he puts in.

11.43 p.m.

Mr. J. W. Rooker (Birmingham, Perry Barr)

I am grateful to my hon. Friend the Member for Birmingham, North-field (Mr. Carter) for allowing me to intervene in this short debate.

In this House we spend many hours debating the price of food, but we rarely touch on the aspect with which this debate is concerned—the strategic importance of food distribution.

I heard hon. Members who saw the notice of the Adjournment subject today laugh and ask what horticulture had to do with Birmingham. The new market is of crucial importance to places as far from Birmingham as Scotland and Wales. They depend on the market for their food distribution.

I fear that the market could become a white elephant. It is a fantastically large building. We could, perhaps, fill it with Concordes. It will be a tragedy if the market is not filled to capacity with traders.

The important point is that we are living in a time of crisis. We are a small, highly urbanised island of 50 million people and it is of crucial importance that our food distribution system has no weak links.

If traders are forced out by the City Council and the market does not succeed, the repercussions will be felt far beyond the West Midlands, and our sophisticated system of food distribution will be distorted, with all the fluctuations in market prices, artificial shortages and exploitation that that can create.

We remember what happened two years ago in Darwin, Australia, after the hurricane, when, overnight, the price of a cabbage went to £1 and the price of a bottle of milk rose to 50p. That is what happens when a sophisticated food distribution system breaks down. There can be no more sophisticated distribution system in the world than exists in this island, which imports half its food and is densely populated.

I hope that the Parliamentary Secretary will answer the questions posed by my hon. Friend. We have been on too many delegations, written too many letters and put down too many Parliamentary Questions not to be entitled to receive answers. We must have an answer to give to the Birmingham ratepayers.

11.45 p.m.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Gavin Strang)

I am grateful to my hon. Friend the Member of Birmingham, Northfield (Mr. Carter), who initiated this debate, because it gives me the opportunity to express my admiration of the efforts of the City of Birmingham District Council which has been engaged for some years in the major operation of rebuilding and modernising the whole complex of markets for meat, fish and poultry, in addition to that for fruit, vegetables and flowers.

The meat, fish and poultry markets have been operating successfully for nearly two years. Construction of the wholesale horticulture market, part of which has been in use since last year, will shortly be concluded. If as I hope the present difficulties over the market rents are resolved, it will bring fresh opportunities for traders and will, I am sure, contribute significantly to increased efficiency in the distribution of fruit and vegetables.

A project of this size, which has involved rebuilding on the site of the old markets while allowing trading operations to continue, has required careful planning. It was not possible to start everything at once, and the cost inflation of the last few years and the higher borrowing rates of this period have borne heavily on this the larger part of the markets complex. Its cost has been considerably more in consequence and in proportion to the other markets than was planned. I expect that the city of Birmingham will have had these factors in mind in planning the rent structure for the markets.

I understand that the wholesale traders have not differed significantly from the view of the Council over the siting of the new market. They wished it to be built broadly where the old one stood in the central area of Birmingham. Although differences over some design details were expressed some years ago, they have declared themselves generally satisfied with both the size and the design of the horticulture market, which is now so near to completion. They are, however, unhappy about meeting the share of the costs which the Council has allocated to them. This we can all understand in these undoubtedly difficult economic times, but it is basically a matter to be resolved between landlord and tenants if business is to continue and the benefits of this imaginative project are to be fully realised.

As my right hon. Friend the Minister pointed out in reply to my hon. Friend the Member for Birmingham, Perry Bar (Mr. Rooker) on 29th January last, he cannot intervene in the rent discussions between the City of Birmingham District Council and its tenants. I am, of course, aware of the hope of both sides, which was put by them to my right hon. Friend at a meeting last June and to my hon. Friend the Minister of State before that, that the Government might be able to increase the grant payable on the market and thus do something to close the gap between the two parties to the discussions. However, I regret that I cannot see any prospect of our increasing the maximum rate of grant of one-third for these markets provided for in Section 10 of the Agriculture and Horticulture Act 1964.

The Government are already meeting one-third of the eligible capital costs of the Birmingham wholesale horticulture market under the provisions of that legislation, which will have helped with the redevelopment of 15 major markets and assisted with significant improvements at two more. The costs we are helping to meet are the final out-turn costs. Thus, the grant paid has risen proportionately with the rising costs of construction.

In addition, we have successfully furthered the Council's claim for EEC grant on the markets complex as a whole. This has been made possible by the Government's provision of grant for the horticulture market and will provide about £1¼ million in addition to rather more than £3½ million from the United Kingdom Government. Furthermore, we have recognised that Birmingham may experience difficulty for reasons outside its control in meeting the terminal date of the grants scheme, of 14th April next, which is set by the 1964 Act.

My right hon. Friend promised last year that, if work had still to be done after that date for reasons outside the control of the Council, he would consider sympathetically the case for payment of grant on such work. It would appear that periods of inclement weather during the winter together with other factors may have delayed limited parts of the project, and my officials are now in consultation with city officials to judge the effects and the need for special consideration.

Despite the very considerable help afforded from both the Government and EEC sources, I appreciate that the balance to be met in respect of the horticulture market remains a good deal higher than was expected when the markets complex started construction in 1972. I am afraid, however, that I cannot offer any further financial help. I would, however, urge the traders and the Council to continue their efforts to reach a mutually acceptable solution. I know that there is good will between them and both sides are anxious that the market should continue to give the service to the public and horticulture producers that it is capable of doing. I very much hope that early progress may be made in settling the matter by negotiation between the parties, but it is not for me to intervene on one side or the other to try to bring this about.

We have all been struck by the remarks of my hon. Friends representing Birmingham. I think that if a lobby—I use the word in no uncomplimentary sense—deserves to succeed on the basis of the extent to which hon. Members and others have assiduously promoted its cause, this lobby deserves to meet with success.

I acknowledge that hon. Members and the city council have made repeated representations to the Ministry, and I appreciate the concern they feel with regard to the burden which the trade may have to meet in relation to rents and the rate burden on the inhabitants of the city. My hon. Friend the Member for North-field was sufficiently broadminded about this to acknowledge that the problem of Birmingham city market is not unique but is shared by the Manchester and Bradford Markets and the new Covent Garden Market.

Only last week I visited the new Covent Garden Market, not specifically to talk about the problems of the market but more to look at its operation, in particular the grading of imported produce. It is, however, the case that it is finding difficulties. One of the issues raised with me by the merchants was the level of rents and the various devices by which the management has sought to increase the income from the merchants and traders to finance the market.

One of the problems here—it applies to all costs affecting horticultural produce—is that the price paid to the horticulture producer depends almost entirely on the relationship between supply and demand, and therefore, basically, on the supply. There is no way whereby the price can be automatically lifted in order to take account of these increased costs, although one accepts, because really there can be no argument about it with regard to Birmingham, that the very fact of the new modern market should increase efficiency and reduce costs.

I regret that I am not able to give my hon. Friend a more helpful reply. While he was right to draw a parallel with the difficulties being experienced by the new Covent Garden Market—and the Government are looking at the question—he will acknowledge that he would have to be careful about drawing a strict comparison between the Government's relationship to the Covent Garden Market Authority, a single-purpose statutory authority, and their relationship to market authorities which are owned by local authorities.

The Government have helped the market in three ways. We have paid the maximum grant of one-third. The officials in the Ministry have helped to ensure that the City Council received a grant from the FEOGA special projects fund, a grant which the City Council could not have taken into account when it started to build the market. Furthermore, we have given the assurance that, even if some of the work is not finished by the terminal date, we shall look sympathetically at the question of paying grant on that work.

I realise that there is still a gap to be closed, and I do not want to underestimate the difficulties. We shall consider very carefully the remarks of my hon. Friends, and we shall give this matter consideration. If I have sounded pessimistic, it is because of the public expenditure circumstances in which the Govern- Ment must operate, and I am sure that my hon. Friends would not want me to raise false hopes with them or with the Birmingham City Council.

Question put and agreed to.

Adjourned accordingly at four minutes to Twelve o'clock.