House of Commons - Regulatory Reform

Select Committee on Regulatory Reform Fourth Report

5 Assessment of the proposal against the Standing Order No. 141(6) criteria

Inappropriate use of delegated legislation

16. The proposal appears to be appropriate for delegated legislation.

17. The Department have stated that the proposal would remove the burden imposed by section 4(1) and (2) of the Museum of London Act 1965, which limits the power of the Board of Governors of the Museum of London to acquire premises for the purposes of maintaining and exhibiting their collections to premises situated in the City of London. The Committee agrees.

The new burden

18. The proposal would also impose a new burden on the Museum of London by once again restricting its power to acquire premises for the purposes of maintaining and exhibiting its collections, although the new restriction would limit the power to premises situated within Greater London. The effect is to increase the sphere of the Museum's direct operations from the City of London to the whole of Greater London. The new burden is therefore equally as restrictive in kind, but less restrictive in its application, than that which the proposal would remove.

Proportionality of the new burden

19. The Department have argued that the new geographical restriction is proportionate to the benefit which this would make possible, namely a merger between the Museum of London and the Museum in Docklands and the likely removal of the threat that the Museum in Docklands would be closed. These benefits, however, would be expected to flow from the removal of the existing burden rather than the creation of the proposed new burden. The requirement of the Regulatory Reform Act is that the making of any new provision which imposes a burden is proportionate to the benefit which is expected to result from its creation. In this instance the question is therefore whether restricting the Museum of London's operations to Greater London will be proportionate to the benefits that are expected to result from that restriction. We consider that the new burden constituted by the enlarged restriction satisfies the test of proportionality.

Continuation of necessary protection

20. The Department believe that the proposal would not remove any protection. It has argued that confining the operation of the Museum of London to Greater London will afford a continuing measure of protection in respect of its role as a public facility for the understanding and appreciation of historic and contemporary London, although it is not made explicit in whose interest that form of protection would be continued.[9] It is noted that the original geographical restriction to the confines of the City of London was felt to be appropriate at the time of the foundation of the Museum of London for the reason that the Guildhall Museum, which was one of the Museum of London's two precursors, had been situated there. The Department has not offered any explicit assessment as to whether there is any value now in this restriction to the City and it does not comment on whether there is any element of protection in it.

21. We note that the Museum of London Act 1965 (as amended by the Museum of London Act 1986) provides that the Museum "may not acquire or dispose of any land or estate or interest in land without the consent of the Secretary of State and the Corporation [of the City of London]".[10]

22. We also note that the interests of the City of London continue to be strongly represented in the management of the Museum, in that the Corporation of the City of London appoints half of the members of the Museum's Board of Governors.

23. It does not seem to us necessary for a museum established "to promote understanding and appreciation of historic and contemporary London" to be located only within the City of London. In view of the on-going requirements of the extant legislation to which we refer above, we are satisfied that the interests of the City of London in the Museum of London continue to be adequately protected.

24. We nevertheless note that, under the proposal, the Museum of London would gain a new power in law to acquire premises for the purposes of maintaining and exhibiting its collections anywhere within Greater London. This gives rise to the possibility that the Museum could in future take over other museums in Greater London, or locate its own exhibition facilities anywhere within that much wider area, subject to the prescribed consents, the purposes of any museum so acquired being compatible with the Museum of London Acts and, of course, the availability of the finance which would be required. Although there is no indication in the explanatory statement that the Museum of London has any intention of exercising the power in this manner, we draw these possibilities to the attention of the House.

25. We consider that the proposal does not remove any necessary protection.

Fair balance and the desirability of the proposal

26. The Department have argued that the proposal satisfies the test of desirability in that it reduces the restrictiveness, and thus the burden inherent in, the current provision. We agree.

27. The Department has specified the benefits which it expects to arise from the amendment of the geographical restriction, these being:

i. the removal of the legal impediment to the full institutional merger of the Museum of London and the Museum in Docklands, with forecast cost savings[11] which would accrue to the new combined museum; and,

ii. consequentially, a secured future for the present Museum in Docklands exhibition at West India Quay, which the Department believes might otherwise need to close as a consequence of the withdrawal of support by its financial sponsors.

28. On this basis the Committee is satisfied that the proposal strikes a fair balance between the public interest, which lies in the progress of the intended merger of the two museums, and the interests of the Museum of London, which would henceforward be restricted to operating museums only within Greater London.

Analysis of costs and savings

29. The Department states that, having become aware of financial difficulties with the project to establish the Museum in Docklands, the Heritage Lottery Fund came to the conclusion that the project had no prospect of long-term success, operationally or in financial terms, without its absorption into the Museum of London, with the increased resources and reduced costs from which that merger would allow the combined museum to benefit.

30. We have understood from additional information supplied by the Department at our request that the Heritage Lottery Fund first began to be concerned about the direction of the Museum in Docklands project from June 2000. There were three connected and consequential reasons why they began to re-evaluate the basis on which they could continue to provide it with financial support[12]. We have been informed that the reasons for their concern were that:

a) the Trustees of the Museum in Docklands continued to be unable to secure third-party funding to support the operation of the Museum in the long term;

b) as a consequence of this it had to be doubted whether the business plan for the Museum in Docklands would be viable - in particular, it was felt that the Trustees continued to make unrealistic assumptions about future visitor numbers whilst failing to make adequate plans for marketing the Museum in Docklands actively as a visitor attraction; and

c) in the light of the considerations referred to above, there was cause to question whether the then management arrangements for the Museum in Docklands would be adequate to deliver a successful museum enterprise.

These concerns are described as having developed against a background of changed 'market conditions' for museum operators consequent upon the opening of national museums to the public without charge[13]. It appears from correspondence which we have had with the Department that the Trustees may have failed to make realistic plans in part because they believed, until as late as April 2002, that an anonymous donor would offset the pressure of these more difficult market conditions by providing a permanent endowment of £5 million which would support the running costs of the Docklands Museum. The Department indicates that the donation was not forthcoming.[14]

31. The Department has informed us that it was mutually agreed in April 2002 by the Heritage Lottery Fund and the Museum in Docklands that the only way for the Museum in Docklands to continue in operation would be for it to be merged into the Museum of London, with the economies of scale and enhanced managerial resources this would introduce.[15] On the condition that the merger would take place at the earliest opportunity, the Fund agreed to provide further funding for the pre-opening period and for the first three years of the operating life of the Museum in Docklands. We understand that the grants from the Fund provided on this basis comprise 100% of the Museum in Docklands' capital budget for the current financial year 2003/04 (amounting to £808,000) and nearly 31% of the forecast revenue budget for the first three years of the Museum's operation (comprising grants totalling £1.02 million)[16]. We therefore assume that these resources would indeed by lost to the project should the two Museums be unable to merge.

32. The Department have indicated that substantial savings could also be made on present running expenses of the current museums by the implementation of the proposal. These are of the nature of economies of scale in the form of reduced staffing costs and the avoidance of the expense of maintaining two separate charitable companies for the two existing museums (with the attendant audit and Board secretarial costs). These costs are forecast by the Department to amount to around £1 million over the first three years of the operating life of the Museum in Docklands.[17] It has been further indicated that, in the event of the closure of the Museum in Docklands, further recurrent costs of the order of £150,000 per annum would be expected to arise in connection with the maintenance and storage of the materials owned by the Museum of London presently exhibited by the Museum in Docklands, which would in this eventuality need to be accommodated at an appropriate storage facility.[18]

33. The Department also consider that, in the event that the Museum in Docklands were forced into closure by a failure to merge,[19] this would represent the waste of £11.8 million previously invested in the project by way of a capital grant from the Heritage Lottery Fund.[20] One respondent to the Department's consultation exercise also noted that £3.14 million granted to the Museum in Docklands by the London Docklands Development Corporation would similarly prove to have been wasted should the Museum in Docklands fail.

34. On the basis of the Regulatory Impact Assessment and additional evidence provided to us by the Department, we are satisfied that the proposal has been the subject of, and taken appropriate account of, estimates of increases or reductions in costs which may result from the implementation of this proposal.

Benefits other than savings

35. The Department have noted that any increase in visitor and tourist activity in the Docklands area may be expected to have beneficial effects on levels of trade for nearby businesses but that it would not be possible to quantify any potential increases in trade which would result from the proposal.[21] Given that the Museum in Docklands is already in place and the stated purpose of the proposal is, ultimately, to allow it to remain in existence, it appears to us that the proposal may make it possible for a current benefit to local business to be sustained, rather than the expectation of creating a new benefit to local trade which has not existed hitherto.

36. Subject to that point, we are content that the Department has considered and taken account of the scope for benefits other than savings in preparing the proposal.

Adequate consultation

37. The Department published its consultation document on the proposal on 15 July 2003 and the consultation period extended for three calendar months to 15 October 2003, just over the 12 week minimum recommended in the Cabinet Office Code of Practice on written consultations. The document was circulated to 25 organisations or individuals, including major national and regional museums and representative bodies for professionals in museum administration and policy-making, regional and national government and relevant non-governmental public bodies.

38. The Department did not initially identify all of these consultees in laying the proposal before Parliament; the list of consultees referred, amongst others, to 'Community Organisations' and 'Educational Organisations'. The Department has since indicated that these organisations were the Isle of Dogs Community Foundation and the Director of Education at Tower Hamlets Borough Council. We see no reason why these consultees should not have been named in the Annex to the explanatory statement, and we question why the Department did not choose to do so in the first instance. The consultation document was also made available on three central government websites.

39. Four responses were received. They were from the Corporation of the City of London, the Isle of Dogs Community Foundation, the Standing Conference on London Archaeology and TourEast London.

40. All of those who responded to the consultation document expressed a welcome for the proposal. None of them felt that the proposal would give rise to an adverse effect in respect of the removal of necessary protections or in the preventing of the exercise of any reasonable right or freedom. Although they did not themselves choose to respond to the Department's invitation to comment, both the Board of Governors of the Museum of London and the Trustees of the Museum in Docklands favour the proposal, which they have themselves acted to promote.[22]

41. We are content that the proposal has been the subject of adequate consultation.

9 Explanatory statement, p 5 Back

10 Museum of London Act 1965, section 3(4) (as amended by the Museum of London Act 1986, section 2(1)) Back

11 Explanatory Statement, pp 7 and 8 Back

12 Appendix B Back

13 Explanatory statement, p 4 Back

14 Appendix B Back