Examination of Witnesses (Questions 60-64)
8 MARCH 2005
MR ANTHONY
BROWNE, SIR
TOM LIGHTON,
DR IAIN
ROBERTSON AND
MS JOANNA
CAVE
Q60 Chris Bryant: That is the element
that seems unfair. You might be paying droit de suite on
something where you have lost money?
Sir Tom Lighton: We have had the
Damien Hirst shark example, but that is not the universal pattern
of the art market.
Mr Browne: I am sorry my advocacy
has failed in your case. I do think it is important that one looks
at the facts and the way it works. I think what Tom has said is
absolutely right. One of the paradoxes is that in the first reading
of the European Article the Directive was amended to apply the
right just to the profit, which I think has some logic, I agree
with you, but this was reversed by the European Commission on
the grounds that it would make it unworkable. It seems to me that
to make this system fair it has to be unworkable or vice versa.
I think that is one of its principal failings. Even if I was not
in the art market I would be opposed to it as a principle because
it does not achieve what it sets out to achieve. I believe it
is a completely outdated concept and it is not the best way of
helping artists; all the evidence suggests that.
Q61 Chris Bryant: But it is going to
happen now, is it not?
Mr Browne: That is right, and
we have got to make it work.
Q62 Chris Bryant: You have seen the document
that the Government has come up with which has a draft statutory
instrument in it. If it comes to the House it will only get a
debate of an hour and a half from the Committee somewhere. Now
is the moment to say publicly what amendments you think are necessary
to make it work.
Mr Browne: This thing came out
in February. I represent possibly even more varied constituents
than you do in some ways. I have to consult amongst a large number
of people on the precise details of this. One of the things that
surprised me most in the consultative document was the paucity
of the impact assessment that is attached to it. The Department
of Trade and Industry did an impact assessment in 1996 which was
lodged in the House of Commons' Library and the Prime Minister
asked the DTI to commission a further inquiry from Market Tracking
International, which again was published in 1999 and since then
there has also been a more recent study in 2003. I am surprised
that the most recent study has not been published with the consultative
document and that more reference is not made to the impact. When
you read the impact assessment and the consultative document you
wonder why on earth the Government got so heavily engaged in this
because it simply does not bring out all the very telling economic
statistics which do back up the case about market diversion.
Dr Robertson: The one thing we
have been missing here is helping the intermediary because the
intermediary is the person who creates livelihood for the artist.
I know it is not part of the document you are proposing putting
forward, but there must be a way of actually increasing the opportunities
for mastering the primary market to show their work and thereby
make a living rather than focusing exclusively on this very small
commission or fee they might get from the latest sales of their
work. When work goes into the secondary market margins are extremely
thin and I do not quite see why so much focus and attention has
been placed on this very, very unhelpful tax. Let us look at some
legislation which helps intermediaries.
Q63 Chris Bryant: Maybe you should write
to us with some suggestions of what this should include. Mr Browne,
you mentioned the £30 to £40 transaction cost. When
you buy a work of art at auction a computerised system works out
what the premium was, what the VAT was, what the insurance was,
all of that. I do not see why it would be all that difficult simply
to add another process which says "And the royalty right
is such and such". I cannot see how that could possibly cost
£30 to £40 a go.
Mr Browne: This was as a result
of various surveys that have been done. We do not know precisely
because a good deal depends on the legislation, but those have
been the figures that have appeared in the impact assessments
within various surveys done by the Department of Trade and Industry.
It is based on the fact that you will have to be aware of what
lots in an auction are liable to this charge and what are not.
In a way it is analogous to the costs on a business of managing
VAT and so on. There is a cost to the industry of doing this.
This is not a cost that the industry is allowed to deduct from
the levy itself. The collecting agencies are allowed to deduct
25% of what they get in before they pay it out. The charge on
smaller businesses is a cost that they will simply have to bear.
I suppose they could pass it on one way or another, but it increases
the cost of doing business. If the terms are extended to bring
the value level down, I feel that the effect of that will be either
to impose an additional administrative cost and complication on
the smaller business or, if they are not prepared to do it, there
is nothing to stop them saying they simply will not sell those
things because it is too expensive to do so. One has to look at
the cost benefit. If you take 400 euros at 4% or 500 euros at
5%, whichever it is to be—Sorry, I am wrong, it is 50 euros.
Chairman: We really need to move on to
our next set of witnesses.
Q64 Chris Bryant: You have just got the
maths wrong by a factor of ten.
Mr Browne: If it costs £34
to collect then you are talking about a rather uneconomical way
of going about trying to help artists.
Chairman: We are badly overrunning and
we are keeping the Minister waiting. Thank you very much indeed.
I hope you feel that you have had the opportunity to put your
case.
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