Draft Artist’s Resale Right Regulations 2006 |
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Mr. David Heathcoat-Amory (Wells) (Con): As my hon. Friend the Member for East Devon (Mr. Swire) mentioned, I have some experience of the directive and, by extension, the regulations, because I was in Government when the Commission first advanced the idea of a droit de suite or artist’s resale right for the European Union. In those days, there was substantial cross-party agreement about the threat to the British art market, as my hon. Friend described. The United Kingdom has by far the largest art market in Europe, and the second largest in the world. It is an intensely international business, part of the global economy. People do not have to bring works of art for sale to London; they can just as easily take them to New York, Zurich or Tokyo. Therefore, any additional tax or regulation on our market is likely to have a very damaging effect by diverting trade to other jurisdictions. There is evidence that that is already happening. The very threat of the new tax has caused some dealers to reconsider and, in some cases, to relocate to New York. We should be fighting to keep this British strength. It is important for London. I am sure that that is one of the reasons why, in its report, the London Assembly came out against the directive and these regulations. It pointed out the damage that they would do, not just to the market but to the peripheral industries and businesses that depend on the visitors and the activity brought to London by the dynamism of the London art market. Robert Key (Salisbury) (Con): I endorse what my right hon. Friend has said. Does he recall that when that was happening—I was a Minister at the Department of National Heritage at the time—a number of northern European countries, members of the European Union, agreed that it would damage not only London but other European centres of the art market? Would he also pay tribute to the work of the then Secretary of State for National Heritage, Lord Brooke of Sutton Mandeville, for his work on the issue? Mr. Heathcoat-Amory: My hon. Friend is right. Our noble friend Lord Brooke has led an heroic struggle in another place to try to defeat the regulations—he comprehensively won the argument when the matter was debated there last week. He is also right that the London art market is a European resource. It is, therefore, truly bizarre that the European Commission should make proposals that could drive the whole thing to New York. That was recognised not only by our party’s Government but by the incoming Labour Government. I pay some tribute to the Prime Minister, who intervened personally at a high level in the European Union to try to defeat the directive. But that makes all the more bizarre his answer to my question, yesterday, in which he said:
He did not take that view at the time. The Government actually voted against the directive. It is not often that the Government do; usually, they obtain some amendments or concessions, then they abstain or even
Mr. John Whittingdale (Maldon and East Chelmsford) (Con): Am I correct in recalling that the Prime Minister threatened to invoke the Luxembourg compromise? My right hon. Friend studies these matters more closely than I, but I believe that the threat of the Luxembourg compromise is hardly ever used, except in matters of extreme national importance. Mr. Heathcoat-Amory: I understand that the compromise was considered. If this situation had happened in France, and the French market or industry were threatened, they would be fighting like tigers to protect French interests. Regrettably, the Government did not invoke the Luxembourg compromise. I want to be fair to them, however, because at every level, including in the Department of Trade and Industry, they fought an effective campaign to try to keep together the shaky coalition—the blocking minority—against the directive. As tends to happen with such minorities, it eventually peeled off and the directive was imposed on us by majority voting. The threat to the London art market remains, but the threat is not to the big auction houses. The Commission claimed that the campaign against the artist resale right was got up by Christie’s and Sotheby’s. They shall not suffer; they have auction houses in New York, and they shall simply hold more auctions there. No, it is the small people who will suffer: the small businesses and little galleries clustered around the auction houses in London, and the people working for offices in this country—the packers, porters, and clerical and auxiliary staff. Those are the people who will suffer. They cannot relocate to New York. The owners and the shareholders will not suffer. As usual, it is the voiceless people at the bottom who will suffer from that migration of business to jurisdictions without this new tax. It is, frankly, shameful that the Government now pretend that they have been in favour of the directive all along. Artists shall not benefit from such a transfer of business, because instead of their receiving a levy on a work of art in this country, art will go to New York where it attracts no levy, and they will get no income. That is why a long list of British artists oppose the directive, including Craig Aitchison, to whom I talked about it, David Hockney and Anthony Caro. My hon. Friend the Member for East Devon has given me a long list, and I have seen an even longer one. It is a long and growing list of artists who realise that they will suffer if their dealers and their business leave, and their works of art in future are not even sold in the United Kingdom. The Minister seems to deny that there is gold-plating. I apologise for missing the first few moments of his speech, but I understand that he alluded to my
The directive was agreed four and a half years ago, but instead of producing draft regulations in time, the Department produced them on 15 December—just a few weeks before they were supposed to come into effect. Anthony Browne, who has done a great job as chairman of the British Art Market Federation, wrote to the better regulation task force. He received no reply, of course, because the task force is another toothless Government body that does what it is told. I therefore wrote to it on his behalf, and it gave the correspondence to the DTI, but there has been no reply from the Department either. The Government are in denial about the damage that the regulations will cause. Bringing the threshold down to €1,000 will cause immense definitional problems, because it will sweep up a great deal of art and art-like objects, which might or might not attract the levy. There is a list of definitions in the regulations, and we are talking not only about paintings and drawings, but about lithographs, tapestries, ceramics, glassware and photographs. Will all photographs attract the levy? The regulations say:
but how limited must that number be? The regulations do not tell us whether a limited edition of a bronze sculpture or a limited number of photographs would attract the levy. Mr. Swire: My right hon. Friend makes a good point, because sculptors often issue a limited edition. They can then strike it again and issue another edition. Would those fall within the scope of the regulations? Mr. Heathcoat-Amory: Answers have we none. Although the Government have had four and a half years to think about the matter, they are clearly completely clueless about such important aspects of the regulations, with which the industry will have to grapple. That brings me to the impact assessment, which attempts to set out exactly what the measures will cost the industry. The explanatory memorandum says that “evidence was produced” and that the
Column Number: 16 It says, “Research shows that” the “administrative burden” will be light, but what is the evidence? The British Art Market Federation certainly does not agree. It was shown additional evidence and objected to it, but nothing of that appears in the impact assessment. The federation’s misgivings have been completely ignored. I am afraid that this is a good example of civil servants enlarging the extent of their Departments and the state, uncontrolled by a weak Minister—Lord Sainsbury—or by this Minister, who, as we have heard this morning, has no shame at all about the way in which he is going about this business; indeed, he shows no understanding whatever of the industry that he is now regulating. The Downing street policy unit was very interested in the issue when it was fighting the directive, and I concede that it understood the issue, but it has now completely lost interest in it, to the extent that the Prime Minister is pretending he was in favour all along. My hon. Friend the Member for East Devon mentioned compatibility with the European convention on human rights. We are dealing with property rights, which the convention protects, and people’s property rights cannot be removed without due compensation. If the regulations come into effect, however, a work of art that someone thought they owned will, overnight, be 4 per cent. owned by the artist. If that person tries to sell it, some agency will come along and take 4 per cent. That is a diminution in value by administrative fiat, which contradicts the human rights convention. Lord Sainsbury, who ought to know better, says that the regulations comply with the convention, but what evidence does he have for that view? I want to make another point about the levy. If it were collected automatically when there was a transaction, what would happen if the artist could not be traced? He might have gone abroad, not want the income or want it to go to a charity. What will happen to the money? Will it be kept by the Treasury or the collecting agency? The regulations are silent on that. Although the Government have had all these years to think about it, there has been a scrabble at the end without working out the details. The order will impose damaging regulations on small businesses and art dealers or on the artists themselves, and it is for them to work out which art attracts the levy and to where the money should go. If the artist has died without record or moved abroad, what will happen to the money? The order is a textbook example of how not to regulate. The Minister should be ashamed of himself. 9.46 amMr. Alan Reid (Argyll and Bute) (LD): It is a pleasure to serve under your chairmanship this morning, Mr. Forth. I thank the Minister for his explanation of the regulations. I also listened with interest to Opposition Members. The regulations mean that artists will be paid a modest royalty each time an original art work of theirs is sold by a gallery, an auction house or a dealer. We are faced with a European directive and must decide how to implement
We have to decide whether to set the qualifying threshold at €3,000, the minimum that the European directive allows, or at the €1,000 limit that the Government propose. I support their decision to set the limit at €1,000. Britain was right to oppose the directive, because it brings in extra bureaucracy. However, we shall have to set up the bureaucracy anyway, so we may as well set it at €1,000 as that will benefit more artists, especially those on low incomes, than would be the case if the limit were set at €3,000. As for whether the level should be set in euros or pounds, paragraph 3(4) states that the sale price will be
That seems to add yet another item of bureaucracy into the calculations, so can the Minister explain why it would not have been simpler to have set the limit at a level of pounds, not euros? Mr. Duncan: The hon. Gentleman has just said that the threshold of €1,000 is good. Let us call it £600. If something were sold for €1,001, based on 4 per cent. the entitlement of the living artist would be £32. Under what sensible and practical system does the hon. Gentleman think that anyone who has sold a painting can scour the world to find the legitimate recipient of £32? Mr. Reid: That will be the responsibility of the collecting authority. Mr. Heathcoat-Amory: How much will it charge? Mr. Reid: That is something that I would have to investigate. I agree with those hon. Members on the Conservative Benches who have spoken in opposition to the directive, but if we are to set up the bureaucracy, the €1,000 limit is right. The bureaucracy will be there anyway and that limit will allow more artists on lower incomes to benefit. For example, an examination of United Kingdom auction sales during 2003–04 illustrated that the number of artists who would benefit would increase by 72 per cent. if the threshold were set at the €1,000 limit, instead of the €3,000 limit. That will mean that those artists will be able to benefit, rather than artists whose works are selling at a higher level and who are likely to be better off. Given that we must decide whether to set the limit at €1,000 or €3,000, I support the Government in setting it at €1,000. 9.50 amJeremy Corbyn: I had not intended to speak but was shocked by the Opposition’s approach. They seem to have no understanding of or concern about the low income on which many artists subsist. In my constituency a number of very good painters enjoy their work, but are very poor. Every so often they desperately try to sell their works; sometimes they do
We all benefit from and enjoy artists’ work. However, the people who make the money are not the artists, but the dealers and collectors, and the dealers and collectors after them, and so on. The analogy of buying a house, improving it and selling it on that was drawn by the Conservative spokesperson, the hon. Member for East Devon, is frankly fallacious. A very good painting is not improved by the ownership of one individual any more than it is by the ownership of another individual; it just becomes more valuable because somebody recognises how good it is. Years later, after a wealthy collector has paid a lot of money to a lot of very wealthy art dealers, the poor artist is still in their garret somewhere in London, trying to survive, knowing that they are getting nothing from the one or two paintings of theirs that are doing well. There are analogies with other works of art, such as books: a writer receives royalties for a long time after a book is written—for 50 years I think. I cannot remember for sure, but the principle remains. The regulation is a good step in the right direction to recognising the poverty in which many artists live, and their right to some kind of benefit from the huge profits made from their works in later life. History is littered with stories of poor artists and rich dealers; Van Gogh himself died in poverty, but many made a lot of money out of his works. There are many other examples like that. The regulation is a step in the right direction, and I am pleased that the Government changed their view. I refer Members who say that resale right will destroy the British art market to schedule 2, which refers to other countries that may draw benefit from that right. Surely, the step that Europe is taking is an encouragement to the rest of the world to join in the same principle. That will not be quick or easy, but it might well happen. A voice, other than those of Sotheby’s, Christie’s, and wealthy art dealers, needs to be heard: the voice of those on whom we all rely to enrich our lives—the artists. 9.53 amAlun Michael: I have set out the Government’s proposals for the implementation of the directive on artists’ resale right, and I acknowledge that there are conflicting opinions on the best way to deliver it. I welcome, therefore, this opportunity to explain the choices that we have made. I am deeply disappointed by the divisive and tendentious way in which Opposition Members have approached the debate. I should have said say Conservative Members, because the Liberal Democrat Committee member asked questions and sought to engage with the issues, as the Conservatives did not. The new leader of the Conservative party told us that he wants to lead a party that is more reasonable and that will not oppose for the sake of opposing. This morning, we saw the Conservative party in its old and true colours: opposing for the sake of opposing and failing to engage with the issues. Column Number: 19 Members who reflected on their own time in government should recognise that the original directive faced consistent cross-party opposition. At least the right hon. Member for Wells acknowledged that we opposed it, but even he failed to acknowledge in a straightforward manner that it is now a requirement upon us, specifically as a result of decisions made by a Conservative Government. It is a pity that we do not have a cross-party approach to sensible implementation similar to that taken when we considered the original proposals. Mr. Crispin Blunt (Reigate) (Con): What happened to all our famous increased influence in Europe since 1997? The directive was successfully resisted until then and has now been passed only through QMV against British opposition. Why could not we make alliances to defeat it? Did the Prime Minister made a mistake yesterday when he replied to my right hon. Friend the Member for Wells? When he spoke in support of the directive, did he mean the regulations or the directive? If he meant the regulations, will the Minister arrange for him to make a correction in the House? Alun Michael: The hon. Gentleman has his blinkers on again. He should recognise that the directive came into force as a result of measures agreed by a Conservative Government. That is why it is an international obligation on us. Opposition Members seem to want to withdraw from those obligations in the way in which they also seem to want to withdraw from proper engagement in the European Parliament; many people will observe the damage that that would do to the country. Of course there is a period of negotiation. The right hon. Member for Wells acknowledged the vigour with which the Prime Minister, in particular, and the Government sought to oppose the directive in its early stages. Now that it is in front of us, it would be more sensible for Opposition Members to engage in discussion about implementation. Instead they use abusive language and the term “gold-plating”, which cannot be justified as a description of what the Government are doing. We had a curious speech from the hon. Member for East Devon, who declared an interest and then said that he would not rehearse the arguments. I was not impressed by his sarcastic dismissal of the position of young, struggling artists, which, I am sure, will not go unnoticed. Mr. Swire: The Minister clearly was not listening. I declared an interest—not a business interest, but an interest in the art world, in artists, dealers and the art market. That was and remains my interest; clearly it is not one of his. Alun Michael: Well, the hon. Gentleman used the words, and he chooses his words. He also referred to the Hunting Bill; I recall the arrogance of his contributions to those debates. I remember the predictions of the deaths of thousands of hounds and
It is certainly true that the directive was adopted against the will of the UK. That is because the directive, as a single market measure, was adopted under article 95 of the EC treaty, which requires only a qualified majority in the Council of Ministers. That article, which was originally article 100a, was inserted into the treaty by the Single European Act 1986, which was signed under Mrs. Thatcher’s Government. Before that Act, such a measure would have been based on article 100 of the treaty—now article 94—which requires unanimity in the Council of Ministers, which would have meant that the UK had a veto. Members who have served in government will know that the processes of negotiation are never simple and straightforward and that Governments do not always achieve everything that they want. It does no good to the UK for Opposition Members to talk down the period of the UK presidency, which was a great success on many fronts; it has been recognised as such across Europe, but apparently not on the Conservative Benches. The UK opposed the directive, but always saw that there would be benefits; it was never a black and white issue. I answered most of the points raised by the hon. Member for East Devon in my introduction. As the comments of my colleague Ministers showed, we were worried about the administrative costs. In engaging with the necessity of implementing the requirements, we designed the regulations, as far as we could, so as to avoid imposing such burdens. Mr. Heathcoat-Amory: When Lord Sainsbury, the Minister responsible, told the Select Committee on Culture Media and Sport in March 2005 that applying the levy below €3,000 would mean that the
was he misleading the Committee, or is that still his view? If it is, why has he reduced the threshold to €1,000? Alun Michael: No, he was not misleading the Committee. He was stating his view at that stage of the process, before we had worked out the best way of regulating while avoiding excessive bureaucratic burdens. During the consultation, we considered a wide range of submissions and extensive evidence from the art market, artists and independent researchers and the view of the Select Committee that took the evidence. All that showed that a €1,000 threshold was appropriate for the UK. One of the key problems with resale right was that it seemed to benefit only rich artists or the heirs of deceased artists. By adopting a lower threshold, we have ensured that our implementation will be of more benefit to less well off artists. Those are the artists who, we believe, need encouragement and support for their creativity to flourish. As I indicated earlier, we will
Jeremy Corbyn: Has the Department estimated how many lower-paid or poorer artists would benefit from the measure and how the money would be distributed to them? Alun Michael: I cannot comment authoritatively on the figures, but those who gave evidence argued that it would be of benefit, and the evidence in the Patent Office’s two reports, which I shall come to in a moment, is in the public domain, so available for everybody to see. The Government remain committed to minimising the risk of diversion of sales from the UK and protecting the UK art market. Our implementation balances the need to protect the UK art market and to reward artists’ creativity. Questions have been asked about whether setting a lower threshold disadvantages the UK in relation to its competitors, particularly those in Europe. I believe that it does not. Based on current information, the majority of member states will adopt a threshold of less than €3,000, and many have indicated that they will go below €1,000. Austria, the Netherlands, Luxembourg, Portugal and Cyprus favour €3,000; Belgium and Spain will pick something between €1,000 and €3,000; a final decision is awaited in Ireland; Italy and the Czech Republic are going for €1,000; and the levies in Germany, Denmark, Greece, France, Estonia, Hungary, Lithuania and Latvia are between zero and €1,000. We have received considerable evidence on costs, which shows that particularly with compulsory collective management, resale rights can be managed cost-effectively on relatively small amounts. That view is supported by the most recent independent economic research. The threshold was set at €1,000 because on sales below that value it becomes increasingly unlikely that the benefit to the artist will outweigh the burden on business; so it is a common-sense level to adopt. I indicated earlier that, in pursuit of an international level playing field, the UK succeeded in getting the Commission to agree that it would make it a priority to negotiate internationally to make the relevant article of the Berne Convention mandatory, so that the right would be introduced in the USA and Switzerland. Those attempts have not succeeded to date, but we will continue to press for the international adoption of resale right. As I have indicated, both studies from the Patent Office are in the public domain. The most recent is now on the Patent Office website, should anybody wish to look at the detail. I was asked why the level is set in euros rather than in pounds. The reason is essentially that because the exchange rate fluctuates, it is not beneficial to set in stone a figure in pounds. There was also some discussion about the burden. DACS will assume the burden of tracking down the proper recipient of the £32 and will absorb most of the costs. |
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