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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 176-ii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE CULTURE, MEDIA AND SPORT COMMITTEE
Tuesday 9 January 2007 MR MARTIN LEVY, MR JONATHAN SCOTT, MR GERRY McQUILLAN MBE SIR NICHOLAS GOODISON, MR HUGH STEVENSON and MR WILLIAM MASSEY QC
DAME LIZ FORGAN OBE and MS CAROLE SOUTER MR JULIAN RADCLIFFE, MR RICHARD ELLIS MR ANDREW ELLIS and DR FRED HOHLER Evidence heard in Public Questions 182 - 312
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Culture, Media and Sport Committee on Tuesday 9 January 2007 Members present Mr John Whittingdale, in the Chair Janet Anderson Philip Davies Mr Nigel Evans Paul Farrelly Alan Keen Mr Adrian Sanders Helen Southworth ________________ Memoranda submitted by the Reviewing Committee on the Export of Works of Art and Objects of Cultural Interest, the Acceptance in Lieu Panel and the Goodison Review Group
Examination of Witnesses Witnesses: Mr Martin Levy, Member, Reviewing Committee on the Export of Works of Art and Objects of Cultural Interest; Mr Jonathan Scott, Chairman, and Mr Gerry McQuillan MBE, Secretary, Acceptance in Lieu Panel; and Sir Nicholas Goodison, Mr Hugh Stevenson, Chairman, and Mr William Massey QC, Member, Goodison Review Group, gave evidence. Chairman: Good morning, everybody, and welcome to what is, I think, the fourth session of the Committee's inquiry into caring for our collections. We are covering quite a lot of ground this morning, so I appeal to all witnesses to be relatively brisk in covering the ground. Could I welcome, first of all, Sir Nicholas Goodison who carried out the Goodison Review three years ago and the members of the Goodison Review Group, Hugh Stevenson, the Chairman, and William Massey. Could I also welcome Martin Levy on behalf of the Reviewing Committee on the Export of Works of Art and Jonathan Scott, the Chairman of the Acceptance in Lieu Panel and Gerry McQuillan who, I understand, is the Secretary to both of those committees. First of all, can I call upon Helen Southworth who has a brief statement. Helen Southworth: I want to raise a non-registrable interest, that my husband is a museum director, was a member of the Goodison Review Group and is a member of the North West Board of the Heritage Lottery Fund. Q182 Philip Davies: Has the Treasury accepted any of the fiscal recommendations made in the Goodison Review? Sir Nicholas Goodison: No. Q183 Philip Davies: That was very brief! Sir Nicholas Goodison: I was told to be brief! Q184 Philip Davies: How many of them has it expressly rejected? Sir Nicholas Goodison: The report was published in January 2004 and I have had no contact with the Treasury since that date. There has been no discussion and no formal response to my review. I have had, therefore, to glean reasons for no acceptance from elsewhere, particularly of course from parliamentary debates, and I suppose the major gleaning that I get from that is the feeling, expressed as a feeling, that present concessions and present incentives are not used sufficiently. That came out in a Lords' debate and it is what Lord Evans said in summing up that debate, I think, in the autumn of last year. I find that a strange response because I was of course recommending measures which encourage philanthropy and the only measure that encourages philanthropy at present which might be relevant is the gift of shares and land and, when I did my review, the Treasury were unable to produce any figures for what had happened as a result of that inducement. However, when you think about measures, such as the acceptance in lieu of private treaty sales, they are not philanthropy, they are sales, and the only other philanthropy is gift aid which I do not think is suitable in this case because the donor does not receive the total benefit, so I do find that response odd. I am not without hope and I must observe that yesterday the Treasury did ring me up and invite me to come and talk to them about my review and about the broader issues of philanthropy and I am very glad about that. I am an optimist and in the long run I think, I hope, we will see something. Q185 Chairman: This was the first contact you had had in three years? Sir Nicholas Goodison: Yes, with the Treasury. Q186 Chairman: The day before you came before this Committee? Sir Nicholas Goodison: Yes. I must say, I take it as encouraging. I am not a pessimist in these matters and I think it is encouraging. Being an optimist, I like to think that the real reason for nothing having happened is simply they had not got round to it. Q187 Philip Davies: Are there any other reasons, apart from the fact that they had not got round to it, why you think they might have given such a poor response? Sir Nicholas Goodison: I simply do not want to speculate because I do not believe in speculating. Q188 Mr Sanders: Assuming that the Treasury do not want to go down the tax incentive route, are there any other routes they can go down? Sir Nicholas Goodison: Well, my review put forward a whole series of ways in which the problems of acquisitions could be solved and it was not just acquisitions, but it was trying to persuade people to keep works of art that they now have, with modifications to one or two present measures, it was trying to persuade them to prefer selling to museums if they were going to sell at all and it was trying to improve the museums' ability to collect and willingness and enthusiasm to collect and so on and so forth. It was a large package and all of those things I would like to see done. I do not know if you want me to come back to answering the question about what has been accepted because that was, I think, confined to the Treasury, was it not? Q189 Chairman: It was, yes. Sir Nicholas Goodison: I have things to say on the other measures. Q190 Chairman: You said that you have made contact with the Treasury since the publication of the report, but has the Review Group had contact with the Treasury? Mr Stevenson: We have put in papers to the Treasury, copies of which we have made available to the Committee. Apart from an acknowledgement that they have received it, we have had no further contact at all. Q191 Philip Davies: Have they given any indication as to when they might actually accept or reject these proposals? Do you have any timescale for that? Sir Nicholas Goodison: Not to us. Mr Massey: If I could come in there and just give chapter and verse on that, we submitted a paper on the future of conditional exemption for heritage chattels on 6 October 2005 and we submitted a paper entitled, Proposals for UK Tax Relief on Donations of Cultural Property, ie, the gift aid for works of art proposal, and that was submitted on 22 October 2004. We also submitted, with perhaps the not too catchy title of, Possible Modifications to Administrative Practice Relating to Negotiated Sales of Objects to Institutions, and also a draft model agreement for acceptance in lieu in situ, over which there has been a certain amount of debate, and that was submitted to the Treasury again on 22 October 2004. We have had acknowledgements of receipt, but nothing substantive from the Treasury. Q192 Chairman: Who appointed you, Sir Nicholas? Who appointed the Review Group? Mr Stevenson: The Review Group is just a private group of people. We have not been appointed by anybody. Mr Massey: The Review Group is simply an ad hoc group of lawyers, largely lawyers, of museum curators and other interested bodies. For example, a member of MLA is on it and also a former director of Christie's. We have all read the Goodison Review and we all thought there was considerable merit in most of the proposals. We thought it could perhaps benefit from further analysis and possibly research into other jurisdictions, fiscal incentives, et cetera, and we, therefore, formed a group on an ad hoc basis, so we represent really nobody other than ourselves. We are an ad hoc group and we simply are there really to explore and perhaps back, as far as we can, the Goodison proposals. Q193 Chairman: Sir Nicholas, you were formally appointed by? Sir Nicholas Goodison: By the Treasury, well, by the Chief Secretary. Q194 Chairman: Who was Paul Boateng? Sir Nicholas Goodison: Paul Boateng, yes. Q195 Chairman: So you were presumably led to believe at the time that your report would receive some kind of response from the Treasury? Sir Nicholas Goodison: I think in normal circumstances I would expect some response and maybe some discussion. Q196 Chairman: But none of that has happened? Sir Nicholas Goodison: There has not been any, no. Q197 Helen Southworth: Could I ask whether you are aware of any representations being made by the DCMS about the recommendations of the review? Sir Nicholas Goodison: I have had a number of discussions with officials in the DCMS and my impression, but you will have to ask them, is that they wish to see things done and would back quite a lot of the recommendations of my report. I sincerely hope they do because they represent museums and collections in this country. I have never discussed, and never been summoned to discuss, anything with a DCMS minister incidentally, so there has been, as far as I am concerned, an aching void. Q198 Chairman: Although the DCMS have discussed it? Sir Nicholas Goodison: The DCMS have shown interest in the field of acquisitions and summoned a meeting in July chaired by a senior DCMS official which I thought was encouraging. Q199 Mr Evans: How would you best describe the state of acquisitions in the UK at the moment? Sir Nicholas Goodison: I would not change a word of what I wrote in my report today. I did take the trouble to re-read it before appearing here and I think it still stands. I think it is very sad that the enthusiasm to collect has been damped down by the difficulties that museums have been having. I think that remains true today. The national museums are to some extent fortunate because they have access to larger funds and larger backers, but even they are finding it difficult to allocate sufficient money to acquisitions to enliven and improve their collections. You have had evidence from them and that is what they have told you, and I agree with that. Out in the regions I think it is much more serious still because the local authorities are always, for reasons that you know, penny-pinching and acquisitions are a very easy thing not to bother about if you are trying to save money on your budget. I do not think anything has changed since I went around the country when writing the review. I heard these very depressing statements from regional museums about the state of their collections, the storage of them, the conservation of them, the lack of curatorial expertise, the lack of training, the lack of proper career prospects, so I think there really is a serious issue here of improving collections management across the country. Q200 Mr Evans: Is the problem more at the very top end where the acquisition would cost perhaps in excess of £1 million? Sir Nicholas Goodison: Yes. I did say in my review that there was nothing that I could recommend that would deal with the problem of a super-expensive object. I must make it clear that I am not only talking about works of art, I am talking about objects across the whole board of cultural activity, but the really expensive ones do tend to be works of art. There was nothing I could recommend which would solve them other than the Exchequer grants which I was warned off anyway and it was not part of my brief, but I must observe that it was Exchequer grants in Scotland that saved two great pictures which were integral to Scottish collections, but the Treasury have taken the view that the National Heritage Memorial Fund has taken the place of Exchequer grants which it patently has not, but that is the view. There was no other recommendation I could make and, therefore, I recommended increasing the National Heritage Memorial Fund to at least £20 million a year, and I do stress the term "at least", and of course it is going up to £10 million in 2008 which, in my view, is nothing like enough. However, lower down the scale from the very large acquisitions there is a host of potential acquisitions which fall in the area of £5,000 up to £500,000 where you could still prove that works are of pre-eminent importance, but that, I think, is where the big problem that I was trying to tackle lies. Q201 Mr Evans: Is the real issue here though that museums and galleries in the United States, for instance, to take one example, have access to such greater amounts of money than we have that almost there is a culture of giving up, that we cannot compete with them, so why bother? Sir Nicholas Goodison: The United States is a great deal richer, for a start. It is the leading economy of the world, as Britain was in the 19th Century and the 18th Century, so you cannot do anything about that difference. The fact is they are richer, the fact is their museums, therefore, are better endowed and of course they have great tax benefits in the acquisition of works of art and culture in the States which we do not have here. The thrust of my proposals on tax were, as I said earlier, partly to persuade people to retain and partly to persuade them to sell to museums if they did not want to retain, but, above all, to give that 60% of their own money towards acquisitions, at least 60%, and that was the thrust of my proposals. My belief, and it was based on discussions with museum directors, potential donors and others, is that it would make a difference. Q202 Mr Evans: Do you accept as well for the regional museums and galleries that they have a real problem, and you have sort of intimated it, about using council tax money to buy perhaps a work of art which may cost a lot of money, that there would not be proper support for that, particularly at a time when people are not getting their rubbish collected more than once every two weeks and people would say the money should be going there as opposed to buying fancy works of art? Sir Nicholas Goodison: Well, I think the enlightened council will back a good acquisition. You have only got to go and look at an exhibition or a new acquisition in a regional museum to see the excitement that it can generate and the well-chosen acquisition enormously enhances the educational possibilities, the local price in the collections and so on, so I think the willingness is there, but the funds are not there, and most criticisms of the system are to do with the lack of funds. I would add a postscript to that, and it is a very important one, that museums must not sit on their backsides, they have got to get out and cultivate potential donors. Nothing in my proposals would work if the museums could not cultivate their potential friends. Q203 Mr Evans: Do you think they are being lazy then at the moment? Sir Nicholas Goodison: I think if you are in a local authority network, it is quite difficult to cultivate potential donors. Some of them do it very well, others became very dispirited quite a long time ago and worry of course that, if they get private money, the public money will be chopped. That of course is one reason why I recommended strongly that museums should consider setting themselves up as trusts and local authorities should back that because I think donors are much more likely to give to charitable trusts than they are to local authorities. Q204 Chairman: Can you give us an estimate of how much your fiscal proposals would cost the Treasury? Sir Nicholas Goodison: No. I was asked that at the very first press conference and I said I really could not give an answer to that just as they could not assess the results of the gifts of shares and land when they brought that in. It is an exact parallel, that there is no evidence on which to make an estimate, so I plucked the figure out of the air that I thought it was quite likely to be of the order of £20-30 million, but I do stress that is a guess. Q205 Chairman: But you said earlier that you thought one of the reasons the Treasury were not attracted to your proposals was because they felt that the existing concessions were not being taken up as much as they could be, so that would suggest it is not necessarily a matter of cost which determines it. Sir Nicholas Goodison: I do not know, as I said earlier, what underlies that feeling. It was Lord Evans who made the statement in the Lords and it appears to be based on some work done in the Treasury which I have not had access to. Q206 Mr Sanders: Is there more work to be done along the lines of your review to simplify, integrate and promote the existing fiscal provisions that support museum acquisitions and, if so, where should the responsibility for this lie? You recommended to the Department that responsibility was transferred from DCMS to the MLA for the export control and acceptance in lieu programmes. Sir Nicholas Goodison: I regret to say I did not hear part of that question. Q207 Mr Sanders: I think you had answered part of it in earlier questioning, but is there more work to be done along the lines of your recommendations to simplify, integrate and then promote ---- Sir Nicholas Goodison: The answer is yes. The DCMS have transferred the functional parts of the export review which I greatly welcome. They have held back the right to approve in situ agreements under acceptance in lieu and the right to approve export permission. I regret that. They have their reasons, but my proposal was that they should delegate all those functions to a strengthened MLA. Nothing whatever has come through the Inland Revenue because my proposal was also that those functions carried out by the Capital Taxes Office should also be transferred, but nothing has happened there, so it is a disappointment to me that the proposal to build up within the MLA an authoritative and consistent body which could give advice and guidance and handle all the aspects, both of owners and museums, has not yet been realised; there is more work to be done. Mr McQuillan: If I might add something from the MLA's point of view, the unit which I head, the Acquisitions, Export and Loan Unit, does provide advice to anyone who comes, whether they be private or a museum, on the tax incentives which operate in relation to acquisitions in the UK. We provide a tailored service for each acquisition and in the last year, 2006, we had 40 such cases where museums or private owners came to us and asked for advice and guidance, and that is considerably up on 2005 when there were only 26 such cases, but there has been some progress on this matter. Sir Nicholas Goodison: I would not want you to think I am criticising the present work of the MLA. I think Gerry McQuillan in particular does a superb job and it is my aim of course to build on that excellence. Q208 Chairman: Just before we move on from the criticisms of the review, the Review Group, you have set yourselves up to refine the proposals and then go on and make recommendations, so given that you are getting no response whatsoever, do you see any point in continuing to operate? Mr Stevenson: May I say that is something obviously we will discuss among ourselves. It is quite dispiriting because a great deal of work has gone in, as you will have seen from the paper, into putting some real flesh on the bones of the Goodison proposals and it is clearly dispiriting to get no response to it. Sir Nicholas Goodison: But you have to go on! Mr Massey: I think since we started we have had, I forget, it is either five or six committee meetings to discuss the recommendations and in every one of those committee meetings an item on the agenda has been the future of the group and certainly on the last agenda, the future of the group was very much something on everybody's minds. Obviously if one is beavering away, but getting nowhere, that is a disincentive. After all, none of us is paid to do this, it is benevolent work and there is obviously a disincentive, if one is getting nowhere, to stop, so time will tell and obviously results will tell, but there is a limit obviously. Mr Stevenson: But there is a great deal of expertise and legal expertise within the group and practitioner expertise and we love to see it being used. Q209 Chairman: But even if the Treasury are not listening to you, presumably others are? Mr Massey: Well, our submissions have been to the Treasury so far and to this Committee. That is where the submissions have been. Q210 Chairman: Sir Nicholas, what do you expect to happen following your telephone call yesterday? Sir Nicholas Goodison: I expect to be called to the Treasury to have a very interesting discussion which I look forward to. Q211 Chairman: Do you know who you will be seeing? Sir Nicholas Goodison: No, but I imagine it will be a group of people who advise the Chancellor, or I hope it will be. Q212 Chairman: But not a minister? Sir Nicholas Goodison: I very much welcome the thought that they put to me yesterday, that it would be in the broader context of philanthropy because I think it should be seen in that context. My major tax proposals were really to encourage people to give. There are a lot of rich people around today and we need to encourage more giving. Q213 Chairman: But have you asked to see a minister? Sir Nicholas Goodison: The invitation was there right from the start. I have not pressed it. Q214 Helen Southworth: If we are looking at potential abuses of the systems, one possible abuse which has been reported recently in The Guardian is that a vendor applying for the licence may provide for the Reviewing Committee a valuation or a fictitious sale at a price which far exceeds the amount the object could fetch at a foreign sale with the result that it could escalate the price for the UK. What processes can you put in place to make sure that we are not actually sort of affecting the market and actually undermining the whole system by supporting acquisitions? Mr Levy: When an application for an export licence is made, there is a very detailed form which has to be filled in in which as many questions as can reasonably be asked are put and those, amongst many other topics, will involve the destination of the object for which the licence has been applied, the price at which the licence is being applied and what that price represents. Now, when there is a situation where there is a sale documented between the vendor and the buyer, there really is no difficulty at all; it is clear cut and we accept it. There have been occasions where we have had a certified letter from an attorney overseas confirming the nature of the contract and on that basis there is no problem. Where the questions arise which you are alluding to is if something is going out speculatively to be sold at auction or if something is being supported by an owner to him or herself abroad, those who have residences here and abroad. In those instances, we have the opportunity of consulting the committee during the proceedings, the independent assessors, for example, and sometimes people on the committee have expert knowledge within a field as to whether the value is one which is acceptable within the broad bounds of what is known about the market. If we are satisfied that that value is reasonable, then we accept it. If, on the other hand, there is considerable doubt about that, we are in a position to call for independent valuations which we do do, so we are mindful of this problem and, I would say, ever more tightening up on this process and not letting things go just because. Q215 Helen Southworth: How frequently would you say it is in terms of items which are difficult to value? Mr Levy: Not that often really because more often than not there is a sale from party A to party B with a contract, so it is not that often. There have been instances and there have been instances recently where things have gone out to be sold without there being a contract. Q216 Helen Southworth: Is that a changing process? Mr Levy: No, it has always been the process that people can apply for a permanent licence for something to be sold. As I say, I think the committee is very concerned that things do not go out at the wrong price and, therefore, the public purse is being asked to raise money at a figure which is not justifiable. Mr Scott: If I may add to that, I was Chairman of the Export Committee between 1985 and 1995 and it was a very rare problem ten years ago or during that ten-year period, but I think it is one that has increased in more recent years. Q217 Helen Southworth: In terms of export to public institutions overseas, we have already touched on the fact that there are nations which have far greater purses than the UK. Is there an issue around there being less effort made to save works for the UK if they are going to a public institution overseas and are there any possibilities of discussions and negotiations with institutions elsewhere so that we can identify items which are specifically important for the UK and not have a sort of escalation of prices? Mr Levy: Well, I think one has to understand the Waverley criteria as the background to this and the Waverley criteria offer an opportunity, the last opportunity, to retain something in this country which is considered of particular significance under the three criteria. I think one has to understand also that, of the something like, I think last year, 30,000 objects for which licences were applied, something like 25 items were eventually referred to the committee, so it is a very, very small number of pieces. The committee then considers these against the background of the Waverley criteria and there is no responsibility on us, or reason for us, to consider where they are going, but simply whether the pieces are of sufficient significance that they ought to be kept in the country. The question asked about, "If something is going to go to the Metropolitan in New York, how tragic is that?", the thing is that we have no control over it and, first of all, we are not in a position to make that judgment at this stage, but once the thing has left the country, we have no jurisdiction over what happens to it. For example, we can say yes, the Metropolitan is a very worthy place and the object is free to go, but the Metropolitan can go through some financial crisis or change of taste and decide against the acquisition, in which case this great object, which might have been retained over there, disappears into the ether. Then I think there is a further problem with this, that many American museums actually use benefactors to make acquisitions for them, so might not that same use in the Metropolitan, just to take an example, say, "Mrs X or Mr Y is going to buy this individually and promise it to us as a gift", and why is that any different? We are on a very slippery slope with that. Q218 Helen Southworth: Is that an issue which is changing currently or is this a static position? Is it the same as it was 15 years ago? Mr Levy: So far as attitudes are concerned over here? Q219 Helen Southworth: No, in terms of volumes. Mr Levy: I think the number of cases fluctuates on a year-by-year basis, but probably no more than about 40 at the most and not much less than 20, so it is the same number of cases every year. Our prices go up, but not the number of cases. Q220 Helen Southworth: In terms of the process of retaining things within the UK, what role currently do you believe philanthropy plays in that? Mr Levy: Insufficient, I would say. Sadly, our greatest concern is that, of the very small number of pieces that we would recommend to be retained, over half, by object, are exported on average over a period of years. We get enormous support or the system gets enormous support from independent bodies, the Art Fund and the National Heritage Memorial Fund, but they too are constrained by the amount of money they have available. They also have their own agendas, so there are timing questions and there are access questions. For example, if you take a drawing which, by its nature, cannot be shown in public the whole time, and I cannot speak for the decision-making process, but if there is an onus on them to make things available to the public, but actually that object has to be kept in a drawer for nine months out of the year, that might preclude them contributing towards something which we would feel should be kept. I think another issue is the slight misunderstanding which has arisen so far as outside funders is concerned, that the Waverley criteria are sometimes seen to have different values, the first, second and third criteria, the first one being so closely associated with national life, the second one about the aesthetic and the third one, broadly speaking, about the standing importance for study, put very simply. Now, we do not actually see a difference between those three criteria and all three are of equal importance, but I think sometimes funds will say, "Well, if it is not of national importance and if it is not so closely connected to our history, then maybe we need not give it quite such strong consideration". Given the nature of the Waverley criteria, as I say, I think each of them needs to be seen equally. Q221 Helen Southworth: You referred when you were giving your demonstration of the Met to the very strong role benefactors play in the US. Mr Levy: Yes. Q222 Helen Southworth: Can you describe what sort of role you think they currently have in the UK and what levers you think make the recommended difference up? Mr Levy: I think that some of the recommendations that the Goodison Review has made as far as encouraging private individuals to contribute in that way, were they to be acceptable at some stage, would be of enormous benefit to the museums over here. I think that is one way in which extra funding might be forthcoming. There is also, I believe, a commission on unclaimed assets which is in process at the moment and we have in previous reports talked about a national acquisitions fund which has been more or less rejected, but we, as a committee, just wonder if some of the funds from this commission on unclaimed assets might actually kick-start just such a fund. Q223 Helen Southworth: Do you think there are any changes which should be made to the system and to the Waverley criteria in particular? Mr Levy: I think that the Waverley system was examined in the quinquennial review which reported a couple of years ago and it was also looked at by the Goodison Review. Really everybody who contributed to that, I think, found broadly in favour of the way it operated and I think it is always worth looking at things to see if they can be changed, but it has operated on a very simple premise for 50 years and I think it has been very effective and it has actually had great achievements in retaining extraordinarily beautiful and important works of art which are retained not only for the benefit of this country, but also attract enormous numbers of tourists during the course of the year to our museums. Q224 Helen Southworth: So you would not see a need for a comprehensive review or changes to the system at random? Mr Levy: I do not think so personally and I do not think the committee does, but we are here in a sense to do what we are asked to do and I think if people felt there was some cause to look at it, it would not be for us to say no. I do not think anybody has actually suggested anything major that needs to be changed and that is not working other than a lack of funding to retain those very, very few pieces which we recommend each year. Q225 Helen Southworth: In terms of potential additional funding and drawing additional funding in, what would you think the potential was for increasing philanthropy? Are we talking about a 10% addition, are we talking about doubling it? What do you think potentially in the UK there could be if we were operating well and people had good relationships develop and were encouraged through fiscal incentives? Sir Nicholas Goodison: You cannot quantify it because there are no figures available yet even on gifts of shares and land. I have asked again if there are any figures on those because I think they might give one a clue as to what the potential is in the other forms of gift. I do think very much that the Treasury and the Inland Revenue, since they are all now in one department, might be able to produce that figure. I do not have any doubt that there is scope for a good increase in philanthropy in the field that we are today talking about and I say that because, during my conversations which led to the writing of the review, I did not only talk to the museum directors who know their sponsors well and knew what they were thinking and had evidence that they would be helping if they had tax concessions, but I also spoke to potential donors who said yes, they would see this as an opportunity, so I have no doubt there is latent demand there, but I cannot quantify it. Mr McQuillan: It might be interesting to make a comparison with France. In 2003, French legislation for philanthropy changed radically and they offered 90% relief for gifts from companies which made donations to acquire items which had been declared national treasures, the equivalent to the Waverley criteria in the UK, and that is already beginning to have a significant effect and several items have been acquired by the Louvre which clearly have been on the basis of donation. For private individuals, the French system was changed so that 66% tax relief was given from 2003 and we are liaising with colleagues in France to try and find out what sort of uptake there has been of both of these systems since they were introduced in late 2003, so there should start to come on stream some indication of how the changes to the philanthropic regime will have an effect on museums and acquisitions. Q226 Helen Southworth: When are you expecting to have that information? Mr McQuillan: Well, it is very difficult getting at the French Treasury system. I contacted the French Embassy and I would hope that some time in the next few weeks we might have this information available. Q227 Janet Anderson: The Export Reviewing Committee concludes that arrangements intended to protect the national heritage are "not working as they should, above all, due to a lack of funding", and that one of the problems is that the system in the UK depends upon matching offers becoming forthcoming. Do you think there is any way in which the committee's modus operandi could be changed to overcome that problem and to keep more of these items here in the UK? Mr Levy: The system, as it exists at the moment, is one that depends on co-operation from all people involved with it, whether they are exporters, people buying things abroad or people wanting to retain things in the UK. I think part of the reason that it is a success, and I think it should be seen as being successful with the exception of this percentage that goes abroad or a broadly successful system, the idea was mooted at one stage that, if something was stopped, the would-be exporter should sign a binding offer to agree to sell this to a public institution should the funds be raised. This suggestion was looked at by DCMS and it was found, on counsel's opinion, to be a disproportionate measure to take, so it is very difficult. There are very few occasions on which an offer is withdrawn. There have been a number of instances over recent years, but in the most recent years it did not happen at all and to say it is a diminishing problem, the evidence of the last period is that it has somewhat diminished, but the answer is that I do not personally think that there is any way to, as it were, pre-empt a purchase at that stage. Q228 Janet Anderson: So you are broadly happy with the way the system is working? Mr Levy: I am broadly happy with it and I think that those people who were consulted about the system in the quinquennial review also shared that view and they are very much the same group of people. Q229 Janet Anderson: If we could go back to the question of funding in your forthcoming meeting with the Treasury, none of us has a crystal ball, but do you have any idea as to what might be acceptable to the Treasury and do you think that DCMS ministers could perhaps be more supportive in pressing your case with the Treasury? Sir Nicholas Goodison: I cannot really answer the first part of that question, but I go back to the Labour Party's Manifesto which said that they wanted to encourage philanthropy, particularly in relation to the arts. I forget the precise wording, but there it was, so I have no reason to think that that spirit of wishing to increase the level of philanthropy in this country is not still there which is why I remain an optimist, despite all the evidence, and I would be hopeful. I go back a moment and ask why did the Chancellor introduce gifts of shares and land against income tax? It was to encourage philanthropy, so there is a straw in the wind there, more than a straw, a log in the wind and it was a very good move, so I am not unhopeful. Yes, I think the DCMS, from the evidence I have, would, I hope and think, support, but I cannot guarantee that because ministers change and ministers tend to call the shots on that, but I have reason to believe that the officials are broadly in line with what I am recommending. Q230 Janet Anderson: So do you think perhaps that there is a kind of window which might overcome the problems of the erosion of the effectiveness of acceptance in lieu when works of art cost far beyond the inheritance liability of the owner? Sir Nicholas Goodison: Yes, that is a slightly different problem, but just to answer the main thrust of your question, if I was in the Treasury, I would see two things. I would see, first of all, a slimmer and slimmer chance of public sector support for the arts community or the cultural community because of the tightness of budgets and wanting to continue to tighten budgets, and we are seeing that at the moment in these requests to national museums to consider 7% reductions in their budgets. On the other hand, I would see a lot of private individuals becoming richer and I would logically think that there was scope for increasing private support to cultural organisations and I believe that to be true. It is the main thrust of my report, that I think we need to encourage more private money to come into the system to help to solve the starvation of public money, and then we need government support, which is the title of my review, in addition to private giving. Q231 Janet Anderson: So you would still like to see government support increased as well and perhaps particularly for the two incidents in Scotland where public money had been put up to retain ---- Sir Nicholas Goodison: Well, I mentioned those because they were in effect Exchequer grants, although public policy in England is not to use Exchequer grants, but I just mention it as an example that there have been Exchequer grants, despite the overall policy that was introduced some years ago. I hope that there will be a change and I hope that we can introduce a greater philosophy of giving in this country, as there is in the States at the moment. If you are a rich person in the States and a leader of society, it is thought rather odd if you do not give money and there is a lot of peer pressure on you to give money, and I would like to see that develop in this country. Q232 Chairman: Mr Scott, are you concerned that the effectiveness of the acceptance in lieu scheme may be diminishing as the amounts you are able essentially to offer in terms of write-off for tax appear smaller and smaller in comparison with the potential yields in the market? Mr Scott: On the whole, that is not a problem. Over the last five years or so, we have had, on average, 30 or so objects offered which we have recommended acceptance of. The average market value of those has been something over £25 million, say, £27 million over that period and the average amount of tax that has been written off has been between £15 million and £18 million. Now, we cannot actually, and I am very happy to say that we cannot, influence the mortality of owners of important objects and I would be very loth to suggest that we should acquire such occult powers to benefit the system, but we have not any evidence that we are missing out, as it were. We are advertising the system in a modest way which is something we did not do five years ago, we are publicising our report giving details of the objects which we accept each year and, in addition to that, we have a website which receives a very considerable number of hits. Mr McQuillan: There are about 40,000 a year downloadings of the annual report of acceptances each year. Mr Scott: And our report does give the full mechanics of the system, an idiot's guide as to how it works, as it were, so I think or I hope we are getting the message across to potential users of the scheme. We are at the moment finding that we are missing out and I think to some extent people are getting wise to making use of tax planning and so on for mitigating the effects of inheritance tax on some large estates. Therefore, whereas there was a case when the Duke of Omnium died, and it was a pretty regular thing, that there would be the offering from Omnium Gatherum Castle, that does not tend to happen nowadays and there have been, I would say, some very large ducal deaths which have not been followed up in the way which might have been the case five or ten years ago. Q233 Chairman: Given the obvious reluctance of the Treasury to accept the recommendations of Sir Nicholas, do you encounter any resistance on behalf of the Treasury to your activities? Are there cases where the Treasury require persuasion that they should accept a particular object in lieu? Mr Scott: None at all, absolutely none. I am pleased to say that we have excellent relations with the Nottingham office and so on and we have no impression that such and such is inappropriate, although there was a case about six years ago when there was one very large case and there was some sort of back-seat tweaking of figures which was resisted and sensibly resisted. Q234 Chairman: Can I ask about conditional exemption and this is to whichever of you feels most qualified to respond. Do you find that the effectiveness of the conditional exemption scheme has diminished since the changes which took place seven or eight years ago? Mr Scott: Conditional exemption cases are brought to us in the first instance for adjudication and we have seen a severe drop in the numbers of cases. I find this of concern partly because we see conditionally exempt objects as a very good pool from which future offers for acceptance in lieu may be given, but partly also for the fact that the process of conditional exemption does put objects temporarily outside the risk area for coming before the Export Reviewing Committee. At a time when, as we are well aware, there is such a lack of funds for important objects, any scheme which diminishes the effectiveness of keeping those things off the 'at risk' list is to be deplored. I think that we have not yet seen or got the full impact in particular of recent changes in the law to trusts because very many of these objects are held in trusts which perhaps do not have anything other than assets to pay tax liabilities and I would be very interested to know whether the Treasury have taken account of that when that legislation was introduced. Sir Nicholas Goodison: I think the conditional exemption has kept more objects in this country than any other single measure since it was first introduced. I have made a number of proposals concerning conditional exemption and you, as a committee, have taken them on. Mr Massey: Could I just endorse what Sir Nicholas said there. It is an extraordinarily important weapon really in favour of preserving items in this country. If one looks at what is done, it has been in existence for something like 100 years and we have got now over 90,000 objects and works of art under the conditional exemption system, accessible to the public, kept by the owners at no cost to the nation. That must be, it seems to me, a good system. I think the difficulty is that with 1998, it is now perceived by owners who are thinking about conditional exemption as an unattractive incentive because of the burdens which are now imposed on them as a result of the changes in 1998. If that is the fear and if that is a concern to owners, so it is a disincentive, obviously that puts pressure on the owners to sell the works of art and, if there is inadequate funding coming from the nation, that obviously increases the risk of the works of art being sold and going abroad, so it does seem to me that it would be worthwhile to consider encouraging owners by another look at the conditional exemption law since 1998. To be specific, there are three changes which I think run counter to the usefulness of conditional exemption. One is the fact that in 1998 the class of exemptible chattels was very considerably reduced down to pre-eminent chattels and not merely to museum-quality chattels. Now, going forward, that may be something which the Government for the time being may think is right, that one should not actually throw open the doors of exemption to anything other than the most important chattels. The problem, I think, which Sir Nicholas highlighted in his report is that that causes an awful lot of chattels which are currently accessible under the museum quality test and which are apparently accessible to the public to be removed from accessibility on the next death and they simply will not become exempted because the standard has narrowed. That seems to me to be a pity because quite often the collections in the great houses may have one or two pre-eminent items, but a huge number of museum-quality items which enhance the whole collection and actually make a very attractive viewing experience. Now, they may also under the current rules be exempted, provided the house is an open house, but many houses will not be open houses, in which case they have to satisfy the pre-eminent quality case and will not do so. Sir Nicholas's recommendation is that nothing should be done which takes out of the conditional exemption regime chattels which are already in it as that does seem to be counter-productive. The second disincentive is the one which requires the owner to provide access other than by appointment with members of the public because this normally entails some element of opening the house to the public and that raises obvious security concerns to owners and they do find it extremely unattractive, particularly those with young families, and they are concerned about personal security as well as the security of their chattels. They are concerned about the rising tide of burglaries because it means them putting not only the house, but actually putting their exact location of the chattels on the internet which is what you might call a 'burglar's charter'. I think the third disincentive is under the new rules, the 1998 rules, the undertaking made by the owner is inherently variable at the suit of the Revenue or the Treasury which again is an unattractive type of agreement. Nobody in the commercial world goes into an agreement which is inherently variable and unilaterally variable by one side, but not by the other. I think those two disincentives provide a great deal of discouragement to owners and indeed the Goodison Review Group did a survey amongst London solicitors which we have exhibited in the evidence which shows a marked lack of enthusiasm for legal advisers to recommend the current conditional exemption rules for new owners. Q235 Chairman: So to sum up, essentially I think all of you are saying that you think the 1998 changes had a damaging effect and that we ought now to re-visit them? Mr McQuillan: I really feel that very strongly. Mr Massey: Yes. Chairman: Do we have any other questions? Q236 Helen Southworth: Philanthropy has been a fairly constant theme of the evidence that you have been giving but we focus quite closely on what either the Treasury can do or on what museum curators can do. Can you express an opinion about what the DCMS ministers might be able to do in a leadership role and whether there are pivotal people within the private sector that should be being brought into this as well? Sir Nicholas Goodison: I think ministers have a big role in preaching the word so I would hope they would preach the word. Mr McQuillan: There is one other very specific area which I feel very strongly about which I am pleased to say has been taken up by DCMS and that relates to literary archives. It has been very noticeable that over the last six years we have had only one major literary archive offered to us and the reason for that is that virtually every major writer of today has had his archive hoovered up by Texas and so on, with the result that it would be virtually impossible for any student of 20th century literature to be able to do it in this country in future. I think that the initiative by the DCMS and by Chris Smith in particular to try and rectify that situation hopefully so that such archives can come before the AIL committee in future is something that is very strongly to be recommended. Q237 Helen Southworth: Are you hopeful that you will see some big initiatives from DCMS ministers to launch seminars and discussions and to get some excitement into this process? Mr Levy: The British Library did a major two-day seminar in November - of course the British Library is funded by DCMS - highlighting this problem and bringing over curators from the American collecting institutions and keepers from the British collections to discuss the issues and get a common understanding of what the process is that goes behind the American acquisitions. I think that is part of the debate that was widely reported and reported in The Times Literary Supplement, so there is some movement in this area. Q238 Helen Southworth: Are people generally happy that everything that needs to be done is currently being done or do you want to see more being done in the next couple of years? Mr Levy: I think the problem is with the tax regime in that the archives of living authors, if they are sold are taxed to income tax and there are no benefits currently - conditionality exemption and acceptance in lieu et cetera - that can come into effect because they are taxed to income tax. Q239 Helen Southworth: If they sell abroad they are taxed to income tax but if they sell here they are also taxed to income tax? Mr Levy: Yes. If they were charged to capital gains it would be a much easier situation but that is something we would need Treasury co-operation on or a change in the douceur mechanism, which is only applicable to capital taxes at the moment. If that could be applied in some way, I am sure it is not beyond the bounds of creativity in the Treasury to apply it in this particular instance to income tax so the benefit goes in part to the public institution acquiring the objects in this country and in a smaller part to the living author, it would help remedy the advantage there is currently in selling to America. Chairman: Can I thank you very much. Memorandum submitted by the Heritage Lottery Fund Examination of Witnesses Witnesses: Dame Liz Forgan OBE, Chair, and Ms Carole Souter, Director, Heritage Lottery Fund, gave evidence.
Chairman: Can I welcome back to the Committee Liz Forgan and Carol Souter on behalf of the Heritage Lottery Fund. I will invite Nigel Evans to begin. Q240 Mr Evans: Good morning. How much money have you got to award in acquisitions this year? Ms Souter: We do not have a specific allocated sum for acquisitions, we have general open programmes, so we will respond to particular requests for acquisitions and deal with them as we would any other application to us. Q241 Mr Evans: How much would you estimate then that you would give this year? Ms Souter: It will depend entirely on what we are asked for. Q242 Mr Evans: How does that work? I do not fully understand. Normally you would have a budget that you would be able to operate within. It almost seems if you had 30 great requests then you would be able to meet all of them! Ms Souter: We are always in the position that we have more requests for funding than we have the funds to support, so any project in any year is going to be in competition with other projects in that year. We have found that with a few exceptions, for example for churches, that it suits best the overall needs of heritage to have open programmes so that we do not cut up our money into penny packets but we allow people to apply. For example, you might have one year where you have some very big applications for acquisitions and in other years the majority might be much smaller and come with other applications. Q243 Mr Evans: I can understand the smaller bits. There is no problem with the smaller applications, but if you had ten applications which you thought were good but were all costing £3 or £4 million each, you would not have the ability to say, "Yes, we will accept them all," would you? Ms Souter: No. Q244 Mr Evans: You have got to be cash-strapped sometimes; everybody is cash-strapped. Ms Souter: Exactly, and that is the same for acquisitions as for every other sort of project, be it a natural environment project or wider museum project. We look at the projects that come towards us. We obviously provide as much advice and guidance to potential applicants as we can as to priorities of budget availability and so on. Q245 Mr Evans: You just said budget availability. I am just trying to find out what your budget availability is. Ms Souter: Overall we have £290 million for the whole of the UK for this year. That is split between applications up to £2 million, which are considered by our nine English regional committees and Scotland, Wales and Northern Ireland committees, and applications above £2 million which come to the National Trustees which Liz chairs. Q246 Mr Evans: Right. Do you see there being a funding crisis? Ms Souter: I think there are clearly not sufficient funds available to meet all of the desires of museums and galleries to acquire items for their collections and I think that that has had an impact on the resources that they are prepared to commit to attempting to make acquisitions. As you have heard already, it is very dispiriting when there is not a successful outcome if you have been trying to acquire something. We have recently announced a £3 million ring-fenced fund to encourage collections development at the smaller end of the scale with grants of £50,000 to £200,000. We are consulting on the detail of that at the moment and that is partly specifically to address that lack of confidence amongst the smaller applicants that they will be successful if they attempt to acquire. Q247 Mr Evans: What about at the top end; do you think there is a crisis there? Could you give us a typical example of an application at the top end? Dame Liz Forgan: We would absolutely never use the word "crisis". The effect of using that word would be to do something that we would very much not wish to do and that would be to put off potential applicants from coming to us because they would give up before they began, so we would never ever use that word. It is probably my job on behalf of the trustees to answer for the overall policy which makes it so difficult to answer the question that you started out with. The overall policy which the Heritage Lottery Fund operates is that the heritage of Britain needs to be seen in the broadest possible context. The heritage is what the people in Britain value enough to wish to transmit to the next generation, subject essentially to two conditions, one is that it can be sustainable and the other is that it can be shared very broadly with other people. I think that is a rich and productive and very successful strategic framework which we have applied over the years and I think has been a good one. It always makes for friction in any particular slice of that very big cake when the pressure comes on one area or another, whether it is archives, whether it is the natural heritage or whether it is acquisitions. I would not say crisis. You could never have a policy that prepared for the sale in any year of a huge Old Master or two or three. That would be ridiculous. Those things have to be treated as special events. Q248 Mr Evans: So what would happen if you had an application this year for something costing £20 million? Dame Liz Forgan: It did happen to us not very long ago - the case of the Madonna of the Pinks that you will perhaps remember. It caused an enormous amount of discussion which frankly delighted me because it made everybody think about exactly what we mean by the public benefit and the value that we attach to these pictures. A fierce argument took place involving newspapers and trustees up and down the land - it was wonderful - and in the end after long discussions with the National Gallery, subject to their creation of a very special programme of public education and special access built round that picture to justify a very, very sizeable investment by the Lottery Fund, we enabled them to buy it. We could not do that every year and I think you would not expect us to with the funds available to us. Q249 Mr Evans: No, so if you get two or three in a year for £20 million, then you just have to say that although you thought they were all valid and you would love to do what you have done with the National Gallery you would just have to say no to two of them? Dame Liz Forgan: Hard choices I am afraid. We have always taken the view that it is a serious issue for the nation but it cannot be done by one agency alone. The Heritage Lottery Fund cannot do it; the Government cannot do it; the private sector cannot do it. We need all three to be meshed together in a way that maximises all our potential contributions and enables each bit to do what it most wants to do, and together I think we could probably do a bit better than we are doing at the moment. Q250 Mr Evans: So do you think there should be a creation of an Acquisitions Fund particularly at the top end? Dame Liz Forgan: I am nervous about that notion because it seems like a very simple solution to everything. Actually what do we mean by that? What I would like to see is the Government looking very carefully at Nicholas Goodison's proposals, not only for increasing the Government's own contribution, for instance with the National Heritage Memorial Fund, which I do think is very important and it ought to be up to at least £20 million if we are to do this job properly, but also to encourage the private sector to share more of this burden because, as anyone can see by reading the papers, private wealth in Britain is increasing very satisfactorily and we are not seeing a corresponding chunk of that money coming into this area. It is plainly an area where it potentially could. The Lottery has always had a view that part of its duty was to contribute towards the acquisition of special objects. We tend to look very, very favourably on applications that come from the regions and smaller ones because a small acquisition in a regional museum can make the most enormous difference, for example the Wenlock Jug in Luton or the Joseph Wright of Derby portrait that we bought for Derby. The people of Derby really care about that, it makes a big difference. The Lottery itself tends to be seen as a huge pot of money but it cannot do it by itself and nor should it. It has to live by its own lights and by its own lights it can make a big contribution but it cannot do it all. Q251 Philip Davies: Do you spend up every year your budget, in which case, following on from Nigel's point, is it pure luck as to what comes up each year as to whether or not you can buy it? Or do you say, "These things come up periodically and so we will put money aside each year so when a really big thing comes up we have actually got money in our pockets to do something with it"? Ms Souter: Can I answer that in terms of how we operate within the Heritage Lottery Fund. We allocate a sum which we are prepared to commit each year. For many years that has been more than our income levels because we know that the big capital projects we fund take a long time to spend the cash so we can manage the cash flow by committing more funds in any given year than we are expecting to go out of the door. We are coming to the end of that and so our commitment levels will be declining over a period but we aim to commit as much money as we started the year wanting to commit. We do not hold money back. We do not operate in that way. The National Heritage Memorial Fund, which was set up as a living war memorial in 1980, operates on a slightly different principle. It has a grant-in-aid figure which as Liz says, we hope very much will be increased over the years, and it also has an endowment which sits behind it. That means that there is at least the potential - to go back to Mr Evans' question - if there was a very large acquisition that was suitable for the National Heritage Memorial Fund, because the endowment sits there as well as the grant-in-aid, to deal with a quite extraordinary situation as we had with the acquisition of Tyntesfield for the National Trust, a house in its entirety rather than a work of art, but it gives us the opportunity to use that money in very, very special and unusual circumstances. Q252 Chairman: It was put to us in evidence that the HLF appeared to be giving a lower priority to museum acquisitions than they had done in the past. Would you accept that is the case? Dame Liz Forgan: Absolutely not. As Carole explained, the flow is driven by what comes to us not by our own arbitrary decisions. What is the best illustration to give you? Ms Souter: Perhaps I could mention success rates. The success rate for acquisitions for museums, galleries, archives and libraries has never fallen below 76% and in the year in which we contributed least money, which was only £1.3 million, a very small percentage of the total HLF money, the success rate was still 80.86%, so it really does depend on what people ask of us. Realistically people will make their judgment about whether they are likely to be successful or not so one must not be naive about that, but we have a very, very high success rate for acquisition applications to NLF. Q253 Mr Evans: So what percentage do you turn down? Ms Souter: Just under 20%. Dame Liz Forgan: Chairman, I think it was you in an earlier session who made the point that there was some sense that people did not apply because they were afraid that it might be a waste of time, and we are concerned about that. Carole mentioned that we have taken a proactive step in a way that we do not often do to try to address this in the shape of a special fund of about £3 million which is precisely aimed at encouraging the regional museums to not only acquire things but also to put in place the curatorial training and confidence to look after them and to want them. This is an experiment and we will see how this goes. We have not promised anything more than a year. In fact, it will take five years to work through, but we have tried to make it as simple as it could possibly be. We have removed all the requirements to come back to us every time an institution wants to purchase an individual object, so we are going to make it as simple and as streamlined as it possibly can be for those who qualify for it and we will see whether that will achieve its aim, which is really to raise the water table at regional level of curators in those museums having the training and confidence and encouragement to acquire. It is not necessary to spend £3 million every time you want to acquire an object that will really enhance your collection. We hope that will have a good effect at that level. Q254 Chairman: You do not feel that the guidelines you operate under from the DCMS, which focus specifically on issues like promotion of access, make you less inclined to give grants for acquisitions than for other projects within the museums sector? Dame Liz Forgan: I must tell you Chairman, that although we have broad general directions from Government to that effect, if you took them all away tomorrow I do not think there is a trustee round the table that would change the way we operate. That is not out of some piece of political correctness; it is out of the belief that not only is the heritage story enriched and enhanced by having more and more people contributing to it but that in the long term our ability to sustain our national heritage depends on there being a really broad constituency of people who know it and love it and think it is theirs and will look after it and campaign for it. Q255 Helen Southworth: Could I can ask about timeliness. Are there issues about the speed with which people need to respond if they get a catalogue and find there is something important to their collection which is on sale next week? Ms Souter: Yes. Q256 Helen Southworth: What are the issues and what is the resolution of them? Ms Souter: Again if I can address the two funds. It is easier for the National Heritage Memorial Fund to turn round an application very quickly because it does not have the requirements for access and involvement and inclusion, so we have (and on the part of the staff this is truly heroic) turned round applications in two or three weeks when exactly that has happened, when someone has found something in a sale catalogue. It is obviously not ideal because it means you take a decision on one object rather than looking at whatever might be coming up at the next committee and looking at them all as a piece. It is more difficult for the Heritage Lottery Fund particularly at levels over £50,000 where that level of application would go either to a quarterly committee meeting or to the trustees meetings, and as our resources are increasingly stretched I think both committee members and trustees are increasingly concerned not to take decisions between meetings (which would be what would be required) because of the risk that you disadvantage some other project which is going through the process and comes up at a meeting which has less money available to it because you have taken a decision on an acquisition. There is no doubt that it is more difficult for the Heritage Lottery Fund to deal with a sudden request for an acquisition than it is for the Memorial Fund. Q257 Helen Southworth: Would you like to see incentives to get owners who are thinking of selling discussing it with the public sector rather than going to auction? Dame Liz Forgan: It is terribly important and that sort of intelligence is so helpful and useful. On the whole curators and people know what is going on. It is just every now and again something comes out of the blue and it would be extremely helpful if we could find a way of encouraging people thinking of selling to start having a discussion with their local museum or gallery before making a decision. That would be wonderful and anything you could do to make that happen would be simply miraculous. Q258 Alan Keen: Helen has led on to what I was going to ask. Your role is very passive, is it not? You talk all the time about you do not want people put off from applying to you because they think they will not get the award. The whole situation to me seems to lack co-ordination. It is a fragmented business altogether, is it not? You have got museums who obviously would like to acquire whatever item happens to come along, but it seems to me it is the private collections that are important, and they might not even be collections, they might be just objects that exist and owners have not even thought of them as part of a collection. Do we not need someone who is proactive and looking out for and trying get the same culture that exists in the US into people's psyche, to people who at the moment have objects which they do not even understand the desire of other people to see them? There seems to be no-one who is proactive. We go from the Treasury which is struggling to understand the word "giving". It is not very comforting for taxpayers to have a Treasury that does not understand philanthropy. What would you like to see exist? Would you love to be in a position yourself where you were the person who had the duty of looking at everything and planning ahead as to what could be done in trying to persuade people with money to give? There must be people who do not even understand the system at all concerning valuable objects. I am sorry to be talking around the subject but I am trying to draw out what could be done. Can you comment? Dame Liz Forgan: I have just been relishing the wonderful vision of myself as the "Empress of the Arts", but I think in seriousness the market is a very, very powerful motivator of people. The issue is not how you motivate people to sell things, it is how you encourage them to have the public interest at heart when they do. Q259 Alan Keen: To give rather than to sell. Dame Liz Forgan: I think the evidence you heard in the session before us is the best advice there is on that subject. I do not think we can add to it. One element where we do contribute, and you are right when you say we are pretty reactive and that is quite deliberate, but one thing we have done in recent years is to set up a small development function in our regional operation so that there are people who will go out at the very bottom end of the market if you like and encourage people to apply to us for funding for all sorts of things, to talk to people who would not naturally think of perhaps applying to us, who would not naturally think that the things they possess or love or want to save qualify for heritage, and to that extent we are proactive. We do go and we say, "Just a minute, have you thought about this?" Q260 Alan Keen: I am sorry, I should have explained that I was asking the question overall, not just on the Heritage Lottery Fund. I understand your role is to be waiting for applications to come forward but I am talking about the overall position. You were talking about the evidence that was given before you stepped forward. I was talking about the same thing. There is no-one with a proactive duty or a proactive role anywhere it seems to me. Dame Liz Forgan: You have to be careful of choking it off. If you go too far in trying to interfere with the private interests of people they will retreat. The Reviewing Committee keeps a very, very careful and skilful balance between the interests of the private seller and the interests of the public in keeping the best things here. They do a very, very skilful job like that. I think myself that is the way to go. I would be concerned about the notion that there was somebody stamping round the country saying we want that and that and that. Ms Souter: If I could add there are different levels of activity as well. I do not think we should under-estimate the local contacts and the contacts with individual institutions that are built up over many years. Many of the great collections include works that have been on loan to them for very many years and increasingly over the years the curators responsible for those collections have developed much better relationships with the owners of those loaned works of art and so they know where things are and they will be alerted. A great many acquisitions, and I think we would probably like to see more, are effected through private treaty sales so they do not come to the market in the first place, and very often that is because the owner has a good relationship with the curator, with the local gallery. I think it is also the case that as museums and galleries have become much more effective at fundraising more widely for perhaps their contribution to the capital funds which we have funded so broadly across the sector, they have also started to build up relationships with potential donors. They are not always just looking for people who will help them in supporting acquisitions. Some people will be interested in doing that, others will be interested in refurbishing the sepa-atrium of the gallery or something like that. I think there is a level of expertise growing up and well-established in some of the bigger institutions that is doing the sort of proactive work that you are talking about. Q261 Alan Keen: It is comforting to hear. Would you say that activity is equal across the country or will it differ depending on the experience or the skill of the various museum directors? Ms Souter: Realistically it varies enormously. The larger and the national museums have a greater capacity, apart from anything else, to devote resources to that sort of contact building and to reaching out. If an organisation is so under pressure that it is not quite sure how it is going to fund its staff for the next year, then it takes a really strong-willed director or set of trustees to stand back and say, "No, we are going to do this long-term relationship building." Some are very, very good at it, but one of the hopes that we have for the collections initiative is that by saying to people, "You can collect, you can acquire things," that we will raise the aspirations and that some of those smaller institutions will start to think, "Okay, let us see if we can raise some matching funds locally and let us see if we can excite some of our potential donors locally to do that," and that will gradually expand that base. Q262 Alan Keen: You have just explained that nationally there is not the same amount of skill and commitment or determination right throughout the country. Is there enough co-ordination to make sure that those gaps are not damaging therefore the potential collections that we may get nationally? Ms Souter: I think there is always going to be more that could be done. The Renaissance in the Regions programme has helped enormously by creating relationships around the hub museums in the regions. We have funded a number of partnership programmes where we have supported a major national institution to work with two or three other regionally based institutions to share skills and knowledge, but there is always, always more that could be done in that field. I think the Department's attempt to develop a strategy and a set of priorities for the future will be helpful from that point of view and when the MLA comes up with its action plan that responds to that report, then I hope that will help show the way forward as well. Q263 Alan Keen: Can I ask specifically now about archiving. It was Oxford University, was it not, that criticised the fact that you have not got an expert on libraries and accused you of being out of balance really and said therefore that sector would suffer? Is that true? Dame Liz Forgan: Our trustees are chosen not for their sectoral expertise. Some of them have sectoral expertise, some of them have completely different areas of responsibility. We have tried to be very protective of the archive sector. I do think they are the Cinderellas of this story and the Heritage Lottery Fund has spent £56 million on archives and libraries up to now. Some of the solution lies in the hands of the archives sector itself and we have worked very hard with them to try to change their vision of an archive from being something that is closed and quiet and dark and beloved of a very small number of scholars to something which is also an open place where all kinds of people can find really important ideas about their lives and their communities. Here and there around the countryside you can see that working really marvellously well. I think the snowball is rolling and we are ready to support and back that initiative wherever it comes. Ms Souter: I think perhaps I would just add that one of the largest HLF awards of recent years was £17.7 million for the acquisition of the John Murray Archive for Scotland. The excitement that that has generated in Scotland, and will generate much more widely when people find out really what is in that archive, really will be a beacon project in terms of showing how important an archive can be in casting all sorts of lights on heritage across the board. Q264 Chairman: You stated earlier that even if there had been no guidelines from the DCMS that you probably would not have changed any decisions that the HLF has made. Can I raise with you one specific application which we will be hearing from shortly, the Public Catalogue Foundation. Many people would think that the work of the PCF is extraordinarily valuable but you rejected it, I understand, on the grounds that it did not encourage new audiences to get involved, it did not improve physical access, and it did not provide support in interpretive materials. Those sound very much like the sort of guidelines you are operating on but are you saying even if those were not your guidelines you still do not think the PCF is deserving of HLF support? Dame Liz Forgan: It is a brilliant scheme but we think it could be more brilliant, and that is the subject of the dialogue that has been going on between us and them over a number of years. I had better leave it to Carole to speak about the detail. Ms Souter: There is no doubt that it is a fantastically exhilarating project being carried out with tremendous commitment and enthusiasm, but we do ask that people think about not just providing a baseline of information but how people are going to use it and get involved and so on. The particular application that was turned down was for the Suffolk project and I myself had a meeting last year with the Public Catalogue Foundation and we had a very productive meeting about how, for example, you could use volunteers to do some of the work and how you could spread out some of the information and rather than simply producing the catalogue how you could actually get it out amongst a wider group of people. Some of my team had a pre-application meeting in the middle of last year and we were hopeful that we would have a request for a project planning grant which would be a small grant to enable the Foundation to think about how they might apply for more substantial funding from us. I think it should be clear though that the Foundation has a project of its own which it wants to take forward. It is a wonderful project and we have criteria for funding projects. There are things that can be done that can bring those two together but it is for the Foundation to decide whether they want to do those things, whether they want to add on working with volunteers in a broader group and so on which would make it possible for us to fund them. I think we have had some very productive discussions and, as is the case with a number of projects, the fact that it is not something that necessarily meets our criteria does not mean we do not think it is a great project for other reasons but we do have to have criteria that apply across the board and are understandable by everybody. Q265 Chairman: The core purpose of the PCF, the revealing of all these works of art which up to now nobody has known exist because they are all in dusty store cupboards, that itself you regard apparently as a wonderful project but you were not prepared to finance it? Dame Liz Forgan: It is wonderful but we believe that the spending of Lottery players' money ought to be rewarded with the maximum possible benefit and we think there are greater benefits that that money could deliver if we work together with the Foundation on a more ambitious way of doing this. This has happened to us many times before. I hope I can make you believe that our access and education criteria, although they may be expressed in somewhat lumbering terminology, are ambitious and wonderful values, and they are there to encourage curators, say, in museums to make a leap of imagination further than they would normally go. It is wonderful to have an Old Master you can hang on the wall, thank you very much, fine, value for money is delivered but if you just give it another push from an organisation and say, "If you really want that money you are going to have to think a little bit harder about how you are going to make that picture come to life for more people and how you are going to get more value for more people out of this huge investment by Lottery players," and that is what we do. Most of the time you get complaints from people at the beginning as to why are they being subjected to this awful PC stuff but when the reality comes to fruition the overwhelming majority of people are delighted. They see their institutions blossoming in a way they did not before and they see their staff using their wits and their imaginations in a way that they had not before and that is the aim. Q266 Chairman: So you are optimistic that you will be able to support the PCF? Dame Liz Forgan: Do not say that! Q267 Chairman: You are hopeful? Dame Liz Forgan: It would be quite improper! Chairman: I do not think we have any more questions, thank you. Memorandum submitted by the Art Fund Examination of Witness Witness: Mr David Barrie, Director, the Art Fund, gave evidence.
Chairman: Can I welcome to our third session this morning David Barrie, the Director of the Art Fund, and invite Adrian Sanders to begin. Q268 Mr Sanders: Given that a high proportion of museum collections are not on display and are actually in storage, what confidence do you have that further acquisitions are needed? Mr Barrie: The position at the moment is that roughly 80% of museum collections are not on view, but I think it is important to recognise that that figure of 80% embraces a very, very wide range of different kinds of material. For example, there are large volumes of archaeological materials kept primarily for research and scholarly purposes. There are things that cannot be displayed all the time, for example works on paper, textiles, light-sensitive material. The volume within the 80% that might be of great interest to the public is probably relatively small. Having said that, I think the Art Fund is concerned that better use should be made of the material that is not currently on regular display and we would certainly want to encourage museums in any way we can to find ways of getting that material out so that the public can have access to it. Q269 Mr Sanders: If museums have got acquisitions that they are not displaying, how would you put a higher priority on that and how would you encourage them to display what they are not? Mr Barrie: Well, it is not something that the Art Fund can do by itself. I think what is needed here is a much more open public debate about the problem of reserve collections. The problem we often encounter in our own fund-raising efforts (because of course we are entirely independent and we have to raise the money we spend to help museums) is that there is a lot of ignorance and misunderstanding about the issue that you raised. I think we need to encourage museums and galleries to be more open in discussing this. We need to find ways of developing policies that involve not only us but also the Government, the Heritage Lottery Fund, and so on. There is no simple solution. Q270 Mr Sanders: What about disposals; at what point does it become defensible for an institution to dispose of items, including items with whose acquisition the Art Fund may have had something to do? Mr Barrie: To deal with the last part of that question first, we have conditions that are attached to the grants, gifts and bequests that we are associated with and we would certainly be very resistant to the notion that any of those should be disposed of. We would certainly insist on being very closely consulted before any such decision was taken. I do think that we are increasingly uneasy about the current presumption against disposal in pretty well any circumstances. As you will know, the Museum Association are currently engaged in a consultation exercise and the results of that are expected to emerge in the spring. We are certainly involved in that process and there certainly will be occasions when it will make sense to look at the possibility of disposing of material, but in the first instance one would want to ensure that material that was surplus to the requirements of a particular museum or gallery was offered free to another museum or gallery and disposal on the open market would certainly be a last resort. We would be very, very concerned to ensure that the proceeds of any such disposal were ring-fenced and used only for the development of museum collections and not used for other purposes. Q271 Chairman: Can I ask you perhaps just to comment very briefly on some of the things you have heard this morning. Are you convinced by the assurances of the HLF that they are giving the same priority to acquisitions that they have in the past and they are not constrained by DCMS guidelines? Mr Barrie: We have a close working relationship with the Heritage Lottery Fund. We have co-funded with them something like 200 different museums and gallery acquisitions. We certainly have been concerned in the past that the volume of money spent by the Heritage Lottery Fund on museum acquisitions appeared to be reducing but I am happy to say that over the last year, as a result of discussions that have taken place with us and with some of the national museums in particular, the HLF has I think recognised that something does need to be done. You have heard just now from Liz Forgan about this new £3 million scheme to promote collecting in the regional museums. That is definitely a step in the right direction. It is in fact mirrored by a scheme that we have just launched ourselves on a more modest level in the West and East Midlands and the East of England, which were the three areas identified in our survey earlier this year as being the ones that were poorest in terms of their ability to build their collections. That kind of active intervention is going to be increasingly important because crucially morale, particularly in regional museums and also increasingly in national museums is very, very low indeed. There is also a big issue around the shortage of curatorial skills. Renaissance in the Regions is a very valuable initiative and the subject specialist networks that are being promoted within that will certainly help but the damage that has been done by the corrosive effect over the years of inadequate funding and inadequate investment in the curatorial substructures, if you like, will take a long time to reverse. This is going to take a long time. Q272 Chairman: But it is in the process of being reversed? Mr Barrie: Some steps are being taken but I have to say that the scale of the problem is so great that we really do need a lot more investment and for that I think we do have to look to central government. Q273 Chairman: And you have also expressed some concern about the effectiveness of the export control system which we again took evidence on earlier. We were told by the Reviewing Committee they thought the Waverley criteria were working well. Do you share that view? Mr Barrie: The Waverley criteria are there and the Export Reviewing Committee has to work within those parameters. I think we do have quite serious misgivings about the system. Obviously the primary problem is funding. There simply is not enough money around. The figures are very distressing indeed. Last year alone of 80 objects that were deferred, only nine were saved and those were only worth £8.3 million, and £6 million of that came from Sir Peter Moores. It was a private owner, admittedly a man who very generously runs a museum, the Compton Verney, but had he not been there to step in, it would have been a truly parlous outcome and the pattern has been repeated year on year now for many, many years. The system is effectively coming into disrepute. I do not think we can get away from that. It is not necessarily that the Waverley criteria are wrong, although it is certainly the case that the Waverley criteria do not match very closely for example the criteria operated by the National Heritage Memorial Fund; I think there is a difficulty there in terms of public perceptions. Things get export-stopped that the NHMF and indeed the HLF quite frequently step back and say, "It does not really match our criteria," and I think that is awkward. Q274 Chairman: Changing the export control system is not going to in itself produce more money. Mr Barrie: No, it is not. There are aspects of its operation though that do give cause for concern. I am sure you will aware of the case of the Reynald's Portrait of Omai a few years ago which was export-stopped at a value of £12 million. The Art Fund got together with the Tate to launch a public appeal to save it and then, as if by magic, a private donor came forward with the whole sum of £12 million so the Tate was in a position immediately to make a matching offer. The overseas buyer declined to part with the painting, saying that he would rather keep it in a vault in London. It has now gone on display in Ireland but that plainly was an absurd waste of time and energy on the part of the institutions concerned. A similar problem arose recently in relation to an extraordinarily important group of Blake watercolours, Illustrations to Blair's Grave. It was a long and complicated saga but essentially the Tate was all geared up, with the Art Fund's help, to acquire this precious group of works and was gazumped at the last minute when an offer was made for a much larger sum of money for this group of works. They were then subsequently sold in New York. The group was broken up and the sum raised was actually much, much smaller than the amount for which they were export-stopped. It was a very frustrating occasion. We would love to find a way, and we are indeed in discussion with the DCMS and the export committee, about ways in which the system could be made more contractually binding. This is all quite technical but we do believe it could be improved. Q275 Chairman: The suggestion that has been made is that an application for a licence should also contain an undertaking that if matching funding is obtained then the sale goes through to an institution. You would like something of that kind? Mr Barrie: It may be that the right thing to do is to think in terms of having a licence issued at the outset of the process but subject to very strict contractually binding terms, rather than the present system which involves the issue of a licence at the end of the process so that prior to that point there is no binding contract. I think we and the national museums feel quite strongly that something of that kind is desirable. It is a legal matter and we are exploring the technicalities at the moment. Q276 Chairman: Going back to the Reynald's case, it seems an extraordinarily perverse decision of the owner; do you have any idea why he decided that he would rather leave it in a vault? Mr Barrie: I can only speculate, I do not know. Q277 Chairman: You would not like to speculate? Mr Barrie: It is probably better not to. Q278 Helen Southworth: We have had a very concurrent theme throughout the morning of philanthropy and promoting philanthropy. Although we do not have any target for what we could achieve by promoting philanthropy, a number of other people have commented that there does not seem to be a lot of leadership being shown at the moment in terms of moving this on, there is goodwill but not a lot of action? Mr Barrie: Yes. Q279 Helen Southworth: What do you think could be done and who do you think should be doing it? Mr Barrie: To give you a little bit of history, the Art Fund has been pressing for the introduction of an income tax relief on gifts of works of art for at least 15 years. The Goodison Review obviously brought this issue into high definition and into sharp focus. In parallel with that we developed a proposal called Living and Giving which actually set out in some detail a proposal that we believed, and which the museums and galleries sector as a whole agreed, would be extremely beneficial. The model that we developed was based on the Australian cultural gift scheme. It was less generous in terms of the relief that it offered than the American system because we understand that that was a non-starter as far as the Treasury was concerned. We engaged in, I would say, 18 months or two years of trench warfare with Treasury officials and special advisers and ultimately got to the point at which they seemed to acknowledge that the proposal really did make sense, we had satisfied their concerns and we were told that it was being recommended to ministers. We were therefore obviously very disappointed when a year or more ago it was turned down, not least because, as Sir Nicholas Goodison pointed out earlier, we had succeeded in getting the Labour Party manifesto to include a commitment to such a proposal. We have never been given an explanation formally for why it was turned down. We are obviously very disappointed. We have not given up and we will certainly continue to push for it. There is absolutely no question that at a time when public expenditure is under intense pressure and the likelihood of additional government funds being made available for these purposes is remote, that the introduction of tax incentives of this kind is critically important. If you ask for evidence of how such things work, I can only really point I suppose to the United States, which admittedly is a rather extreme case because there is a 100% income tax write-off available there, but for example in 2004-05 the Metropolitan Museum spent about £53.5 million cash on acquisitions and 54% of that came in the form of cash donations which would have benefited from this kind of relief. It is also very striking that the largest sums of money coming to our own national museums and galleries from the survey that we conducted in the autumn came from their American donors. Q280 Helen Southworth: To UK institutions? Mr Barrie: Yes, so our own great national institutions are attracting larger cash gifts from their American friends than they are from their UK supporters. Q281 Helen Southworth: Will the American donors be getting dispensation in America? Mr Barrie: They will be getting tax relief in the States because the national institutions of course have their own tax vehicles set up in the United States. Q282 Chairman: So the American Government give tax relief for donations towards UK purchases? Mr Barrie: Yes, we benefit greatly from the generosity of the American Government. Chairman: That is very generous. I am afraid that time is pressing on and we are going to have to move to our next session but thank you very much indeed. Memorandum submitted by the Art Loss Register and the Public Catalogue Foundation Examination of Witnesses
Witnesses: Mr Julian Radcliffe, Chairman, the Art Loss Register; Mr Richard Ellis, Consultant, Swift-Find Ltd; and Mr Andrew Ellis, Director, and Dr Fred Hohler, Chairman, the Public Catalogue Foundation, gave evidence. Q283 Chairman: Can I welcome for our final session Julian Radcliffe of the Art Loss Register; Mr Richard Ellis of Swift-Find Ltd; and Fred Hohler, Chairman, and Andrew Ellis, Director, of the Public Catalogue Foundation. Perhaps I might begin by asking the Public Catalogue Foundation, first of all are you encouraged by the exchange that I had with the HLF earlier? Do you think that you are reaching an accommodation which might open the door to funding? Mr Hohler: Can Andrew answer that because there was no room in here so I was sitting outside on my telephone. Mr Andrew Ellis: All I would say is that we are very soon going to put in another application. We have fully taken on board all their advice in the very friendly discussions that we have had with them. Q284 Chairman: How is progress with the catalogues that you have already produced? Is there any prospect that you might be able to cover the costs through sale of catalogues? Mr Andrew Ellis: I think that is unlikely. Typically a catalogue costs, including an allocation of overheads, about £65,000 to produce and for the catalogue that has been out the longest, which is Leeds, we have probably had about £14,000 in revenue. For the current year we probably would cover about 14% or 15% of our costs through catalogue sales and we would hope that would certainly rise to 25% or so. The business model though is mainly based on grants and donations from supporters. Q285 Chairman: And you are succeeding in raising money from donations and supporters? Mr Hohler: Yes, it is hard work, but the public on a county by county basis are pretty generous. The area where we find most difficulty, HLF apart, is local government and the curiosity is that local government, who really in a sense are responsible overall for the art in their counties, is very reluctant to put up even the tiniest amounts of money. Some have been generous and sometimes we get up to £10,000 or £12,000 but often you are stuck with £2,000 or £3,000. The great public in the counties, who have a lot of goodwill, say, "Why are not the people who are being paid to look after these paintings chipping in something?" and it is not a very easy question to answer. Mr Andrew Ellis: An encouraging trend has been that at least one of the museum hubs, the West Midlands, has committed to supporting a quarter of the costs of each of their five catalogues, but that has not really been followed on by many other museum bodies. Meanwhile overall in terms of fundraising whereas a year ago we expected about 20% of our funding to come from the public sector in general, now it is nearer to 15%. Q286 Chairman: Could you say a little bit about your experience as to what extent are you publishing pictures of works that the owners know are there and they have just decided they are not appropriate for displaying, or are you actually uncovering works that have long been forgotten and they come as a great surprise even to their owners that they possessed them? Mr Hohler: The owners simply do not know what they have got. Mr Andrew Ellis: If you take the case of Kent for example, in the whole catalogue about 27% of paintings in that catalogue were by unknown artists across the whole county. That is probably not exceptional across the country. Mr Hohler: That is a question of attribution but do the owners of the museums know what they have got in their collections? No. Until we have finished the work nobody knows what is in the national collection of oil paintings. We know about 20% or 30% from public documentation. Q287 Chairman: Have you found any masterpieces? Mr Hohler: It is in the eye of the beholder, Chairman! Q288 Chairman: Well indeed, but you have not discovered a work worth a large amount of money that has simply been forgotten? Mr Hohler: We are not interfering with or trying to reattribute paintings. What we are trying to do is to get the record set up. Do we look at paintings of Queen Victoria which are described as 15th century paintings of Oliver Cromwell? Yes. Do we try to get it changed? Yes. But it is not our business to correct attributions. We would get into terrible trouble if we did that. So if we think there is a Van Dyke or a Tissot or whatever it is, that is really up to the curatorial world to sort that out, but they are never going to be able to sort it out if there is not a visible record for them to look at, and at the moment there is not. Mr Andrew Ellis: Can I just counter something I said before. I did say for Kent it was about 27%. I think that is probably a high tide for the rest of the country but there are certainly many counties that we have done where a percentage - ten to 15% - are by unknown artists. Q289 Chairman: In the areas where you have completed the catalogues and it has now been published, have the museums concerned seen a benefit from the fact that this information is now publicly available? Mr Hohler: Yes. Mr Andrew Ellis: Absolutely. We have curators who say, "I do not know how I managed without this beforehand. A copy of the catalogue is on my desk all of the time." Recently there was a survey done, and the co-ordinators are working on the project at the moment across about ten counties and about 380 or so collections, and amongst those 380 collections only four collections have a complete, illustrated catalogue of their paintings on-line or in book form. That is a very, very small percentage so you can see how this can be extremely useful to them. It is a fantastic opportunity particularly given the work we do for them is free in that it prompts them also to get their records into good nick. Mr Hohler: There is a very big collection that we did and we produced a catalogue and somebody came up to me at the launch and said, "I have bought my copy," and I said, "But you were curator of this collection for nine years, why have you bought it?" She said, "Well, I know I was but I have never seen most of these paintings." It is a big national collection and you need to have a proper list, and there is not the money to do it in these places. Q290 Chairman: Do you have a copy with you? Mr Andrew Ellis: Yes we do actually. Q291 Chairman: Just to pass to my colleagues so they can see an example. Mr Hohler: For a small sum of money! Alan Keen: Pass it round quickly! Q292 Chairman: Is there any overlap? We took evidence a few weeks ago from the Bridgeman Art Library who were talking about their work in helping museums to achieve a digital record. You seem to be in the same sort of area. Do you work with them or is there overlap? Mr Andrew Ellis: We work very closely with them and we have a very friendly relationship with them, but we do not in any way compete with them. We are not in any way an art image library. We do not rent out paintings, we do not hold any rights to those paintings, we do not act as the agent on behalf of the collections, so we do not in any way compete with the Bridgeman. Q293 Chairman: And what determines where you go? Mr Hohler: Wherever there is an oil painting in public ownership or supported by public money. It is only publicly owned art. That is what is so irritating about it; we own that stuff. Q294 Chairman: In some cases it must be quite difficult to know. If they do not know what they have got how do you know; do you go and look? Mr Hohler: We agitate. You go along and talk to them and encourage them. Q295 Mr Evans: What do you do exactly? You will turn up to an art gallery and then you ask for access to this 80% of paintings that they have got in storage? Is this how it works? Mr Andrew Ellis: We include all of their paintings not just the paintings that are in storage. We will approach them and sell them the benefits of the project, which are free digital images to them, a record that goes on public display, and then we will ask them to sign an agreement with us, and then we will ask them for data and then we will arrange a mutually convenient time when we can photograph their paintings, we give them the proofs to check, and then we publish. Mr Hohler: That is for galleries but we would go to a county council and photograph all the stuff in the council buildings. You just go and work with whoever is responsible for the furniture there, or in crematoria or hospitals, wherever these paintings are - schools, judges' chambers. Q296 Chairman: You presumably have some discrimination and you are not going to publish a picture of every previous municipal chairman that is hanging on the wall of every council building? Mr Hohler: Wrong again. Absolutely without any discernment at all we do everything because you hear, "We have only got 18 boring pictures of aldermen," and there a Delazno(?), a couple of Burne-Jones and a Millais, and you have got to take them all. Mr Radcliffe: Even MPs! Mr Hohler: Even MPs! Chairman: There must be a huge amount of rubbish there as well. Q297 Mr Evans: On the rubbish side, if you are looking at the stuff that is in storage that is never put out to public exhibition (even though, as you quite rightly say, they are publicly owned) what percentage would you categorise as really not worth the canvas it is painted on? Mr Andrew Ellis: We make no value judgments at all about these paintings. Q298 Mr Evans: No but you look at the stuff and say it is rubbish. Mr Andrew Ellis: It is totally in the eye of the beholder. We allow the readers to make those decisions, not us. Q299 Mr Evans: I am trying to make a gauge of whether there is a lot of stuff there that quite frankly should be disposed of because it is not worth storing. Mr Hohler: Wait a minute, that is a slightly separate issue. For example, in that catalogue in front of you would see, I guess, a lot of 18th century landscapes. Perhaps they are not artistically of huge merit and perhaps they are not by great artists but, by golly, they can be interesting. They can tell you and your community a huge amount about what was there before and what has changed and why it was there and what their society was doing. Very few paintings are ever painted without a purpose, you know, really. If you go to the National Museum in Washington and look at the first 100 entries, they are what are called American naive primitive paintings and they are cherished there. Artistically, by Tissot standards, they are of pretty insignificant merit, but are they interesting? Yes, they are absolutely fascinating so you have got to be very cautious about taking that artistic merit only route, in my view. Mr Andrew Ellis: We are very democratic about this. Q300 Chairman: Can we switch our attention quickly to the work of the Art Loss Register and Swift-Find. You both appear to be doing roughly the same thing in terms of maintaining a database of stolen art works. Do you work together or are there differences between what you do? Mr Richard Ellis: There are certainly distinct differences in the operation. We have combined our resources previously with the previous committee when it was looking at and making the recommendation for a national database for stolen cultural property, and the Art Loss Register and Trace, as it was then, presented a joint paper. One of the reasons why the recommendation failed to become a database was because the police and the Home Office found that they could not work with the private sector as it existed at that time. Swift-Find has been formed only in 2004 so it is a very new company, but what it has done is looked at the existing databases as they were then and decided on how to create a system which is more than just a database of stolen art, antiques and cultural property, it covers all stolen property. By taking that route it has appealed to the Home Office and to the police as a central registry of stolen goods. It happens to work extremely well for art antiques and cultural property and this has enabled the company to produce a business model which provides a free service to the police, and a free service to cultural institutions whereby records of what people own or institutions own, can be placed on a positive database so there is a record held securely of what exists prior to any theft. There is a stolen database which currently holds around about four million records of existing stolen data of all types of identifiable property of which something in the region of 170,000 objects are of art and antiques. We provide searching technologies which do not exist anywhere else. The searching technologies include image matching, so where you have a stolen painting, for instance, which may resurface at a dealer, it is misattributed and you are not searching for Turner on Turner you might be searching Turner on Constable, with image matching you will still have nonetheless a match, and indeed with reference to the high number of paintings with unknown artists you will again be able to decipher a match on an object which is stolen just purely on the image, and obviously there is also textual searching and serial number searching. Also there is the spider technology which is incorporated into the system. This means that instead of a searcher having to spend many hours looking at different websites on the internet, a single search for an object results in a search of all publicly accessible internet sites simultaneously, and if an object is not in the Swift-Find database, for instance it is on a third party website, the searcher will be taken to that website, they will be shown an image, a description of the object and the contact information relevant to that person for that particular object, so it becomes a one-stop shop for searching for stolen property. In terms of the cost, it is free to law enforcement and it is free to cultural institutions. The way in which matches are notified is an anonymous system. We hold no information as to who owns the property that has been stolen. Instead we have the police reference number and matches are electronically referred instantly to the investigating police authority wherever they are in the world, and this has led to the police now looking at Swift-Find and we have a number of direct data transfer arrangements with different police forces in the UK and outside, so at the point of recording a crime the police, without any additional paperwork and time, can by clicking on the property data button transfer the property data through to Swift-Find with their unique police reference number and contact point, and it is to that that information as to a match is then immediately sent. Swift-Find does not get involved in the actual recovery of stolen property other than as an alert system and therefore we charge no recovery fees, so again it is not a case of penalising the victims twice once for having property stolen and again for having it recovered. This is a service which is paid for by the searcher. It is an internet-accessible database, the only one of its kind that is, which enables it to reach a far wider group. Q301 Chairman: Who pays you? Mr Richard Ellis: It is paid for by the searcher so where we have auction houses - and we have something in the region of 60 of the top auction houses around the world supplying their sale data prior to sale for which we do various levels of searching - they pay for that service. The internet searcher, the people using eBay for instance, and there are many, many of those, pay for the service. The operation is funded by the end user, the person who is conducting their own due diligence on what they are seeking to buy. Q302 Chairman: But unlike the Art Loss Register you only catalogue stolen property? Mr Richard Ellis: No, as I said earlier, we have a positive database as well. Q303 Chairman: You do have a positive one? Mr Richard Ellis: Very much so. In fact, for the record I think it is important that Swift-Find as it was formed in 2004 in December launched itself as a new company called MyThings as an internet company. It was not everybody's choice of name but there it is. MyThings presents itself as a forum of collectors of all types of objects and provides them with a positive database on which they can record, again anonymously, their objects, their collections, whatever it is, be it iPods, be it cameras, be it art and antiques. They have a secure inventory held in that database. That can be searched against the incoming lots for sale and also of course for dealers. The whole company was set up by a porn broker because he had no database on which to search for stolen property, so it has been set up really from the end user perspective. Swift-Find acquired the old Trace database of stolen art and antiques. This has been added to the data in the new data base but the company has reverted to the label "Trace" so the company is now MyThings and MyThings Trace, providing both positive and negative. Q304 Chairman: What does the Art Loss Register do that has not been covered by everything that Swift-find do? Mr Radcliffe: The essential difference is that we have been going for very much longer and have a bigger and more sophisticated stolen database and we work much more closely with the police. Our database was founded in 1990 but took over a database which had been going since the 1960s and our emphasis in on only doing art and antiques. We are not concerned with anything which is not a cultural object. We have a large number of art historians who work in many different languages. We undertake a very great deal of sophisticated research on items for the police when matches occur. We have a long and proven track record of recovering items which I have listed in our evidence, and our staff are being trained as special constables in order to provide the additional staff for New Scotland Yard and other police forces. We operate fully internationally so we have offices in overseas countries and undertake the same sort of programme there. We have two databases, one is the stolen items that we are searching for, and the other is the ownership, so we take the Public Catalogue Foundation, or any other ownership database, put it into the same overall database as the stolen database and then check all the fairs, dealers and auction house sales to find items that might have been taken out of storage without somebody realising it and are being offered for sale. We believe that this may become one of the major deterrents to theft because if a museum is able to say to its curatorial staff, its contractors and the public that everything in this museum is recorded on the Art Loss Register database and if it is offered for sale it will probably be matched and that item will then be seized, that I think will be a major deterrent because people know, as the Public Catalogue Foundation has given evidence, that many items are not well recorded are not checked often because a full audit takes time and money. Even somebody like the V&A can only check their three million items every X years and when they do they will find there are shortages, sometimes due to misfiling but sometimes items have actually been stolen. We helped them recover some Constable drawings for example. Our emphasis is much more on art-related objects and much more on working with the police. We charge recovery fees to the insurance industry and a very small fee to the cultural institutions. Our whole emphasis is on cultural property and even Dick would probably admit that we have the longest and most successful track record. Q305 Chairman: What about family heirlooms? Mr Radcliffe: Yes, we do that. Historic houses, private collections and not just museums can be recorded on our database. For houses which are open to the public for example, this is very useful because they are very susceptible to theft of smaller objects which they might not notice immediately and which thieves do then try and unload very quickly. Q306 Chairman: There are quite a lot of people who do not live in historic houses but who might actually have one item which has passed down the generations which is worth a great deal of money. Mr Radcliffe: We were founded by the insurance industry and the art trade and the insurance companies, with the agreement of the policy holder, give us records of what is in a private house and should never be sold or if it is going to be sold we are notified beforehand. Mr Richard Ellis: I think it is fair to say that for both the Art Loss Register and Trace MyThings, the criteria for placing objects on the databases is not one of value, it is one of identifiability. Q307 Mr Evans: Can I just ask one of you, have you done the Commons and the Lords? Mr Radcliffe: I can give you a very good example. Dr Hohler: We can do. Mr Radcliffe: We have had discussions with a number of government departments. The MoD has not even recorded their stolen items with us. There are a number of cases where DCMS has given export licences for items that were stolen. I will give you a classic example. Lord Roden had stolen a very valuable, nationally important piece of furniture in Northern Ireland. It was aggravated burglary and he died shortly thereafter. This item was then put in the trade. The trade did not search with us but we found it at Grosvenor House by which time it had already been overseas in Miami and various other places for fairs and an export licence had been given for it. There is a great tendency by people not to register losses because they are embarrassed or do not get round to it, and to not undertake due diligence when they should do so. We are really breaking a great cultural and attitude problem which is that for 100 years nobody had a database, nobody searched and nobody recorded stolen items, and that has got to change. Q308 Mr Evans: Surely there should be a responsibility on behalf of government because it is public property? Mr Radcliffe: What is more, we do it at very low cost if they can give us a very good description. They have to be able to give us a good description and perhaps the first question should be how good are the descriptions held by the Sergeant at Arms of the possessions in the Palace. Q309 Chairman: The Public Catalogue Foundation do it for nothing. Mr Radcliffe: They might well do it for you. Q310 Mr Evans: Have you contacted the Sergeant at Arms to see if they would be happy to? Mr Andrew Ellis: We are going to do the Government Art Collection later this year and we shall be publishing before Christmas, and we could then move on to the Palace of Westminster but we have had no contact yet. Mr Richard Ellis: As a company we have been in touch with the Government Art Collection as well to offer a free inventory on the positive database, so these are areas which are looked at. Picking up on something that Julian said, the anecdotal wealth of these stories on where due diligence should have been undertaken and was not are vast. Possibly the most embarrassing one I had while I was at Scotland Yard was being called to Sotheby's to a book auction where a dealer had spotted some valuable books stolen from himself, and there was his own property up for sale at Sotheby's, and when we traced it back they had previously been recovered by the police and had been sold at a police auction where the Sotheby's vendor had acquired them. You can see how this is so easy. Property goes missing, whether it is stolen, whether it is discarded or whatever by a museum (which is easily done when they are sorting out stores) and to actually have a positive, accurate register of what they have is fundamental and so many of them do not have sufficient accurate records. Q311 Philip Davies: As your databases get more sophisticated and improved does this lead to a reduction in insurance premiums or even a reduction in the number of things that need to be insured for theft because you can trace them much more readily? Mr Radcliffe: Yes, we have got fairly good statistics of that now. Burglary in the United Kingdom from domestic dwellings has reduced dramatically in the last few years - that is not true of thefts from museums or other institutions - and the insurance premiums therefore for private houses and art collections have dropped quite significantly. The statistic is very interesting. When we started with a very small database, only 20,000 items, one in 4,000, of the items at Sotheby's and Christie's being offered for sale was stolen, and usually consigned by the thief or a near thief. Now we have a database of 180,000 items so you would think you would be finding 15 times or ten times as many. Not a bit, we find only one in 11,000 is stolen and they are usually consigned by good faith purchasers who have failed to search with us. So there is no doubt that we are having a significant deterrent effect at the top end of the trade but our problem is to get the middle and lower end of the trade to search and they would prefer not to know. Q312 Chairman: We will have to draw it to a close. Just before we finish can I ask you, we previously did not have any database and we now appear to have two. Is there anything in particular that you would like to see done by Government or for this Committee to recommend in the area you are working in? Mr Radcliffe: We have had long discussions with the Government about the Government giving to us automatically all the stolen cultural objects which every police force has reported to it. There has been some reservation about that because of data protection. We are finding that has become much less of an issue now. As our staff have become special constables the confidence level has risen and most of the police forces now are prepared to give us the data, and very often to ask the victim to contact us, but the Data Protection Act has often been used as an excuse for doing nothing. Mr Richard Ellis: Just on the point about data protection, one of the reasons why Swift-Find MyThings chose to be an anonymous system and not record the data of victims was because of the Data Protection Act, and by not doing that we have found that the police are happy to share the stolen data with us and hence the ability to have these direct data transfer. We are shortly to start a pilot with Hertfordshire Police where we are looking at providing an electronic mechanism whereby victims, including museums, will be able to accurately record the property that has been stolen from them which is then sent electronically through to the police for verification and onward circulation and obviously into the Trace database. Mr Radcliffe: The police destroy their records after seven years. We have got many, many cases where we recover the item, we go along to the police, the police cannot remember who it was stolen from, and that is why we insist on trying to get the name of the victim. Chairman: Can I thank you very much. |