8 July 2008 : Column 345WH

8 July 2008 : Column 345WH

Westminster Hall

Tuesday 8 July 2008

[Mr. Eric Martlew in the Chair]

Artists’ Resale Rights

Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Watts.]

9.30 am

Mark Fisher (Stoke-on-Trent, Central) (Lab): I am grateful to you, Mr. Martlew, and to Mr. Speaker for selecting this subject for debate. Today’s turnout shows that the subject was well chosen. Shadow and former Ministers, and people who really care about this subject and who often speak about it, are here today. Such a well contested and attended debate is somewhat unusual in this Chamber, so I shall keep my remarks brief to ensure that everybody has the opportunity to speak.

The background to the debate is that in 2001, the European Commission introduced a resale right for artists so that they benefit when their work is resold. The measure had long been promoted by the French Government, who called it a droit de suite, and long wished for by artists, who might have received very little money from a first sale, and who saw their patrons and the people who bought their work benefit commercially from its later success and from any appreciation in its value. It was understandable and perfectly correct that artists would lobby for the measure.

Despite the artists’ good case and the fact that the resale right was originally intended to cover living and dead artists, as it does, the United Kingdom opposed directive 2001/84/EC when it was first promoted by the Commission because of the damage that it was likely to cause to the UK art market. After negotiations by Ministers—I had a certain amount to do with those when I was a Parliamentary Under-Secretary at the Department for Culture, Media and Sport, and previously, as an Opposition spokesman—the UK secured the right to derogate for a limited period. I should emphasise that the derogation applies only to the sale of the work of living artists.

It has been a success, although not unqualified. Living artists have undoubtedly benefited—some 568 benefited in the UK between February 2006 and August 2007. My hon. Friend the Member for Rhondda (Chris Bryant), who has taken a great interest in the subject and who has discussed and debated it previously in the House, reported in a debate in November 2005 estimates that some 85,000 or 90,000 artists would benefit. That has proved to be somewhat optimistic: a relatively small number of artists have benefited but, for them, it has been a success and has improved their living conditions.

To date, because, in my view, of the derogation, the UK art market has survived and prospered. It is the largest art market in Europe—it is very strong—and it is important for both artistic and commercial reasons. We do not lead in many world markets but, apart from the United States and one other entry into the field in the past year or so, we have the largest art market. That
8 July 2008 : Column 346WH
is important for us, not only commercially, but for the arts community, because it puts the focus on London and on the quality of art.

Mr. David Heathcoat-Amory (Wells) (Con): I entirely agree with the case being made by the hon. Gentleman. He will recall that the Government, despite gaining some concessions, voted against the original directive, because they saw the damage that it would do to the British art market. Does he know why the Commission is persisting with the move to extend the artists’ resale right to dead artists? That would only help American, Japanese and Swiss dealers and arts centres, and would be to the detriment not only of London, but of Europe. Should not the Commission defend Europe as a trading centre rather than introduce disincentives for people to bring their art to Europe from elsewhere in the global market?

Mark Fisher: Perhaps because I share the right hon. Gentleman’s position I am not the best person to explain the disadvantages of the scheme. However, one of the qualifications of the joys of the artists’ resale right as it was originally envisaged is that if the measure applied to dead artists, their estates and descendants would benefit. That is not improper. It is quite right that the descendants of, say, Matisse, benefit from sales of his work, but it is not exactly what was envisaged by those who originally promoted the ARR.

Mr. Hugo Swire (East Devon) (Con): I agree with the hon. Gentleman on that point. However, given that collectors and consigners at the top end are very mobile and that they can have multiple consignments wherever they like, does he agree that it would be foolhardy to extend droit de suite until the EU has successfully negotiated with Switzerland and the United States, which are playing no part in the matter, and for good reason?

Mark Fisher: I agree with the hon. Gentleman, but the debate is moving considerably. The French, who originally promoted and envisaged droit de suite—hence the name—may well begin to recognise its effects on their art market, which they are keen to promote. We could see movement on that in future, and on the battle lines that heretofore have been quite well drawn. People other than the UK Government are beginning to recognise that, although the artists’ resale right is admirable in its intention, if it is extended to the past, it will create problems that its original promoters did not envisage.

Mr. Don Foster (Bath) (LD): I am slightly confused by the hon. Gentleman’s argument. He says that the current scheme for living artists is working well and that he would have liked more to be helped by it, but that the real problem lies with the future and passing those benefits on to heirs and successors. The argument against the original scheme, which he supported, was that it would be a huge disaster to the arts market in this country, but that has doubled in size. What is the evidence that there is a problem with the current scheme or that it will be worse in future?

Mark Fisher: The difference, as the hon. Gentleman knows only too well, is that we secured the derogation. It is right to extend that beyond 2005, perhaps to 2012.
8 July 2008 : Column 347WH
While the art market changes and settles in the next decade, the derogation ought to stay. We would be well advised to extend the derogation so that we can see what changes in the art market. Huge changes are taking place. I mentioned that we were the No. 2 art market in the world after the United States, but we are now the No. 3, because of the astronomical development of the Chinese market. However, that will not be the only new market; it is likely that Russia and India will grow, too. Art is going to be a big area for development. Everything is changing, and while that is happening it would be sensible for us to negotiate with the European Commission to extend the derogation. We cannot anticipate what will happen to the art market in the next 10 years, so let us see what happens. The derogation has worked well and has saved the art market from its original fears, so we should try to extend it. That is the case that I should like to promote.

In 2012, the present derogation will expire, and Europe must decide what we do after that. There is a simple choice. On the one hand, we could go back to the original directive, under which all works of art—except for works of decorative art—would be covered. As we originally anticipated, however, that would cause problems for our art market and art markets elsewhere, including in France. On the other hand, we could seek a further extension of the derogation for a limited or, indeed, an indefinite period. Given that we cannot anticipate the future, a limited period of, say, 10 years would be a sensible measure, because we would be able by that stage to see how the art market had shaken out. We cannot predict that that will be a simple development, but an indefinite extension is probably not well advised.

What we have here is a clash of two good arguments. Artists have a good point, and I have great sympathy with their position and that of collecting societies such as the Design and Artists Copyright Society, which collects on behalf of artists. There is much to commend their position, although many people are somewhat uncomfortable about the fact that it is artists’ families who benefit, not artists themselves. However, on the other side of the argument—the side that I definitely support—the British art market is good for the United Kingdom and for its artists, and the derogation would allow the art market’s beneficial work to continue. This is therefore an interesting debate because it is quite finely balanced; it is not that one side has a rubbish argument and the other is incontrovertibly right. The debate raises interesting questions, but, on balance, there is a strong case for extending the derogation.

Those who say that the British art market is strong do not take into account changes such as those that are happening in China, which overtook us this year, or the fact that the art market is changing enormously as capital moves over the world and the profile of new countries increases. On the other side of the argument, the benefits to artists have not been quite as great as people originally envisaged. The 85,000 to 90,000 artists mentioned by my hon. Friend the Member for Rhondda in his speech in 2005 have not benefited—the numbers have been much smaller. Since February 2006, DACS has collected £4.4 million on behalf of only 1,400 artists, although that money is very useful and very good for those artists. However, only a relatively small
8 July 2008 : Column 348WH
number of people have benefited, contrary to the EC’s original prediction that 250,000 artists might benefit. Indeed, another problem with the scale and spread of the money collected is that 80 per cent. of that collected in the UK went to fewer than 140 artists. One could therefore see this as a specialist scheme, which undoubtedly benefits a few artists, but not the whole artist community.

In that sense, the provisions are not unlike the public lending right. The public lending right is a wonderful thing, although it is underfinanced, but those who benefit from it are those who least need it, such as J. K. Rowling. She does extraordinarily well from the public lending right because her books are borrowed so much, but other, less famous authors do not do so well. My father receives a payment from the public lending right every year, and his cheque usually comes to a champion £5, which I gratefully receive and give to the Royal Society of Literature. It is not, therefore, the famous artists who need the money, and measures such as the artists’ resale right and the public lending right for books, although extremely well intentioned and important, do not necessarily benefit the people we think they will.

There are good arguments on both sides, and I look forward to listening to colleagues, but I believe that the Government are playing it about right: they are consulting on the issue, and I hope to hear from the Minister that they are likely to negotiate hard for an extension beyond 2012 and perhaps for 10 years to allow them to see how the art market develops. I am encouraged in feeling that that is the right approach by the fact that things are changing in France, which has always been the champion of droit de suite, and we might well see some sympathy and even support for our Government’s position from the French Government. That is hard to predict, but the world is changing, and we are on the right side of the argument in asking for a further derogation to see how fast and how much the situation changes.

9.45 am

Mr. Frank Doran (Aberdeen, North) (Lab): Thank you for calling me to speak in the debate, Mr. Martlew. I congratulate my hon. Friend the Member for Stoke-on-Trent, Central (Mark Fisher) on securing a debate on this important subject, which concerns many hon. Members, as can be seen from the turnout.

I have come across this issue on two separate occasions. I was Parliamentary Private Secretary to my right hon. Friend the Member for Makerfield (Mr. McCartney), whom I am happy to see here today, when he was the responsible Minister at the then Department of Trade and Industry. I was also a member of the Select Committee on Culture, Media and Sport when it considered the artists’ resale right a few years ago and produced a report that helped the Government to come to terms with the issue after earlier opposition.

My position is directly contrary to that of my hon. Friend, because I believe that we should not seek a further derogation, but build on what has already been achieved by providing some remuneration to artists and allowing that to continue after their death. The argument that we heard from the other side of the Chamber is similar to the one we heard when the measure was first introduced way back in 1997. We were told that there would be an horrendous effect on the art market, which would devastate our position as one of the world’s
8 July 2008 : Column 349WH
leading art trading centres. However, things have not happened in that way. There are, however, other factors at work in the art market that do cause a problem, and I shall return to them later.

Mr. Swire: The hon. Gentleman is absolutely right that there has been no clear evidence to date to suggest that the measure has impacted on the UK’s position as a leading arts centre. Will he not concede, however, that it is far too early to tell what effect it is having on the art market and that the art market in the UK is being distorted for several other reasons, including the high prices being paid by Russian and Indian collectors for works by impressionists and post-impressionists?

Mr. Doran: The hon. Gentleman has a background in this area and knows far more about the art market that I do. Clearly, I listen carefully to what he and others in the market say, but the evidence so far is that the impact has been minimal.

There are, however, other areas where we do have a problem. My hon. Friend mentioned the rise of China, and there are reasons why the Chinese art market has developed in the way that it has. We might also see the rise of Russia as an art market, although it is more difficult to see that at the moment because of some of the circumstances in Russia. We must be alive to the problems, but the artists’ resale right is a pimple compared with the other problems facing the market.

Mr. Heathcoat-Amory: Is not the hon. Gentleman making the same mistake that the Treasury is making in relation to the British economy? Just because something goes well in good conditions, that does not mean that it is secure for ever. We may now be entering a period of recession, and the background to that is a shift of economic power to the far east and other economic jurisdictions. Is it wise of Britain to impose a fiscal penalty on one of its premier successful industries? That must be damaging. The hon. Gentleman will recall that the Commission assured us that other art markets would follow suit and introduce a retail levy, but they have not done so, putting us at a disadvantage unless we extend. Are the proposals wise?

Mr. Eric Martlew (in the Chair): Order. Interventions should be short.

Mr. Doran: The EU is still negotiating, and I do not know when, if ever, it will conclude those negotiations. However, I repeat my point that the amount of money that we are talking about is trivial compared with the overall turnover of the art market.

A few years ago I introduced a ten-minute Bill in the House with the aim of tackling the buyer’s premium, which has an interesting history. In the mid-’70s, when the economy, sadly, was in a similar position to now, both the major auction houses, Sotheby’s and Christie’s, were having some difficulties, so they introduced the buyer’s premium, which was 10 per cent. in those days. It had a significant effect on the market and obviously on their income. Progressively they have increased it, so that in some cases it is now 25 per cent.

I looked at Sotheby’s website last night. In London its buyer’s premium is 25 per cent. on prices up to £25,000. On prices above that level, up to £500,000, it is 20 per cent., and above £500,000 it is 12 per cent. The website helpfully gives an example—from New York, as
8 July 2008 : Column 350WH
the same figures apply there—of how that works in practice. On a lot sold in New York for a hammer price of $1,500,000 the buyer’s premium would total $262,500. That is an added cost to the purchaser and a staggering amount when it is added to the seller’s premium. I have not checked what that is, but usually we would expect it to be about 10 per cent., perhaps going up to 15 per cent., with a smaller percentage for more expensive items. It is ludicrous to argue in the context of those figures that a maximum of £12,500 going to an artist or their beneficiaries has a devastating effect on the market, and leads to the “We’re all doomed,” scenario that other hon. Members have presented.

Mr. Swire: The hon. Gentleman inadvertently hits the nail on the head. The auction houses would love to think that they get 10 per cent. from consignors. What happened when they put up the buyer’s fees was that the consignors’ fees came down proportionately. However, his point is a good one. He read out figures that are applicable in New York or London. That is the key point. Wherever one buys those works of art, one pays that commission. With droit de suite, one does not pay it in the United States and elsewhere.

Mr. Doran: The hon. Gentleman is right. At Sotheby’s, exactly the same figures apply in London, France, the Netherlands, Italy, New York, Switzerland, Hong Kong, Australia and Canada, although the situation is slightly different in Canada. However, my point, if the hon. Gentleman will allow me to make it, is that if the auctioneers can add such an amount of money to their costs and, because of the reach of the two main auction houses, apply the premium around the world, they have a margin that can be cut if they feel that the £12,500 that they would see as being creamed off for artists is having a serious effect on their market. It could be taken out of that premium.

As a lawyer I have tried to consider the buyer’s premium in terms of the contract, and it has always struck me that there is a real problem with it. The hon. Gentleman is right to point out that it enabled auction houses to reduce the seller’s premium, which helps them to attract business; but the seller suffers in another way, because everyone who buys knows that they are paying the buyer’s premium, and in a case such as the one I mentioned, no one will bid up to the price that they are prepared to pay. If I am prepared to pay £1.5 million for a work of art but I know that I will have to pay another £200,000 or £300,000 on top of that, I will cut what I am prepared to bid, so the seller loses anyway. That is a serious problem.

I have made the point I wanted to make. The evidence is that the scheme works: it has not damaged the market, and it will continue to work. Much of the reason it works is the efficient and effective way in which the Design and Artists Copyright Society has worked on it. It manages the scheme very effectively and fought for it through the various stages of its development that I have described, from 1997 when it first appeared in the in-tray of my right hon. Friend. The scheme works and the fundamental question for me is why artists should be treated any differently from writers and musicians; why should their heirs and successors lose when copyright extends for up to 70 years in those other cases?

Next Section Index Home Page