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Lord Graham of Edmonton: My Lords, I wish to point out that half-way through the list of speakers we are already well behind time. I make an appeal for speakers to try to keep to time.

8.30 p.m.

Baroness Wharton: My Lords, I, too, thank my noble friend Lord Palmer for introducing this debate today, particularly as the National Heritage Select Committee has just reported on the British film industry. I hope that the Minister will be able to comment on paragraphs 185 to 187, particularly with regard to write-offs, in that the report states that the Inland Revenue should regard expenditure on the production of a film as revenue expenditure, allowing it all to be written off as incurred. At present only a third is allowed in the current year.

Irish tax incentives have already been mentioned by one maiden speaker; namely, the noble Earl, Lord Hardwicke. On this side of the water, we are not looking for subsidies, rather that we should be able to compete fairly with our neighbours. The British Film Commission undertook a report to examine the growth of film production in Ireland, and it is all too easy to see why we lose out. Last year Mel Gibson's film "Braveheart" was due to be shot entirely in Scotland but relocated the majority of its production schedule to Ireland because of the more attractive tax concessions. That move cost the UK well over 30 million dollars.

The British Film Commission also brought across senior US production executives last year to see exactly what the UK has to offer in the way of locations and post-production facilities. As we know, our largest studio, Pinewood, alone has over 30 stages, so we do need to attract a great deal of production. I and other colleagues entertained them to lunch in this House and the message was quite clear. If the price was right, they would rather locate here, provided we could offer the same financial incentives that could be found across the Irish Sea.

Films made here promote the beauty of our countryside, towns and villages and encourage tourism which, as we already know, is one of our highest invisible earnings, as has already been mentioned by my noble friend. It also, of course, encourages more jobs. Last week, I, along with other members of the Media Group, saw a beautifully filmed picture called "Circle of Friends". The cinematography was exceptional and as a result County Kilkenny will have many more visitors this summer and Irish culture is there on film for audiences worldwide to see. I am simply re-emphasising the advantages that we, too, could enjoy.

We have already had a debate about Channel 4 and its funding formula. The majority of speakers supported a change. Channel 4 has invested over £100 million in

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film since 1982. It has made 300 films, mostly for modest amounts. It invested £1.1 million in "The Madness of King George" and £800,000 in "Four Weddings and a Funeral". Those are sizeable amounts from a channel with only 13p in the pound for investment. I believe that a change in the funding formula would double its input. As it is, Channel 4 is investing £12 million in film this year alone. Thus TV has really kept film going. The Government intervene heavily in television but leave film largely to market forces. There are times that the US has intervened on behalf of its own film industry, particularly when that industry has needed a boost, for instance in the 1970s.

In order to spread the financial risk, we need to invest and produce in volume. One-off films are not attractive to investors; certainly the City is wary of them. But to produce in volume we need the right tax incentives. I believe that the City is at least showing some interest. As the noble Earl said in his maiden speech, Ireland has increased her involvement from £1 million in 1992 to £100 million in 1994. The committee believes that we, too, should consider introducing a scheme similar to the Irish Section 35 incentives. It is good to see how many of the recommendations made to the Select Committee by the British Film Commission and others have been accepted. I hope that the Secretary of State will take note.

There are film commissions in many major cities facilitating film-making, but we badly need the proposed London film commission to co-ordinate film production throughout our capital. Again, the report strongly recommends this.

I feel that I must say a word or two about the crisis facing the live arts, particularly in the regions. For example, the Salisbury Playhouse is closing down for a year. The Redgrave Theatre in Farnham is also closing, with no re-opening planned. Even the Molecule Children's Theatre, which explains science to children, will close at the end of this year. The list is endless.

Regional theatre has always been our most important training ground and part of our culture. We cannot afford to lose it. Even orchestras are at risk. Could we not find a way of using lottery receipts to prevent even more closures? Finally, I stress the importance of the industry, both now and in the future, by quoting the French actor, Gerard Depardieu, who said:

    "This immense market in film, television and software will continue to grow. Of that there can be no doubt. Its significance in our lives will grow too. It's not just a great industry; it is at the heart of our culture and values. The images of film and television are a mirror in which we see ourselves and a window through which we see the lives of others".

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8.35 p.m.

Baroness O'Cathain: My Lords, like many other Members of your Lordships' House, I particularly welcome this debate. I welcome it because it has expanded the term "arts" to incorporate the architectural heritage. Too often when we deal with the arts we deal just with the performing arts. I suspect that possibly the case for the performing arts is made so well because the people involved are so articulate.

One objective of the arts as a whole is to enlighten. There are many others of course, not least to encourage those with artistic talent to develop that talent, and another could well be to endorse the national identity, as has been done to such great effect in France these past few years. But I wish to talk about the objective of enlightenment in the context of funding of the arts.

I know that funding of the arts is an emotive issue—indeed, I know it to my cost! Some people would say that I am particularly foolhardy coming back to this subject considering how my contribution to the arts funding debate in January 1994 ultimately resulted in my being unceremoniously ousted from my job. But at least I do not have to worry on that score any longer.

I shall not repeat the arguments that I made then about general funding of the arts at columns 995 to 998 of Hansard, which are available in the Library. Suffice it to say that, as stated in numerous press articles since, I gave "almost universal offence to the arts fraternity" on that occasion by suggesting that arts funding should be monitored and that the people receiving arts funding should be accountable. Those words appeared as recently as last weekend. What I also said of course in that debate was—and this is never referred to—that the arts are one of the greatest assets of this country and have an enviable international reputation. We have to make sure that we preserve and increase that reputation.

The arts will always need funding, sadly, but we must consider whether the funding is best spent, or is it a case of he who shouts loudest gets most? Rather like the statement, "No taxation without representation", I submit that, as every taxpayer funds the arts, the greatest number possible of those taxpayers should benefit from such funding. It is most difficult to ascertain the actual numbers attending performances by the performing arts sector. Museum and art gallery visitors are tracked but not the total number of people who benefit from classical music, drama, contemporary dance and ballet. Total numbers of those who visit our ecclesiastical heritage are, however, available, and most impressive they are.

The right reverend Prelate has given us a special description of the problems facing the churches in England. What the right reverend Prelate the Bishop of Norwich did not say was that some 27 million people per annum visit our cathedrals and churches. A huge proportion of those people will be greatly enlightened by the process. Our cathedrals and churches are a unique British art form. They were designed, built and embellished by wonderfully creative artists, architects, tapestry weavers, stained glass artists, stone masons and

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gilders. People come from all over the world to visit our British cathedrals and churches and to listen to and marvel at our unique choral tradition.

So much of our nation's cultural life is not necessarily home grown. Our orchestras play music by other nations' composers, as well, of course, as music by our own composers. Quite a lot of the performances offered by the subsidised art sector are not home grown. In the case of our cathedrals and churches they are a totally home-grown part of the our cultural heritage and deserve to be supported, certainly as much as the performing arts. That, of course, is not possible. Resources are just not available. What is really needed is a firm commitment to this part of our heritage, and the allocation of a major part of lottery funds would help.

The sums for the maintenance of the fabric are, I fear, very substantial. It is estimated that St. Paul's Cathedral alone will need some £50 million over the next 25 years just to secure the fabric. The 39 City of London churches currently spend £1 million per annum to do just that, and it is not enough. Those are the harsh facts of life of our unique ecclesiastical heritage.

In general terms, our Christian heritage is just as important, if not more so, than our performing arts heritage. We badly need to reinstate positive values—biblical values—in our nation.

Too many people believe that contemporary culture is exemplified by the TV programmes on offer. Just looking at a normal evening's offering on our screens shows how removed we are now from biblical values—serial killings, serial marriages, marital infidelity, break-up of families and so on. Visiting churches can and does inspire many to rethink values, and one can hardly fail to be affected by the fact that in visiting our great cathedrals and churches one is surrounded by the results of talents used for the glory of God, talents which thankfully are still available, not only in London; churches encourage a great deal of local employment in rural areas. I appeal to the Government to do all they can to ensure that the huge financial burdens of maintaining the fabric of our Christian heritage are lessened by additional funding from the public purse, be it the lottery or taxpayer or council taxpayer funds.

As I said last year, public funding of the arts should be monitored so that there is accountability. The fact that we have now found a new source of funds does not relieve us of the necessity to ensure that those funds are well managed and well spent. We must ensure that our cultural heritage does not become blithely dependent on subsidy. A culture dependent on subsidy could so easily become a dependency culture.

8.42 p.m.

Lord Rix: My Lords, all of us interested in funding for the arts are most grateful to my noble friend Lord Palmer for introducing the topic as the subject for this debate. The issues raised are particularly relevant at the moment, for only last week we had the announcement of the first Arts Council lottery grants, which clearly affected both the general funding of the arts and the architectural heritage with which the arts are

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inextricably intertwined. How happy the noble Earl, Lord Gowrie, must be at the new potency gained by that much-maligned body.

However, two other events last week cause me to draw your Lordships' attention to the particular issue of disability and the arts. These are the completion of the passage of the helpfully amended Disability Discrimination Bill through another place and NCVO's worrying announcement that there has been a drop in voluntary donations to good causes of 15 per cent. since the advent of the National Lottery. On the first matter, I am confident that your Lordships will have further ideas for amending the Disability Discrimination Bill in order both to widen its scope and to ensure its effectiveness. On the second, I believe that it is up to the Arts Council Lottery Board to ensure that innovative projects aimed at improving access to the arts for disabled people do not fall by the wayside because of any voluntary deficit. I realise that this is a partisan plea, but I have never hidden my partisanship when it comes to matters concerning disability.

I want to turn briefly to the question of our theatres, which are surely at the heart of our architectural heritage in Britain, perhaps along with our churches. Theatre is the one art in which Britain has consistently excelled over centuries. An active theatre is a symbol of a healthy community. The reopening of a sleeping theatre has frequently served to restore confidence and investment in a neglected area, encouraging inner city regeneration and becoming a symbol of recovery. The presence of an audience encourages evening shopping, restaurant and cab trade and makes the town feel safer and better cared for.

We do well to look after our theatre wealth. Many theatres need major refurbishment and modernisation, and it would be a mistake to think that only the National Lottery should be considered to provide the needed funds. Investment in theatres at every level brings excellent returns.

In carrying out major works it is now understood that the needs of disabled people are taken into account, and this should be a priority in any such project. Where listed historic buildings are concerned it can be difficult to make the full range of provisions we would insist on as of right in new buildings, but architectural ingenuity can often solve seemingly intractable problems both for disabled members of the audience and for disabled performers and back-stage staff. Too often when arts are discussed in the context of disability, thought is paid only to the needs of disabled customers. As long as back-stage access is not addressed, arts will never flourish as a potential career for disabled performers or technicians.

Any of your Lordships doubtful about the possibility of reconciling severe disability with dramatic excellence should have joined the noble Baroness, Lady Trumpington, in the Churchill Theatre in Bromley last October to see the Magpie Dance Group of people with severe learning disabilities—which will subsequently be appearing at the Royal Albert Hall in September—and Candoco. On that memorable evening a young man with no legs danced—from his wheelchair—alongside his able-bodied partner, and took the theatre by storm.

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Let me end on a further positive note. A parent I spoke to last week listed the impressive number of concerts her profoundly and multiply disabled daughter had recently attended. She enjoys bhangra, Mozart, reggae, Peter Glass, Madonna—the list is endless. She goes with her carers at least once a fortnight to the Barbican, the Hackney Empire, the Coliseum and the South Bank. Like some other people with profound learning disability, she can be noisy and will sometimes scream and shout at moments when the performers are not doing so. Her mother told me that the Barbican in particular has gone to great trouble to accommodate her needs. She is taken off to the bar for a drink if she is getting too noisy. Her current tipple is, I believe, gin and tonic through a straw. The staff's wonderful response to this multiply disabled woman whose passion in life is music is driven by their sensitivity and flexibility. To them she is not a problem customer, she is a satisfied customer.

Perhaps that little story about a multiply disabled young woman, who attends concerts of her own choice, who is a home owner in her own right and by her own choice, also provides a comment on the recent discussion on the feasibility of choice for even the most severely disabled man or woman—where they might live and how they might pass their days and nights. The choice of theatre-going and concert-going must no longer be stymied by lack of facilities. My case rests.

8.47 p.m.

Lord Sainsbury of Preston Candover: My Lords, I should like to comment briefly on the restrictions that limit grants of lottery funds towards revenue costs in the arts and heritage.

I welcome the fact that the original proposition that lottery funds should be for capital projects only has been somewhat modified and that now grants are allowed for revenue expenditure that arise from lottery-funded capital projects. The latter has been described by a Minister in another place as the revenue tail to a capital project.

I propose a policy more imaginative and proactive than revenue tails. I believe that revenue grants to arts and heritage should be permitted on a significantly wider basis, but without eroding the principle of additionality. Unlike the noble Lord, Lord Gibson, I feel that the abandonment of additionality would provide far too good an excuse for a reduction in grants to the arts and heritage. However, I believe that additionality can be redefined and reinterpreted so that the principle may be followed, but not as it is at present.

We all know that there are likely to be a huge number of important and attractive capital projects seeking lottery funds. We have heard about those this evening. But the lottery is a very long-term source of finance. If the rules remain as they are, in time we shall be at risk of over funding new buildings while denying extra funds to allow better use, greater access and, most important, better maintenance of existing arts and heritage buildings.

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Let me give two examples, regarding the first of which I must declare an interest as I have the honour of being the chairman of England's first ever public art gallery, which, as many noble Lords will know, is the Dulwich Picture Gallery.

This marvellous gallery with its fine collection of 17th and 18th century paintings has been grossly underfunded for decades. Until now we have received no public funding but for a contribution to our educational work from the enlightened Southwark Council. Now, under a new constitution, the trustees are determined to ensure that the gallery is endowed so that never again will its future be under threat.

It seems to me that such a cause—a gallery of huge historic significance, a Soane building of the greatest architectural importance and a picture collection that the nation should cherish—is an ideal candidate for lottery money for an endowment. We do not want to build an extension; we would not be allowed to do so anyway. What we need to do is to conserve and maintain the gallery, improve its facilities and make it more accessible to all while ensuring the highest curatorial standards.

The admirable National Heritage Memorial Fund has recognised that and is making a major contribution to our endowment appeal. But not a penny of that comes, or can come, from lottery funds. That fact obviously severely limits the size and number of grants that the NHMF can make for causes of that sort. I cannot think that that makes sense. The rules need changing so that cases of this nature are eligible for lottery funds.

My second example concerns funds for the performing arts. While recognising the need for many capital projects, large and small throughout the country, do not let us forget the good that lottery funds could do for the performing arts in expanding on existing funding from the Arts Council.

Why should lottery funds not be used to increase public accessibility, to reduce prices for students and young people in particular? It is a point that the noble Lord, Lord Gibson, raised. The importance of reducing entry prices is great. Why should we not also use lottery funds to finance contemporary works of opera and drama and to help art education? Those are all good causes which anyone who has been concerned with the financial problems of the Lyric Theatre will know can rarely be adequately funded, if funded at all.

Lottery money should be made available for such purposes, not suddenly but gradually. My proposition is that, starting next year, up to 10 per cent. of lottery funds allocated to the Arts Council and to the NHMF should be allowed to be used for revenue costs. That proportion should be reviewed annually with perhaps the maximum permitted being gradually increased so that eventually possibly as much as half the total funds could be used for revenue purposes, always depending, of course, on the judgment of the Arts Council and the NHMF.

Finally, perhaps I may say a brief word on listing. I applaud the Secretary of State's decision to allow public consultation on the listing of buildings. Greater openness and consultation were desperately needed. Generally the Secretary of State should only list

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buildings which enhance the built environment rather than disfigure it, as many do which are currently out for public consultation. English Heritage should perhaps also maintain a list of important public buildings whose demolition could only benefit the environment. Perhaps lottery funds might even be used to encourage that. Top of that list, of course, should be the Department of the Environment building itself.

8.54 p.m.

Lord Freyberg: My Lords, I, too, would like to thank my noble friend Lord Palmer for initiating this debate.

I want to draw your Lordships' attention briefly to an unresolved aspect of funding for the visual arts; namely, the nation's ability to purchase outstanding works of art as and when they become available.

In the current market, important pieces often cost over £10 million. Holbein's "Lady with a Squirrel", for example, was acquired by the National Gallery from 1992 to 1994 at a gross valuation of some £15 million, in a complicated arrangement involving several bodies. Although this was a happy outcome, it was by no means assured because of the precarious nature of the funding system, which has allowed us to lose such works as Edward James' unrivalled Surrealist collection and the Mantegna "Adoration". This year, Houghton's rare painting by de Troy, at only £3.5 million, is also likely to be lost. The National Gallery would have been its most suitable purchaser, but one consequence of spending so much of its resources on the Holbein was not being able to put in a bid for the de Troy.

Museums and galleries can turn to bodies such as the National Heritage Memorial Fund, which until recently had an annual budget of approximately £12 million, now cut to £8.6 million. There are many calls on this money from aircraft museums to stretches of wild country. Not surprisingly, only part of their budget can go towards individual works of art. The National Gallery was fortunate to receive £3.5 million, spread over three years, towards the purchase of "The Lady with a Squirrel".

But there may come an occasion when more than the entire budget will be required for one great work of art. At present there is no mechanism for funding such a purchase. In order to raise the £7.6 million to keep Canova's "Three Graces" in this country, the Victoria and Albert Museum with the National Gallery of Scotland spent much of both their purchase budgets for several years to come, and still had to get a grant from the National Heritage Memorial Fund, the National Arts Collection Fund, and public and generous private benefactions. That situation will occur again and again unless a proper system is devised now. Our major museums have purchasing budgets that do not allow them to compete on the open market with the vast purchasing power of far wealthier international museums.

Fortunately, in the past few years no two great works of art have come up for sale at any one time. But, were two collectors to die concurrently, it would be quite likely. Today Sotheby's have announced the sale of Luton Hoo's masterpiece, "St. Michael and the Dragon"

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by Bartolomé Bermejo. It is the greatest 15th century Spanish painting outside Spain; its value quite imponderable, and we do not want to lose it. What would have happened if it had come onto the market last year? Offered for sale at the same time as the Canova, there would have been no way of raising the necessary funds for both.

I hope that I am right in assuming that the National Lottery will alleviate this problem. As of yet there has been no confirmation that funds from the lottery will be made available to the national galleries on a scale that will allow them to keep our finest works of art in this country. Although the lottery money is still to be allocated, what a mockery it would be if at the same time as building new museums with money from the Millennium Fund we allowed exactly the kind of art they were designed to house to leave the country. When works of national importance come up for sale, the Government must find some means of offering indemnity against later payment from the lottery.

Such a mechanism could be put into action when an emergency occurred—vital when it takes only three months for a work of art to pass through the process of auction. This, plus the six-month stop on exports, should provide enough time to get the money from the lottery. Moreover, there would be no need to establish a separate purchasing fund whereby money is put aside each year whether or not there are calls on it.

As the National Heritage Memorial Fund has so many diverse responsibilities it would be helpful to us all to have a reassurance from the Government that very substantial funds will be made available to the national galleries in emergencies. I do hope that the Minister can give us that assurance today.

8.58 p.m.

Viscount Montgomery of Alamein: My Lords, it is a pleasure to follow the noble Lord, Lord Freyberg. However, once again I shall change direction and follow the noble Lord, Lord Rix, and the noble Baroness, Lady Wharton, on the subject of the theatre, which is also an important part of our national heritage. I must declare an interest as I am a trustee of the Theatre of Comedy—a wholly honorary position to which I succeeded on the retirement of the noble Lord, Lord Rix.

Tonight we have had three maiden speakers. I suppose that maiden speeches are rather like first nights—bundles of nerves. But I feel that they will all get good notices; and in the case of my noble friend Lord Hardwicke, who is so young, he should have a very long run.

It is interesting to note that the commercial theatre and the subsidised theatre are now much more interdependent than they ever have been before. Looking around the West End and the commercial touring circuit one sees the benefits of this mutual liaison. What is not generally known is that the subsidised theatre is producing much of its new work because commercial management is assisting with plays, star casts and money. As a result, grant money from the Government to the subsidised sector is a benefit to the whole theatre industry.

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Unfortunately, the provincial theatre is in a much more precarious state. Attention was drawn particularly to that point by the noble Baroness, Lady Wharton. The recession and the drastic reduction in grants have taken their toll. That is very sad, as the provincial repertory theatre is where the seedcorn for future talent lies. Tonight we have heard much about the film industry but most of our great actors started their careers in repertory. If we allow the provincial repertory theatre to wither, we shall not be in the same position in the next generation. We must realise that the theatre is a very important attraction in our tourist industry. We must therefore consider the future and the opportunities for those talented youngsters who emerge from drama schools.

Much of this debate has been about historic buildings. It may come as a surprise to your Lordships to know that there are 27 grade II and two grade I listed theatre buildings in the West End alone. The Shaftesbury Theatre, which is the home of the Theatre of Comedy, is one of them. But none of those theatres can at present apply for heritage lottery funds for expenditure on non-profit restoration work for the public benefit. I hope that consideration can be given to correcting that anomaly.

I very much hope that the Minister will look into this matter. I did not give notice of those questions to my noble friend and I realise that he has a vast array of subjects to cover. Perhaps he will write to me subsequently about these matters.

9.1 p.m.

The Viscount of Falkland: My Lords, I should like to thank the noble Lord, Lord Palmer, for giving me the opportunity tonight to speak on the heritage. It is my first attempt to speak as spokesman for the heritage from these Benches. In other circumstances, I might have chosen to speak on the plight of the film industry, but I have bored your Lordships on that subject previously. It is much more appropriate that that subject should be handled, in what I thought was an outstanding maiden speech, by the noble Earl, Lord Hardwicke. I congratulate him. It was very appropriate that he should speak about the film industry because something over 70 per cent. of film audiences comprise people under the age of 24. I thank him very much for his contribution in that area.

Perhaps I may also say to the noble Lord who introduced the debate that I was somewhat disappointed when he drew our attention to the fact that his forebear was granted his title for services to music rather than as a result of biscuits. If those services to music were as outstanding as the biscuits, which I enjoyed particularly when I was at school to supplement a rather meagre diet, then he was indeed deserving. But factories and biscuits lead on to the subject on which I wish to address your Lordships this evening; namely, the importance of our industrial heritage and the buildings and machinery that have been handed down to us, particularly from the late 18th and early 19th centuries.

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Obviously, in recent years there has been a great change in public attitude toward our entire built heritage. That has been very beneficial in the fight to save the tangible remains of our exceptional island history. Before that all started—55 years ago, in fact—the National Trust began its invaluable work in conservation and preservation. It was mainly in the area of country houses, but even before the country house scheme came into place, there were a number of sites of industrial and historical interest under its umbrella.

I am aware that the National Trust draws upon itself criticism from time to time for all kinds of reasons and from all quarters. What great institution does not? This House should know something about that. The trust is known more for its work in preserving the coastline and great houses. What is less known is the continuing and useful work it has done, within very great financial constraints, to save valuable parts of our industrial archaeology. We need to pay tribute to that. It is wonderful that so many churches, great houses and gardens have been saved for us and our descendants to enjoy. Surely, few would deny our descendants the privilege of enjoying or even living in such beautiful buildings or worshipping in them. They are buildings which have come to us from a century notable for relative peace and a great growth in prosperity—not to mention the great talents of builders and architects during the same period.

Perhaps our industrial heritage is not so immediately attractive to the public at large. The cotton mills, water mills, paper mills, iron foundries, canal architecture and great beam engine pumping stations are enormously valuable reminders of that golden age. The industrial revolution which took place in this country and the momentum which created it are enshrined in those sites. They led to the undeniable greatness of this country in the period from the industrial revolution up to the First World War.

A great deal has remained of that heritage but sadly a great deal of it has disappeared, even though much of that building, like your Lordships' House, was of solid construction. There are still many cotton mills in Lancashire which have been almost totally ignored but, because of their solid construction, they are still there to be preserved. The National Trust has been working carefully and imaginatively for years within severe financial restraints but it cannot do everything and I do not suggest that it should. The greatest contribution in the whole area has been from groups of enthusiasts and independent bodies of various kinds. I believe that they should continue to show the way in this area, using the expertise of institutions such as the National Trust which has experience, particularly in estate management and so forth.

I, for one, hope that some of the lottery money will filter through to that important area. Those complexes and areas have received a great deal of public attention. The great water mill and 18th century complex at Styal in Cheshire has been going for a long time. In fact, it is one of the sites that came under the umbrella of the National Trust in 1940. A number of lessons have been

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learned from that site; for example, how money runs away when one undertakes conservation of that kind. Nevertheless it is a prime example of what can be done.

Other schemes are now attracting a great deal of attention—not here but abroad—and particularly among the Japanese, which is something I hope the Minister will note. We should exploit—if I may use such an awful word—the interest of the Japanese in our history, and not only our industrial history. I am going to a Civil War re-enactment in June which is entirely for Japanese who are coming over to this country at great expense and showing an interest which one rarely finds among one's own countrymen.

We have so much of the great past to show our countrymen and visitors to our country and of course our descendants. They are very important and rarely mentioned, I notice, even in the Arts Council's briefing that I received today. It is our duty to preserve things for our descendants. I wished to speak when we discussed the bypass around Newbury recently, but I kept my head well below the parapet. Noble Lords were criticising the Government with enormous energy for delaying the scheme. Admittedly, I do not have to sweat and swelter in the traffic jams around Newbury. Nevertheless, if the bypass is built it goes across a prominent Civil War battlefield. People may think that cars are more important than battlefields. But will our descendants agree with that?

I conclude by saying that I am sure that the Government will give a great deal of support to many things that have been mentioned in this fascinating debate. I hope that they will think of our industrial heritage and that the noble Viscount will find time to carry that forward to discussions with his right honourable friend. I sum up by reiterating the words of the noble Lord who opened the debate. I hope that the Government will be able to do just a little bit more.

9.9 p.m.

Lord Donoughue: My Lords, I wish to join with others in thanking the noble Lord, Lord Palmer, for so fluently initiating this important debate, which, on the evidence, might have deserved a full five hours. It has been graced by three distinguished maiden speeches. I congratulate the noble Viscount, Lord Gage, and the noble Earl, Lord Hardwicke, upon excellent contributions. I very much agreed with the latter on the importance of the film industry. The noble Lord, Lord Rothschild, gave me particular pleasure since we were contemporaries at Oxford, taking the same class degree in the same subject in the same year. I felt that the quality and elegance of his speech clearly demonstrated why, and how far, he has moved ahead of me in the subsequent nearly 40 years.

On the general issue of funding the arts, I wholeheartedly endorse the point of the noble Lord, Lord Palmer, that government support for the arts is and always has been inadequate. It is derisory compared with our continental European neighbours. We noted that last year the Government cut the Arts Council grant by £3.2 million, the first time in its history that it had been cut. This year some was restored, but still it was £2.75 million short in real terms.

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We also note that the arts spend includes tens of millions of pounds down the new British Library drain. Most damaging of all is the squeeze on local authority expenditure, where local authorities spend more on the arts than the Arts Council. The consequences of that can be seen all over Britain. Major regional theatres, as has been referred to, have a collective deficit of over £7 million, with several closing or threatening to close. Some orchestras are in serious financial difficulties and the discretionary grants for arts training have collapsed.

The basic cause of those problems is the refusal of government—not just this Government but British society as a whole—to recognise the crucial importance of the arts or to develop policies to invest in them. The case for investing more in the arts can be made on cultural grounds alone. A well-cultured society is a good in itself. But even for more philistine people who share the widespread Anglo-Saxon anti-intellectual, anti-arts tradition, a compelling case for greater arts investment can be made on economic grounds alone.

The arts constitute a crucial sector in our service economy. Together with related and dependent cultural industries such as publishing, recording, filming and broadcasting, they employ over 500,000 people in Britain and are our fourth largest earner of foreign exchange after banking, travel and shipping. That is all on a total public subsidy of around £500 million, which should be seen as an investment. It is not much more than the Government have spent or will spend on privatisation consultants, which could hardly be defended as a similar investment.

If we take London alone, where my connection is through membership of the London Arts Board, we learn that there are up to 12,000 organisations in London involved in the arts, culture and entertainment. They employ over 200,000 people —6 per cent. of the total of the capital's employment—and are a bigger employer than the construction industry. Arts turnover is up to £12 billion—6 per cent. of metropolitan GDP—and city audiences for the arts total around 100 million. Overseas earnings are £4 billion and contribute to an arts balance of trade surplus of £1.2 billion. Government support for the arts should not be viewed as negative public subsidy expenditure but positively, as productive investment with high cultural and economic returns.

The British often view the arts as some frivolous gilt on the gingerbread. In fact, they are a critical part of our economy. That is why we believe that investment in the arts must be sustained and improved. Noble Lords may say—and it is true—that the lottery has improved those prospects. We support that and we certainly hope that it results in some exciting arts projects in the years ahead, especially in the architectural field. I am attracted by the initial plans for Richard Rodgers' new South Bank. But it should not and does not mean that the Government can reduce their responsibilities. Once again I should like the Minister, for the record, to give the House an assurance on the question of additionality—that the lottery funds are additional to maintain public funding in the sector. I should also like him to assure us—I look forward to hearing what he says—on the revenue costs of new lottery arts buildings, where the lottery provides the capital. Have the Government any further ideas on

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the revenue side? I look forward in particular to how he responds to the noble Lord, Lord Sainsbury, as we certainly do not want white elephants that no one can afford to run. Is there any hope, under the existing contracts, of diverting any of Camelot's huge profits to the good causes? Why should Camelot's gross take be bigger than that of the arts sector?

Specifically, on discretionary grants, I wish to reinforce what the noble Lord, Lord Palmer, and the noble Earl, Lord Gowrie, said. The future of our performing arts depends wholly on our young getting training—training in music, ballet and drama. The discretionary grants for those courses have been savagely cut because of the Government's squeeze on local authority expenditure. The noble Lord, Lord Palmer, referred to his family's connections with music, the most profound of all artistic expression. Britain has recently enjoyed a golden age in music, with London hosting fine operas—I agree with what my noble friend Lord Chandos said in his advocacy of the case of the English National Opera—and also offering one great world-class orchestra—the London Symphony Orchestra, with which I should declare I have been connected for 16 years—and four other very fine orchestras. Will the supply of our young musicians be squeezed through the lack of discretionary grants? The London Symphony Orchestra has thrived on a combination of subsidy and a marvellous working relationship with the City Corporation. Its success on the world stage shows what subsidy and quality standards can achieve. That should be our aim in many other artistic areas.

On the other main issue of the built heritage, this side of the House is sympathetic to the points made with such conviction and experience by the noble Lord, Lord Palmer. We shall listen with interest to the Minister's reply, who himself has considerable experience of the joys of life in great houses. I also take this opportunity to add that on the question of listed building status we do not oppose the Secretary of State's recent commitment to more consultation. However, we have two serious reservations: that any demolition proposals must be frozen during the consultation period and that the procedures for emergency spot-listing of buildings under threat must be made to work more efficiently.

On the lottery's potential contribution to private heritage houses, we have expressed before our concern that private owners should not be seen to increase their housing equity capital at public expense. But Labour wants to maximise the aid to the heritage. We therefore would suggest that the regulations should be amended to allow lottery proceeds to assist private historic houses provided there is significant and not token public access and provided owners who subsequently sell repay the grants which have been received for their property. Perhaps the Minister will comment on that.

As regards VAT, there seems to be a curious anomaly whereby repairs attract 15 per cent. VAT while alterations are zero rated. Owners of private historic buildings and parish churches state that the 15 per cent. repair tax is the biggest single obstacle to maintaining buildings. Has the Minister any proposals to remedy

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that? For instance, what would be the revenue implications of having a single 8 per cent. rate for repair and alterations?

Finally, as regards the British Museum, I wish to reinforce the statement of my noble friend Lord Strabolgi that the British Museum is the jewel in our heritage crown. I hope that the Minister can assure us that in the immediate future the museum will be provided with the additional resources for its wonderful plans. Time slips by, the aesthetic delights of boxing still await some of us and I wish the Minister to be given full opportunity to answer this excellent debate.

9.20 p.m.

Viscount Astor: My Lords, I too am grateful to the noble Lord, Lord Palmer, for initiating this debate. He plays a valuable role in helping to preserve the national heritage on both sides of the Border—as an owner of a splendid house and through his work for the Historic Houses Association.

The arts and our built heritage are of the greatest importance to this country. I welcome this opportunity to explain to your Lordships the government's policies for the funding of the arts and the heritage.

If I may begin with the national lottery, introduced only four months ago, it has already proved to be a tremendous success and has raised over £300 million for good causes in only 20 weeks. Last month saw the first announcements of successful applications. The money raised is now beginning to do the good for which it is intended—to have a positive impact on the quality of life of everyone in this country. I can assure the noble Lord, Lord Donoughue, that it is additional to government spending.

Many of your Lordships have raised the question of eligibility for lottery funding for the built heritage and, in particular, for private owners. As your Lordships are aware, lottery funds are to be distributed by five different bodies. Repairs to historic buildings are eligible to be considered by the National Heritage Memorial Fund. We have had the pleasure of hearing from the noble Lord, Lord Rothschild, who is the chairman, and I must take this opportunity to congratulate him on his maiden speech. It is particularly fitting that he should have been able to speak this evening in this debate.

It is for the noble Lord and his fellow trustees to interpret the extent of their powers and to set their priorities within the statutory framework and the Secretary of State's policy directions. Under the terms of the National Heritage Act 1980, private individuals and institutions or bodies established or conducted for profit are not eligible recipients. These powers apply equally to the distribution of lottery funds as to funding from the National Heritage Memorial Fund's grant-in-aid. In preparing the legislation for the lottery, the Government decided that it was not appropriate to seek to overturn that position. However, it is possible for private owners to arrange their affairs, should they wish to do so, in such a way as to become eligible for lottery funding. Privately-owned historic buildings may

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be eligible for lottery funding if ownership is transferred to a charitable trust. As my noble friend Lord Crathorne said, there have been successful examples of that.

The National Heritage Memorial Fund may also consider applications for in situ purchases if it is convinced of the public benefit and if the proceeds of the sale are to be applied to the preservation of the building. I know that its trustees are keen to be flexible in their approach and to help private owners within the statutory framework.

I realise that these arrangements do not go as far as some of your Lordships would wish in help to private owners. However, we keep the arrangements for the lottery under review. But I must point out that we have no plans at the moment to amend existing legislation.

The range of our built heritage is extensive. As the noble Viscount, Lord Falkland, said, today we recognise that many different aspects of our past are important. We no longer think only of cathedrals and stately homes as our heritage but also of some of the great textile mills as well as our industrial machinery and other heritage. But, having said that, our wealth of country houses must be one of our greatest treasures. The landscapes in which so many of them stand are one of our greatest inventions. As places of interest for visitors they are unsurpassed, not least because of their splendid collections—and that includes the individual owners who are also an integral part of the attraction.

We are all aware of the vital role that the National Trust plays in preserving and opening up so many houses to the public. It celebrates its centenary this year, and we all congratulate its present chairman, the noble Lord, Lord Chorley. Indeed, I was brought up in a National Trust house. But, equally important, are the private owners who also open their doors.

The Government put great emphasis on ensuring that the public have access to our heritage. Many owners see themselves as trustees for the future and are proud to maintain and show their houses to visitors. The Government have long acknowledged their special position, and a range of measures is available to provide funding to help to protect this part of our heritage.

My department's principal expert adviser on the built heritage is English Heritage. It was established in 1984 to protect and encourage people to understand and enjoy England's architectural heritage and to have day-to-day responsibility for the execution of the Government's policy. I am extremely grateful for the welcome that was given by my noble friend Lord Sainsbury to our announcement about consultation on listing.

The principal responsibility for maintaining historic buildings rests with their owners, but support for private owners is available in the form of grants. Between 1984 and 1994 the Government's contribution to English Heritage increased substantially, from £49 million to over £104 million. English Heritage has also itself worked hard to increase its contribution towards the protection of England's heritage. This year it expects to raise over £17.9 million from income earned from its properties and membership. My noble friend Lord Montagu of Beaulieu, its first chairman, was responsible for setting English Heritage on its prosperous course.

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English Heritage runs a number of grant schemes, including for outstanding buildings listed Grade I and II*. To ensure that resources are targeted to where they are most needed, English Heritage introduced a full and substantive needs assessment procedure in 1989.

I recognise that refocusing English Heritage grants on buildings at most immediate risk has meant that there has been a reduction in the amount of grant-in-aid going to private houses. But English Heritage's policy of targeting money where it is most needed must be right. However, I also recognise the need not to penalise owners of historic houses. English Heritage has been re-examining the needs of private historic house owners in the light of representations made in this House and elsewhere. I am currently considering its proposals.

I have also initiated discussions between English Heritage and the Historic Houses Association on the way in which owners' resources are assessed when calculating need. Jocelyn Stevens, the chairman of English Heritage will keep me informed of the progress of those discussions.

In addition to the assistance provided through the Government's expert advisers on the heritage, my department also provides help through the National Heritage Memorial Fund, so ably chaired by the noble Lord, Lord Charteris, until 1992. Since its creation in 1980 the fund has made substantial resources available for the acquisition, maintenance and preservation of some of England's finest architectural and historic treasures.

I have spoken about different sources of grants for the protection of the built heritage. But there are other important sources of funding. The noble Lord, Lord Palmer, mentioned maintenance funds. This is a technical subject but also an important one, so I shall try to explain why they work as they do. The owner of an outstanding property is able to set aside income-earning assets in a discretionary trust for at least six years. The income is dedicated to maintaining the house, which remains in his ownership. The noble Lord stated that the settlers of maintenance funds have given away their own money, land or chattels and that this provides a public benefit. I do not deny that there is a public benefit. Indeed it would be wrong to grant the tax reliefs if there were not a public benefit.

I am aware of the burden on private owners because of their commitment to retaining their heritage. I admire and respect this commitment. The costs of repair can often be very high. The noble Lord referred to a debate in this House in 1992 when I promised to consider the points made in regard to maintenance funds. There have been discussions since then with my right honourable friend the Chancellor of the Exchequer and representatives of the Historic Houses Association, and others. We believe that the present package of tax reliefs provided for maintenance funds strikes the right balance. There are now some 100 approved funds rather than 60. However, the Government will always be willing to look at any proposals to improve the tax regime, and particularly the way in which maintenance funds operate, to the benefit of the built heritage.

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As my noble friend Lady O'Cathain said, the protection of our ecclesiastical heritage is a responsibility which the Government take very seriously. Substantial funding is provided to assist with the repair and maintenance of historic church buildings. For churches in active use, funding is channelled through English Heritage, and is for the most part directed towards buildings that are of outstanding architectural or historic interest: those listed grade I or II. English Heritage grant-in-aid, which includes a contribution to VAT, has saved many churches that would otherwise have become redundant or fallen into disrepair.

English Heritage last year made grants totalling more than £13 million for the repair of churches and some £4 million for cathedrals. This sum was part of the cathedral repair grant scheme launched by the Government in 1991 and intended to assist repairs of cathedrals. A further £4 million is available for 1995-96. No less than 53 of England's 61 cathedrals should by then have benefited from the grant scheme.

I listened with great care to the right reverend Prelate the Bishop of Norwich. I recognise the concern expressed by him about VAT. I congratulate my noble friend Lord Gage on his maiden speech. He was also concerned about VAT, but about repairs more generally.

My noble friend Lord Mackay of Ardbrecknish explained during a debate recently that the Government remained opposed to a variety of reduced rates of VAT on anything other than domestic fuel and power. The European Commission has just published a report on the approximation of VAT rates having regard to the functioning of the internal market. The report also sought to establish whether distortions of competition between member states had arisen as a result of the operation of reduced rates in the single market. The review concluded that in the present circumstances there did not appear to be any justification for introducing major modifications in respect of the level and structure of the rate system or the scope of the reduced rate list. Under the relevant EC directive no new zero rates can be introduced. The Government's long-standing policy has been to favour a simple rate structure with a single standard rate and a zero rate.

The noble Lord, Lord Palmer, said that the Government encouraged partnerships between the public and private sector. He is right. The past 20 years have seen a quite remarkable increase in business sponsorship of the arts. In 1976 business sponsorship stood at a modest £0.5 million. By 1994, business support was £70 million. The business sponsorship incentive scheme, which has been rechristened the pairing scheme, was established in 1984. The scheme has so far attracted over £85 million in new money for the arts. Since the principle of sponsorship incentive has been so successful in both sport and the arts, I have recently extended this principle to the built heritage by launching a pilot scheme. Run by the Association for British Sponsorship of the Arts, it is based in the north of England. We are providing £150,000 for matching awards under the scheme. It will bring together, in a new partnership, businesses and those undertaking projects

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which widen access to, and assist in the repair of, the built heritage. We will be closely monitoring the success of this scheme.

Funding for the arts in this country has long been a complex animal. In terms of direct support for the arts, the Government's chief contribution is through the Arts Council. Our commitment has been amply demonstrated over many years, with substantial real terms increases in the Arts Council's grant. Since 1979 there has been an increase in real terms of over 40 per cent. This year the Arts Council of England will receive £191 million, £5 million more than in 1994-95 —evidence of the high regard in which we in the Department of National Heritage hold the arts.

The relationship between government and the Arts Council has always been based on the arm's length principle under which it is for the council to allocate the funds it receives to individual arts organisations. That is a great responsibility for the council and one which it continues to discharge admirably. Since becoming chairman, my noble friend Lord Gowrie has introduced a number of initiatives to ensure that the public and Parliament understand the processes behind the allocation of grants and lottery funding, which will result in a dramatic improvement in arts facilities the length and breadth of this country and will be of lasting benefit.

It is especially welcome that the first awards by the Arts Council should have been for such a wide range of projects, from national companies to small community projects. The lottery will provide the first opportunity for many arts organisations, particularly amateur ones, to invest in not only buildings, whether new or old, but in equipment, musical instruments, vehicles, renovations, improved access and much more.

I must point out to my noble friend Lord Sainsbury and the noble Lord, Lord Gibson, that those grants have been made under the existing rules. There already is flexibility. We keep all policy directions under Section 26 of the National Lottery Act under review and will monitor the success of the lottery.

We must not forget local authorities, because after central government support, the largest source of public funds for the arts is local authority funding. The total amount spent on arts provision by English local authorities is similar to that spent by the Government each year—about £180 million. I am pleased to see that, despite difficult times, in general their support for the arts is being maintained and in many authorities has increased in recent years.

Perhaps I may now turn to film, and in doing so I congratulate my noble friend Lord Hardwicke on his maiden speech. His speech too was apt because the Select Committee has just published its report on film. The Government will want to study carefully what the report has to say before we reach a decision on what shape the Government's approach should take in the future. But we are currently looking at how support measures now deliver the objective of encouraging the making of British films and whether they are effective in enabling those films to be seen by British audiences. The current position is encouraging: there has been a marked increase in production levels in the past three

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years. In 1992, 32 British-produced films were made. In 1994, the number rose to 50. There is a growing audience for films in cinemas in this country. We are seeking to make this country as attractive a place as possible for film production. We set up the British Film Commission and we see its role as being of key importance in the development of the thriving production base.

The noble Lord, Lord Strabolgi, referred to the British Library's move to St. Pancras, which will enable the British Museum to utilise a further 40 per cent. of the Bloomsbury site. I can assure the noble Lord that any case made to the Government for extra funding will be considered in the normal way as part of the public expenditure survey process.

I am pleased to report that the terrible technical problems which have beset the new library building at St. Pancras seem—having said this before, I stress the word "seem"—at last to be under control. The construction is now on schedule for completion during the third quarter of 1996, with handover to the British Library planned for the last quarter of 1996.

The noble Lord, Lord Palmer, referred to the difficulties faced by students at the Royal College of Music in obtaining discretionary awards. Discretionary awards are a matter for local authorities and it is for them to decide which students to support, and at what rates, in the light of local needs and priorities. It is true that in recent years authorities have been giving greater priority to further rather than higher education in distributing the funds available. This has not, however, prevented a rapid increase in the numbers of students undertaking postgraduate study in recent years. I can tell the noble Lord that as regards students unsuccessful in obtaining a discretionary award, the Department of Employment's career development loans scheme is a widely available alternative.

No one can doubt the vitally important part that the arts play in all our lives. They have the ability to educate, stimulate, calm, excite, amuse or annoy—and sometimes they can do most of those at the same time. More and more people are using their leisure time to join in the arts and increasing numbers of people are attending operas, concerts, theatre, the ballet and so forth. Almost all our overseas visitors make at least one visit to a theatre, museum or gallery or to an historic property during their stay. Indeed, those form a major reason for their visiting this country in the first place.

Tourism's relationship with the arts and our heritage is a two-way street. For example, historic properties attracted £222 million from visitor revenues in 1992, and our national museums and galleries, some £44 million in 1993-94. We estimate that in 1993 West End theatres gained some £69 million from overseas visitors alone. I have not forgotten the contribution of my noble friend Lord Montgomery. Perhaps I may write to him on some of the technical points he raised tonight.

Noble Lords have raised a wide range of issues and all have had a fairly short time to speak. I too have had to canter rather rapidly round the course. I hope that I have been able to demonstrate the fact that the Government take the question of funding for the arts and the heritage very seriously. A thriving arts sector

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and our unique heritage are vital assets and make an important contribution to the economic health of the country. The Government recognise that contribution and will continue to provide the substantial resources required to ensure that they are available for enjoyment not only by the present generation but also by future generations.

9.42 p.m.

Lord Palmer: My Lords, it certainly has been a wide-ranging and fascinating debate and has lived up to all the expectations that many of us had tonight. We have been treated to three excellent maiden speeches. I am sure that we all enjoyed the opening performance from the noble Viscount, Lord Falkland, on the Liberal Democrat Front Bench representing the heritage sector. I was delighted too to hear the most encouraging comments from the noble Lord, Lord Donoughue. They gave me great cheer tonight.

Naturally, I was disappointed that the noble Viscount was unable to give way on the treatment of income tax and capital gains tax on maintenance funds. I am afraid I must assure him that we shall continue to keep up the pressure. Indeed, I am sure that the right reverend Prelate will not return to Norwich and forget about VAT. The Government must expect more pressure, in particular on those two issues.

Almost all noble Lords mentioned the National Lottery, and have said what a shame it is that it cannot help the private sector. I believe that the Government have a moral duty to look at that again. I hope that tonight at least some seeds have been sown for the future. Let us hope for a more positive attitude towards the arts and the architectural heritage. I thank all noble Lords most sincerely for their contributions and I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.

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