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Lord Jopling: My Lords, I am not sure what interests I should declare. My wife and I are occasional purchasers of works of art. I have a son who is an art dealer and a daughter-in-law who is a well-known artist.

I was astonished to listen to the opening speech by the Minister. I am even more astonished having heard the background to this case, which my noble friend Lord Brooke set out in his remarkable speech for someone who usually speaks in this House with such moderation. I have rarely heard him speak with a stronger sense of irritation than I detected this time. Even before my noble friend's speech, the Minister's speech seemed grossly complacent. I can only say that his speech was economical with the facts. Who would have thought that the Government opposed these proposals tooth and nail as they went through, threatened the Luxembourg compromise and voted against the measure? I hope that the Minister will be more frank with the facts when he winds up than he was when he opened.

8.30 pm

One of my principal objections to this measure arises because I have been a member of the Merits of Statutory Instruments Select Committee since it started. I spent two hours at its meeting this afternoon. The committee is strongly opposed to gold-plating, and it was largely because of that that it drew the attention of your Lordships' House to this measure.

Contrary to what many noble Lords feel, I have a good deal of sympathy for giving artists a right to a share when their work significantly increases in value over the years. But I do not see the logic in reducing the threshold from €3,000 to €1,000. By my calculations, an artist whose work sells for €1,000 in a secondary or later sale after the primary sale will receive, after the 25 per cent administration costs, only slightly over £20. I wonder whether that is worth all of this—reducing the threshold—when at the bottom end of the sale an artist will receive that trivial amount.

I was astonished to hear the Minister saying, as I understood him, that the cost of administration of all of this need not be more than £1 per sale. Well, one has only to think of administration costs. What can one do for £1 in terms of staff, accommodation and materials? If that is what the Minister has been led by his civil servants to tell the House, it beggars belief. It is nonsense that administration of this sort of sale could be done for as little as £1.

I understand that most subsequent sales of works of art achieve significantly less than the first sale by the artist. As I understand it, in the majority of cases where a collector supports young artists and he purchases a work of art, the overwhelming chance in subsequent sales is that they will be at a lower price than the first sale. Someone who likes to support young artists will
 
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know that if he wants to sell a piece of work later he is likely to take a loss that may be made even bigger, because he has to pay the charge on that as well. We must realise that the implications of this measure will be to deter at the margin collectors who wish to support young artists.

I cannot help but believe that this measure is a formula for driving the art market away from this country to Switzerland, Japan or the United States. All I can plead is that the Minister will think again, take this measure away and bring it back in another form.

Lord Monson: My Lords, this is a perfectly dreadful set of regulations and I very much welcome the attempt by the noble Lord, Lord Brooke, to make them slightly less bad. I have absolutely no interests to declare, although my late father-in-law was quite a well-known artist; had he not died tragically young, I somehow doubt that he would have had much to say in favour of these regulations.

It is ironic that the regulations purport to deal with intellectual property, when there is no intellectual, or indeed moral, case for them at all. For a start, they benefit only random forms of artistic creativity, including, for example, collages, prints, lithographs, tapestries, photographs and ceramics hand-painted in factories, as in Stoke-on-Trent, even though in many of these categories the items are rarely signed and are therefore often untraceable. Excluded are, for example, books, including those expensively bound in hand-tooled leather; hand-crafted furniture, which can fetch thousands of pounds; expensive hand-woven knitwear incorporating original designs and expensive threads, which can cost hundreds of pounds; stained glass; musical instruments, so I believe; and, indeed, buildings—many architects consider their buildings to be works of art, notwithstanding that some people may regard some office blocks in the City of London to be the architectural equivalent of Damien Hirst rather than of Rembrandt. Illuminated manuscripts and fine replicas of 18th-century long-case clocks are grey areas. Perhaps the Minister might be able to clarify the state of affairs here.

Whether the artist gets the money to which the EU claims he is morally entitled depends entirely on how the object that he has created changes hands. If it is sold privately—or, for example, on eBay—he gets nothing whatever. The expenses of collection and of keeping tabs on every photograph or ceramic object—neither of which, as I said, is normally signed—just in case it might in the future shoot up in value to around £700 will be horrendous. All this is made worse by the Government's last-minute decision to lower the threshold from €3,000 to €1,000, approximately £680. The rake-off of something selling for this price is a princely £27.20 gross. How much of this will reach the artist after the expenses of collection? We are told—and the noble Lord, Lord Brooke, has confirmed—that the latter will average 25 per cent, but the percentage will surely be higher on lower-priced items. A fee of £6.80 could hardly cover the costs here. Like the noble Lord, Lord Jopling, I find the £1 cost of collection cited by the Minister frankly unbelievable.
 
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In France, as the Times yesterday pointed out, the people who will really benefit from laws like this are the heirs of famous artists such as Picasso, not the small, struggling, unfashionable artist. I hope that the Government will stick to their guns where deceased artists are concerned.

The matter demonstrates how crazy the Government are to agree to further and further extensions of QMV, thereby allowing the EU to intrude still further into the nooks and crannies of our everyday lives, in the immortal words of the noble Lord, Lord Hurd. Luckily, an Irish artist, Mr. Dominic Penny, who lives in Dublin, is appealing to the European Court, claiming that the legislation is a clear infringement of his human rights. He is outraged at what he calls,

"Brussels' interference in his copyright, his rights to form a contract and his rights to say who should or should not benefit from his estate".

Let us wish him every success in his legal challenge. Meanwhile, let us support the amendment of the noble Lord, Lord Brooke, which, if carried, will at least pave the way for the legislation to be improved to some extent.

Lord Bernstein of Craigweil: My Lords, I have the greatest respect for my noble friend the Minister, so I regret supporting this amendment but I feel that I should do so. First, I declare an interest. I am a director of, and a shareholder in, Waddington Galleries, which deals in modern and contemporary art. Because of this interest, anything that I may say in objection to artists' resale rights will no doubt be met by the legendary Mandy Rice-Davies retort, "Well, he would say that, wouldn't he?".

However, I would like to raise the issue of the minimum level at which the resale levy is payable—a point also referred to by previous speakers, who noted that the regulation established it at only €1,000, despite the European Union having set the level at €3,000. I can raise this issue with a clear conscience because Waddington Galleries' sales are of a far higher value and this part of the directive would not affect the gallery.

As the noble Lord, Lord Brooke, said, discussions within Europe about artists' resale rights have been going on for a number of years, and the British Government, and in particular the Prime Minister, have been stalwart in opposing some of the measures which would adversely affect the British art market. In the case of the threshold, the Government argued in favour of €10,000. In the Internal Market Council agreement, a figure of €4,000 was decided on but was later reduced to €3,000 as a result of conciliation between the European Parliament and the Council. As the noble Lord, Lord Brooke, has already mentioned, as a result, the Government voted against this directive.

It seems extraordinary that the Government, having opposed this part of the directive so strongly, have made it even more restrictive than the figure they had previously challenged. At this point, I should say that I do not really understand the figures quoted by the
 
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Minister about the costs of administering the scheme. According to the DTI impact assessment, the cost is considerably higher. As I understand it, at a threshold of €3,000, the artist would receive slightly more than the costs involved in collecting the money. At a threshold of €1,000, the artist would only receive the princely sum of between £18 and £20, and the total cost of collection would be approximately £40. Does that make any sense? The Dutch and Austrian Governments, who supported the UK in opposing the directive, clearly do not think so as they have already legislated to exclude sales below €3,000.

Nor did the Minister think that it made sense when he said to the House of Commons Culture, Media and Sport Committee last year that reducing the threshold below €3,000 would mean that,

"the administrative costs become an absurdly high proportion of the actual payments which will go to artists".

What, I wonder, has made him change his mind? No doubt he is trying to help the lower-paid artists, but the amount that the artist would receive is derisory. It is interesting that in a letter to the Times artists of the stature of David Hockney, Michael Craig-Martin and Howard Hodgkin argued against the low threshold of €1,000. They said:

"It will undoubtedly envelop the market . . . in red tape and it will discourage art dealers from buying particularly the work of emerging artists".

My friends in business often complain to me about government bureaucracy and red tape and I normally give a robust defence but, in this case, I would find it impossible to do so. So, perhaps, would the Chancellor of the Exchequer, who said in a recent speech to the CBI,

"for some time I have been concerned about what is called the goldplating of European regulation where in the process of translation into our own UK laws we end up with additional and unnecessary burdens".

As I said, I have the greatest respect for the Minister and I will listen to his reply with interest. I hope that he will revert to his earlier view that a threshold below €3,000 would not make sense.

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