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Lord Inglewood: My Lords, I should declare an interest: my wife is a professional photographer who sells prints from time to time. I live in hope that she may exceed the threshold in the value of her works. I am also chairman of the Reviewing Committee on the Export of Works of Art and could conceivably be affected in that capacity by the possible export of works by living artists, although the 50-year rule makes it unlikely.

In 2000–01, when this matter was under consideration in the European Parliament, I was the legal affairs spokesman for the Conservative Party and the matter was considered principally in the Parliament's Legal Affairs Committee. I was also, as it happened, an alternate member on the Conciliation Committee, but because of the outbreak of foot and mouth I was unable to attend the meeting.

At that time I was convinced by the Government's arguments that the proposal for the droit de suite was not in the best interests of Britain, Britain's art market or its artists. As such, with considerable difficulty, I persuaded my Conservative colleagues that we should stand shoulder to shoulder with the Government on this issue. I do not apologise for doing
 
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that. I believe we did the right thing, and in similar circumstances I would like to think that I would do the same again.

However, having seen how the Government have changed their ground subsequently, although it no longer affects me directly, I am disheartened. It is not an encouragement, in a forum where there is no government and where national interests come together from time to time, to the Opposition parties in this country to stand with the Government of this country to fight for Britain's interest if we subsequently find that the picture at home is so unilaterally dramatically changed.

9 pm

Although we lost the votes in the European Parliament, had the British Conservative Party not been part of the Group of the European People's Party and European Democrats, we would not have been able to secure the number of the votes that we did. They not only felt sympathetic towards us; they then actually voted for us. Some in my party want to take the British Conservative MEPs out of that group. If that happens, what I have just alluded to will no longer happen and British interests will, in my judgment, suffer.

Three things puzzle me about the legislation. One of them has puzzled me throughout. In the Commission's consideration of whether to introduce the droit de suite, the effect on the London art market of the possible emigration of sales outside the Community was of de minimis importance. How was it necessary to introduce the legislation in the first place in the interests of creating a single market? A fundamental intellectual schism runs through the argument for the legislation. If I am right about that, the basic legislation has been put on the statute book in breach of the doctrine of proportionality.

My second question concerns the negotiation to try to extend the scope of the Berne convention. A moment ago, I mentioned the support that we receive from our colleagues in the EPP-ED group. A considerable amount of that support came from the chairman of the Legal Affairs Committee, Ana Palacio, subsequently Foreign Minister of Spain, who was anxious to take the matter forward in the context of negotiations on the Berne convention, so that we would end up with a droit de suite across the globe. Whatever else had happened, that would have created a level playing field for the London art market. That seems a reasonable way in which to take the matter forward if the Government remain wedded to their present position.

Finally, what is the relationship between the European legislation and Article 295 of the treaty? Article 295 is straightforward. It states:

"This Treaty shall in no way prejudice the rules in Member States governing the system of property ownership".

In his opening remarks, the Minister referred to the law of copyright and was quite rightly picked up by my noble friend Lord Brooke. The law of copyright was
 
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referred to as the measure for the creation of the completely new, novel law of property being introduced into this country by the legislation. Some countries have droit de suite; others do not. In this country, droit de suite has hitherto been a form of legal property unknown to our courts. However, under the legislation, the directive creates the right of droit de suite in this country. It is expressly stated in the treaty, in Article 295, that the treaty shall in no way prejudice the rules in member states governing the system of property ownership. Surely, what we now have under the legislation is in breach of the terms of the treaty.

Earl Howe: My Lords, I intervene briefly in this debate. In doing so, I declare an interest as chairman of LAPADA, the largest UK trade association for fine art and antiques dealers. I endorse in every particular what my noble friend Lord Brooke said and also what I might call the macro-political considerations so powerfully set out just now by my noble friend Lord Inglewood. It is not my intention to repeat the arguments that they have so ably articulated; but perhaps I may single out a few points of emphasis.

As has been said, the art market as a whole was extremely encouraged by the stance taken by Her Majesty's Government and the personal commitment of the Prime Minister, when the directive on artist's resale right was being debated in Europe. Throughout the negotiations, the Government took the line that if there had to be a directive of this nature, it should be issued in a form which did the least possible damage to the competitiveness of the UK art market. It is perhaps worth reminding ourselves that it has not always been in London's favour. London became the pre-eminent centre of the European market only in the 1970s, following the imposition of a tax on the art trade in France in the 1960s and the imposition of droit de suite in Germany in the 1980s.

As we have heard this evening, the concern of many is that droit de suite when rolled out across the EU as a whole will make a key part of the European art market instantly uncompetitive in comparison to dealers and auction houses operating, for example, in New York, and that as a direct result we shall see London diminishing in importance as a global centre of fine art trading. The impact of the directive will be felt not just in relation to high value works of 20th century art. The knock-on effect will hit many other sectors of the market as well. Where you have a high value collection that is to be consigned for sale, it will typically be consigned as a whole to wherever in the world is most advantageous for the seller. Furniture, jewellery and old masters will all be caught up in that. So the Government were entirely right to try to minimise the impact of the directive on the UK.

One of the Government's key negotiating objectives during that process was, as we have heard, to try to maximise the threshold below which droit de suite would not apply. They argued that the threshold should be no lower than €10,000. They voted against the directive when the threshold had been reduced to €3,000. So it was unsurprising when the consultation document was issued by the Patent Office last year to
 
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see a proposed threshold for the levy of the highest possible amount allowed for in the directive—€3,000. It seemed inconceivable then, and it therefore almost defies belief now, that, having taken that stance and having listened to all the representations on this issue from the UK art trade, the Government should now have performed this U-turn and have created a levy threshold at a mere €1,000, which is lower than in the Netherlands, lower than in Austria and lower even than in Germany.

It is very hard to see what benefit the Government believe will come out of this. As the Minister said, the idea is that poorer artists should receive some financial reward on the sale of their work. But on a sale at €1,000, we are talking about very small sums of money. At that sort of level, the net royalty is dwarfed by the administrative costs of delivering it—not only the costs incurred by the collecting agency, but also those of the dealer or auction house.

I do not know what evidence has persuaded the Government that extending the scope of the levy to sales below €3,000 would benefit predominantly poorer artists. That is the argument that they have advanced, even though I have not seen any evidence produced to support it. The recent survey by Graddy and Szymanski, mentioned by my noble friend, found that for sales between €1,000 and €3,000 the value of droit de suite is, in their words, negligible.

It should not be forgotten that at the lower value end of the market, we are typically looking at resales of art not by major auction houses, but by dealers, many of them small businesses. The administrative burden of coping with the levy will therefore fall disproportionately on such businesses. What will that administrative burden be? First, it is to identify those works that they are selling to which the levy will apply; to build the levy correctly into the sales invoice; to submit a return to the collecting agency; to check back the agency's calculations; to pay over the levy; and to keep appropriate book-keeping records. They will also need to amend their contracts of sale. The estimated administrative cost of all that is supposed to be £1. I fail to see how that figure is borne out, and I put it to the Minister that the estimate provided by BAMF is much higher. Further, the figures he spoke of have been comprehensively criticised by BAMF, even though so far as I can see that critique has not even received a comment from the Patent Office.

Not only have the Government gone further than they need have done in implementing the directive, they have placed unnecessary burdens on small business owners for no commensurate benefit to artists. That cannot be in the national interest, and in the light of everything the Government have said and done hitherto, I believe that the art market has every right to feel badly let down.

We can only press the Government to revise their decision. I believe that the minimum which should be done by the Minister's department is to follow the proposals put forward by Graddy and Szymanski in their report. Those are to monitor the changes during the next few years, not only in the UK art market but
 
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also in art markets elsewhere in the EU and other markets outside; to monitor the trends in the number of works imported into the UK from non-EU countries; and to ask dealers and auctioneers to tell them what effect they believe droit de suite is having on their businesses. If, as seems inevitable, the Minister is unable to accede to the terms of my noble friend's Motion, I hope that at the very least he will feel able to give us those assurances.

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