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Lord Sainsbury of Turville: My Lords, following the approval of these regulations, artist's resale right will be introduced in the UK. In response to the noble Lord's amendment, I believe I have dealt with some of the most substantial issues in my opening speech, but I shall add the following points.

Before I do so, I should say to the noble Viscount, Lord Astor, that in no way did I say that the Merits of Statutory Instruments Committee did not take the issue seriously; what I said was that it did not give any weight to the interests of the artists, which is a quite different issue.

I declare a life-long interest. I have collected works of art all my life. My father put together one of the great collections of modern art in the 20th century, and I was brought up in a world of artists, art dealers and auction houses. It is a world that I know very well and a world for which I have a great deal of respect.

I should also make it clear that what we are debating is whether the threshold should be €1,000 or €3,000. That has absolutely nothing whatever to do with the question of the relocation of sales of works of art; at the top end, there is no way that works of art that are worth €2,000 are going to be taken to Switzerland or America to be sold. That is a complete fantasy. What we are talking about is a question of balancing costs and benefits to artists. The noble Lord, Lord Brooke, says that what we have done will shake the confidence of the art market. At a time when we have made it clear that we will seek to make the derogation for deceased artists permanent, I really cannot see that that argument has any force. The noble Lord, Lord Luke, asked why we had not made use of the derogation for deceased artists to 2012. The answer is that you can do that on the basis of the experience that you have had before that period; you cannot do it now when you have no experience of it. We will have to do surveys of what has happened and what the impact has been, and then in due course, around 2009, on the basis of that evidence make the case for extending the derogation.
 
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I also make it clear—when people talk about gold-plating and piling on regulations—that the administrative systems will have to be put in place whether we are talking about a threshold of €1,000 or of €3,000. Those administrative systems have to be put in place; the question is whether they will be used for a larger number of works of art.

I will turn to the question of the figure of €1,000 or €3,000. By laying the threshold to €1,000, we calculate that about 800 extra works of art are likely to be included. Even if we take what we believe to be an extraordinary cost per transaction of £28 produced by the British Art Market Foundation—on the basis of no calculation whatever but just a figure taken out of the air—the total cost of those 800 works of art would be £22,400 for the whole art market per annum. That has to be seen in the context of the total value of the UK's art market of £4.6 billion. I have very great respect for the art dealers of this country. I believe that they would consider that paying £22,400 to help young artists—who at the end of the day produce the material that their livelihood is based on—was a very small price to pay.

I say that it is an extraordinary figure because it is almost impossible to see how one would get a calculation as high as that. I agree with the noble Earl, Lord Howe, that quite a lot of operations have to be done, but they do not have to be done for very many items. I also agree that they would have to check DACS's figures, but even then I cannot see how you could possibly get to a figure of £28. I say to the noble Lord, Lord Marlesford, that I was a finance director for 17 years. I have looked at cost estimates, and £1 is a great deal nearer the reality in any competent organisation than £28. Indeed, at the last meeting that I had with the noble Lord, Lord Brooke, in happier times, he congratulated me on the thoroughness with which we were looking at the figures. Let us be clear; we have looked at these figures in detail, and I am absolutely convinced that the figure is much closer to £1 than £28. Even if you take the figure of £28, the total cost of the difference between €1,000 and €3,000 is £22,400.

Lord Jopling: My Lords, I am grateful to the noble Lord. In his opening speech, he told us that the cost was £1. He now tells us that it is nearer £1 than £28. Does he not agree that the implication of that is that he was totally wrong to try to fob us off with £1 earlier on?

Lord Sainsbury of Turville: No, my Lords. I was saying very clearly that I still think it is closer to £1. I did not say that it was £1; I said that it is in that order of magnitude. I have not just been saying that it is £28. I said that even if you think that it is £28, the total cost is £22,400. I very much doubt whether that will have a major impact on the economic viability of the UK art market. You have only to calculate how many pictures at what price at a reasonable buyer's premium to see that the odd picture would cover the whole cost of the whole UK art market. Noble Lords may think that that is gold-plating, but this is a fake—we are talking about a modest dab of moisture, not gold-plating.
 
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9.45 pm

The noble Lord, Lord Brooke, drew attention to the comments that I made to the Select Committee. I have no problem with those comments. The whole point of consultation is to listen to the views put forward and to try to assess their validity and value. As we assessed the evidence, it became clear that many of the figures that we were being given were based on no calculation whatever; they were simply plucked from the air. The best calculations we had—they were not simply plucked from the air—were closer to £1 than £28. I gave BAMF every opportunity to challenge the figures and produce alternative calculations; it did not, which is why I assumed that it had no calculations and that no calculations had been made.

A number of other points were made. The noble Lord, Lord Inglewood, raised the Berne convention. It was always extremely optimistic to think that the Swiss and American dealers would say, "What a good idea. We will go along with the artist's rights in this matter". We can use this as a way of going back and getting a permanent derogation on the basis that that has not come to pass. He also mentioned Article 295, which talks about prejudicing property rights. We do not believe that the regulations do that at all.

Lord Inglewood: My Lords, surely what has happened here is that, as the law stands, the owner of a work of art owns the entitlement to the entire proceeds of sale of the item in question. After the legislation comes into effect, he will own only an entitlement to part of the proceeds of the sale of the work of art. Surely that is therefore a change.

Lord Sainsbury of Turville: My Lords, on that basis, obviously the fact that a sum of money is deducted for buyer's premium could be said to be derogatory to the property rights as well.

Lord Inglewood: My Lords, with all due respect to the Minister, that is not correct, because the buyer's premium is deducted as the result of a contract. This is deducted as the result of a piece of legislation.

Lord Sainsbury of Turville: My Lords, I still cannot see that the provision in this context prejudices that; that is the legal view that has been taken.

I agree very much with the noble Lord, Lord Freyberg, in what I thought was a rather objective assessment of the regulations. So far as European competitors are concerned, it seems that there is no pattern. The current available figures suggest that Germany, Denmark, Greece, France and Hungary will all come under €1,000; Italy, the Czech Republic and probably Ireland will be about €1,000; Belgium and Spain are between €1,000 and €3,000; while Austria, the Netherlands, Luxembourg, Portugal and Cyprus are at €3,000. Across Europe, people are taking different positions on this.

The noble Lord, Lord Freyberg, raised the question of works of video art and whether they are covered by the definition of works of art. We do not think so,
 
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because we do not believe that they come in the category of graphic or plastic art, but there will be difficult borderline cases. We took the decision to use the definition in the directive so that there could be no accusations of gold-plating. It is not a very precise definition, but there cannot therefore be any queries about that. I am well aware of the recent criticism in the press, but many of the reports have been factually inaccurate and not based on the latest economic analysis, which we made available on the Patent Office website.

Finally, I shall deal with another big question, which is why the Government have chosen to make the art market professional jointly liable for payment of resale right. If you take any look at the matter, that has to be the simplest means of operating resale rights. The art professionals are the people who have the experience in this, who can most easily deduct the sum of money, and would be expected to give advice on the issue to buyers and sellers. I cannot see any way that a counter-argument that someone else should do so could be made. If we did that, it would lead to a great deal more grief for everyone, including the art professionals.

The Government firmly believe that our implementation will allow those artists who are most in need of financial support to gain from their creativity while minimising any risk of harm to the UK's thriving art market. We have not gold-plated this directive and we have not gone beyond what is required within the directive. In fact, in setting the threshold at €1,000, we have not gone as far as the directive allows. In making our decisions, we have carefully excluded those cases where the rewards do not justify the costs. Paragraph 55 of the Culture, Media and Sport Committee report, The Market for Art, states,

"we do believe it should not benefit solely the richest artists. We recommend that the Government lowers the threshold at which the resale right applies from 3,000 to 1,000 euros".

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