§ Mr. John Hobson (Warwick and Leamington)
I beg to move, in page 21, line 32, at the end to add:Provided that this section shall not apply when upon any such sale being effected by public auction it is a term of the contract of sale made by such auction that the purchaser, being the National Gallery, the British Museum, or any other similar national institution, a university, county council, or municipal corporation in Great Britain, or the National Art Collections Fund shall pay to the vendor not the price at which the work of art or other property previously exempted was knocked down to it, but only a sum equal to that price less an amount equal to such estate duty as would otherwise have been chargeable and no more.The object of the Amendment is to assist in preserving for the public some of our heritage of works of art, to assist our public galleries and museums and to give some necessary assistance to cultural and artistic matters. The present position is that certain works of art and other property, if they are adjudged to be of national, historic or artistic interest, are free of Estate Duty so long as they remain unsold, but that as soon as they are sold Estate Duty becomes payable as though they formed part of the estate at the last death.
By the Finance Act, 1921, however, Estate Duty is not chargeable even on such a sale if the sale is to the National Gallery, the British Museum, any similar national institution, a university, a county council or the National Art Collections Fund, to which I shall refer hereafter as the public galleries and museums.
1261 What happens at the moment is that if, by private treaty, the National Gallery or any of those public galleries desires to acquire an exempted work of art, it can approach the vendor and negotiate a price which is likely to approximate to the market value less this amount of duty which will be payable. Under the present provisions of the law, however, the vendor can put his work of art up for sale by auction. In such a case, he will receive the full price. If one of the public galleries or museums is the purchaser, he is lucky because he gets the full price and no Estate Duty is payable, whereas if a private buyer or a foreign museum buys it, he has to pay the amount of Estate Duty to the Inland Revenue.
I concede that that position is wrong and requires rectifying, because it means that vendors are getting additional benefit merely because they have sold at public auction and they have been lucky enough to have a purchaser who is one of the public galleries or museums.
The way in which the Government propose to deal with this matter by this Clause is simply to say that a work shall remain exempt only if the sale is by private treaty. I submit that that is not satisfactory. What my Amendment proposes is, first, that, of course, if the sale is by private treaty the work remains exempt and no duty is payable—
§ Notice taken that 40 Members were not present;
§ Committee counted, and 40 Members being present—
I propose, by my Amendment, that if the work which is an exempted work of art is put up for sale at public auction and is bought by one of those named public galleries or museums, the price payable at such auction by such a public gallery or museum shall not be the price at which it was knocked down, but only a sum equal to that price less the amount of the duty payable.
In other words, the public galleries and museums, whether they buy privately or whether they buy at auction, will have the benefit of the exemption. After all, the intention of allowing the exemption was always so that works of art which are of importance to this 1262 country when they are sold should be diverted into our public galleries and not sold for export or in such a way that the public cannot enjoy them.
The Government's method of dealing with the matter by the Clause without my Amendment has, I submit, three grave disadvantages. First, there are very large numbers of cases where works of art cannot reasonably be sold by private treaty. One gets complete collections, or the complete contents of a house, a complete set of manuscripts or engravings. The only sensible and reasonable way of disposing of them would be to put them in a public auction room. To say that the public galleries would be allowed to go round and take their pickings and that the balance should be sold by public auction is an impossible proposition from the point of view of vendors.
There has recently been sold a large collection of coins, which took three years to dispose of at public auction. Many public galleries might have been interested in them. There could not have been any agreement to dispose of that collection sensibly by allowing public galleries and museums to take what they wanted and to sell the balance at public auction. There may be works of art—and we are not talking only of El Greco and other paintings, but pieces of silver, plate and other things—which may be in a house in Yorkshire and which may have a particular interest for people in Wiltshire. Those in Yorkshire may have no idea that in another part of the country there is an interest in them. If the works of art go to public auction and a public gallery or museum wants to buy them it will have to pay the full price, whereas if my Amendment were adopted it would be able to acquire them with the benefit of the exemption despite the fact the works were sold at public auction and not by private treaty.
The second objection which I submit there is to the Government's proposal is that it is not right that there should be special exemptions in particular cases, according to the method by which particular goods are disposed of. The Government's proposal allows the exemption in the case of a private treaty sale, but not in the case of a public auction sale.
1263 12.45 a.m.
Thirdly and lastly, the effect of the Government's proposal as it stands is purely discriminatory against auctioneers and art dealers who deal by way of auction in the City of London. There are important auctioneers, such as Sotheby's and Christie's, who, since 1948, have established this country as an important centre of international art marketing. Many of the works of art in this country which have been sold and exported to America since 1948 have been brought back for sale in London as a result of the importance of the London art market.
In addition, many of the continental sellers send works of art for sale in London. Anything that tends to divert important works of art from auction rooms into the private art dealers in London will tend to depress that market, depress earnings of foreign currency, keep visitors away, and detract from the primacy which we have in dealings with and in knowledge of important works of art.
My Amendment proposes that the vendors shall, in any event, be left only with the price less the amount of duty payable, whether they sell by public auction or by private sale treaty. According to my Amendment, the museums will be able to have the benefit of the exemption whether they buy by public auction or by private treaty. If they do not have that advantage they will always be at the mercy of a vendor from whom they particularly wish to acquire a work of special interest to them. Galleries often have to pay large sums of money because they particularly want a particular work of art. My Amendment would mean that there would be no discrimination between ordinary art dealers and auction art dealers.
It would make little difference to the Revenue, because it would mean that works of art would not be diverted from private dealers, and the London art market and auction rooms would not be affected.
A number of museums have been approached about this matter. Of the 35 approached so far, none has opposed it and 17 have supported, including Fitzwilliam Museum, Cambridge, Ashmolean, Oxford, St. Andrews University Library, 1264 Durham University and Newcastle Museum, and the city art galleries at Manchester, Bristol, Brighton, Norwich, Durham County (the Bowes Museum), Belfast and Nottingham.
What is particularly notable is that these are largely provincial and the smaller museums and galleries. Normally, they acquire their works at public auction because the opportunity of dealing direct with vendors does not arise because it normally does not occur to vendors that any of these galleries would be interested in certain works of art.
I concede that my Amendment might require tidying up in that it would be essential to know which was an exempted work which public galleries might be able to buy at a reduced figure. It is also necessary that any independent purchaser, whether public museum or private buyer, should be able to discover what is the rate of duty which will be deductible.
It may be said that it puts the public museum and gallery at an advantage, but it is no more than a device to give them additional funds by which they can buy such works. When one realises the wealth of some of the foreign museums with which they are competing, it means only that our public galleries and museums will be in a position in which they can compete on reasonably equal terms with those better endowed with funds. The alternative is to give them more money direct, which they can spend at public auction.
But the only argument which has been put forward in favour of the Government's method of dealing with this was put by my hon. and learned Friend on 12th May when he said thatAt auction, after all, the vendor is not consciously dealing with a public collection in preference to an overseas or private buyer."—[OFFICIAL REPORT, 12th May, 1958; Vol. 588, c. 48.]That really is not so, because the vendor who puts his exempted work in the hands of a private dealer in London is simply trying to get the best price. There are many people who deal by way of private treaty whose only object is to get the best price, and there are many people who require to put a complete collection in the hands of the auctioneer who are very anxious indeed that the public gallery should be able to obtain the work cheap but who have no other reasonable method of disposing of the work.
1265 It is not a question of whether the intention of the vendor should be looked at, but whether the public gallery or museum or the Revenue should have the benefit of exemption, or the difference in price created by exemption, when there is a sale by public auction. Why there should be this difference in that respect when the sale is by private treaty instead of by public auction I have so far been unable to understand. I hope, therefore, that my hon. and learned Friend will reconsider the matter and allow exemption, whether the sale is by private treaty or by public auction in order that the public galleries may have the advantage.
§ Mr. Wedgwood Benn (Bristol, South-East)
I formally support the hon. and learned Member for Warwick and Leamington (Mr. John Hobson), who has made a case at great length most forcibly and persuasively. The Bristol Museum is interested because it believes that the Amendment is in the interest of the museum and of the people who enjoy the gallery. I very much hope that the Amendment will be considered sympathetically.
§ Mr. Teeling
I should very much like to support my hon. and learned Friend the Member for Warwick and Leamington (Mr. John Hobson). It is only appropriate that I should do so, since not only is my name appended to the Amendment but I am the only hon. Member who represents an art gallery, for the Pavilion happens to be one. I know, as the Member for Brighton, Pavilion, that Christie's and Sotheby's are particularly anxious that the Chancellor should do something about this if he possibly can.
The more one goes about London at this time of the year and sees the Antique Dealers' Fair at Grosvenor House and other exhibitions of furniture, the more one sees large numbers of wealthy people from America and the Continent who have come to buy. There is no doubt that auctions and sales bring a great deal of money into the country. This has been increasingly so in the last few years. I hope that something can be done to help auctioneers in the dilemma in which they might be put at present. If it were done, the Chancellor would also be doing something for the tourist industry as well.
§ Mr. Peter Smithers (Winchester)
I regret to detain the Committee at this late hour. I should have liked to have spoken at greater length on this subject, but I content myself with saying that if the Amendment is not accepted we shall be causing great inconvenience to both sellers and buyers of works of art of a museum category. We shall be damaging an important international market which has its centre in London, which has been hard to win and is hard to maintain, and, in practice, we shall be discriminating against two firms in particular.
All these four things are very undesirable things to do and, therefore, I hope that my hon. and learned Friend the Financial Secretary will tell us that he is not going to do them.
§ Mr. Simon
One starts off with the fact that Estate Duty is leviable on the whole of an estate. From the beginning of the system of Estate Duty, to encourage that there should not unduly be a dissipation of heirlooms, it was thought that there should be an exemption for works of art while they were enjoyed in kind. That has been so ever since 1896, and it is reinserted in the Finance Act of 1930. A claim is made for the work of art or something of great scientific interest which makes it of sufficient national importance to be exempt; but when the exemption right is lost it has been turned into cash and it is then charged like the rest of the estate, and it pays what we regard as the proper rate. That, surely, is right.
That system continued until after the 1914–18 war, when there were considerable sales of important works of art abroad, and it was desired to encourage the sale of works which had previously been exempt to national collections. Therefore, it was enacted that where a sale was to a national collection, the exemption should be retained; and I emphasise that the object was to encourage sales to the national collections. Advice could be taken as to the proper market prices, and the people who frequently advised as to those proper values were those experts and firms of auctioneers who have been mentioned in this discussion tonight.
The object was to encourage the owner to sell to a national collection, but not to reward him if, by a bid at an auction, he sold to a national collection. That 1267 would be only fortuitous. And it was not to enable the national collection concerned to buy at less than the market price. Indeed, the system is of mutual advantage; because what happens is that the exemption is split by negotiation, or, in the case of the Ministry of Works, the division is prescribed between the vendor and the national institution.
The disadvantage of the methods suggested by my hon. and learned Friend are very considerable. In the first place, what they would mean, in practice, is a rigging of the auction. One would be putting in a bidder bidding at a false price. My hon. and learned Friend knows that the exemption may amount to 80 per cent. if it is an estate subjected to a high rate of duty, and so, for every £20 bid the national collection would, as it were, be offering a much smaller sum. Everybody bidding against him suffers that disadvantage. If that is not rigging the auction, I do not know what is.
The only alternative is to tell everybody who the bidder is and to let them know the rate of exemption. To let them know which is an exempt article and what the rate of exemption is would infringe on a fundamental principle of our fiscal law, namely, that the tax affairs of any individual shall not be disclosed. Here, there would be a very wide area of disclosure.
There is another reason why this suggestion is by no means to the advantage of the national collections. One has only to think of the case I have mentioned, where there is an artificially deflated bid, to see how one would bid up the market price, instead of the present arrangement which operates to the advantage of both vendor and national collections. Let hon. Members imagine one of the national collections bidding against a Greek ship-owner with all the advantage of his millions, and the national collections bidding on the strength of an Estate Duty exemption. Under such conditions there would be wholly artificial prices for works of art, which would be bound to inure to the disadvantage of the public collections.
I will deal with the four specific points made by my hon. and learned Friend the Member for Warwick and Leamington (Mr. John Hobson). He said that certain 1268 works could not be sold by private treaty, for example, complete collections. However, what happens when a complete collection is put up for auction is that it is sold object by object. There is no conceivable reason why certain objects should not be sold by private treaty to the national collections by face to face negotiation and advisedly, any more than in an auction room.
Secondly, my hon. Friend said that public collections might not know of the sale and that a certain work might be of interest to a provincial collection. The National Art Collections Fund exists to deal with precisely that sort of case. If any vendor is in doubt, he can approach the National Art Collections Fund which is fully cognisant of all the needs of the provincial collections.
§ Mr. Mitchison
Can the hon. and learned Gentleman say whether a sale to the National Art Collections Fund by private treaty is exempt from Estate Duty?
§ Mr. Simon
Yes, it is. I have used the expression, "public collections." That includes the universities, provincial collections and the National Art Collections Fund.
Finally, it was held that this was discriminatory against the auctioneers and my hon. Friends stressed the importance of the auction market in London. This is not wrongly discriminating against a particular form of sale. The purpose of the exemption is to promote a sale advisedly to a national collection. If objects are put up for auction, that is not selling advisedly to a national collection and it is purely fortuitous if a national collection succeeds in getting the article. It might just as easily go to some individual at home or abroad. It is of the very nature of the exemption that it demands a sale face to face and by private treaty. That does not mean necessarily by an individual dealer. It could be done in a number of other ways, through the National Art Collections Fund, or through the auctioneers themselves, who can negotiate private sales.
For all those reasons, I cannot advise the Committee to accept the Amendment.
§ Mr. Mitchison
All of us, including those who have spoken for the Bristol Art Gallery and those many of us who 1269 represent otherwise and by our personal appearance the provincial art galleries, would like to see some advantage given, if possible, to galleries and museums and the National Art Collections Fund when bidding in auctions. I appreciate the difficulty of doing it in the way suggested and I appreciate, too, that there is no case for giving the seller an enhanced price, but if the matter were taken one stage further and if the public gallery, having bought at an auction in the open market, were entitled to reclaim from the Treasury the amount of death duty which in those circumstances the Treasury would receive but would not have received had the sale been made by private sale, would not the purpose which we all have in mind be carried out, and carried out without any inconvenience? Is not the Treasury prepared to go that far in connection with public auctions if it is prepared to go as far as it goes in connection with private sales?
§ Mr. Mitchison
The public gallery would not know the amount and need not even know that it was an exempt article.
§ Mr. Mitchison
If I may trespass on the patience of the Committee for one moment, may I ask the hon. and learned Member to remember that there is a very powerful incentive, in any event, in respect of major works of art in that he may not be able to export them. That has a considerable effect. Could not the Government see their way to think again about this problem, because I do not think it is insuperable and I think it is the general wish on both sides of the Committee, on the one hand that the vendor should get no more than the market price because he is selling to a public gallery and, on the other hand, that public galleries, which are very starved nowadays—I cannot go into that 1270 question—should as far as possible get the benefit of exemption from death duty in a public auction just as they get it in private transactions.
Mr. Glenvil Hall
This is a matter in which we are all keenly interested and on which I do not think the last word has been spoken. I support what has been said by my hon. and learned Friend the Member for Kettering (Mr. Mitchison) and others. Could the Chancellor, between now and Report, have another look at the matter? It may be that there is no solution to the problem. On the other hand, it is possible that in the light of the discussion tonight reins will be loosened and someone will have a bright idea. If so, perhaps on Report the Treasury would have some good news for us and would offer a solution which was satisfactory to all. Frankly, we should all like to see a solution.
§ Mr. Simon
This matter excites the interest of hon. Members and my right hon. Friend has it always very much at heart and under review. It strikes me that there is a considerable disadvantage in the method the hon. and learned Member and the right hon. Member for Colne Valley (Mr. Glenvil Hall) have put forward. If we wish to enable the galleries to buy more extensively it is more sensible to increase their grant than to give them, purely fortuitously, a grant based on the degree of exemption which a particular work of art attracts. The system of the review committee to which the hon. and learned Gentleman referred is, I think, preferable in that respect.
§ Amendment negatived.
§ Clause ordered to stand part of the Bill.
§ Clause 27 ordered to stand part of the Bill.