§ 6.31 p.m.
LORD STRABOLGI rose to ask Her Majesty's Government whether they are satisfied with the present system of export control for works of art. The noble Lord said: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. It is twenty years since the first Report of the Waverley Committee and this seems a good time, I suggest, to review the present system of export control and to ask the Government whether they are satisfied with it. The Nineteenth Report of the Reviewing Committee was published in January and that, I was glad to see, included a warm tribute to the noble Lord, Lord Cottesloe, who has just retired as Chairman after 18 years. As the Report says:
Those concerned with safe-guarding the art treasures of the nation owe him a great debt of gratitude.
That I should like to endorse. I am glad that the chairmanship has passed into the able hands of the noble Earl, Lord Perth. He is well qualified for the task and we wish him well.
§ It is generally agreed that the review system has worked satisfactorily on the whole and the Waverley criteria, which cannot be bettered, still remain the most sensible guide when deciding whether or not to grant an export licence. The great weakness in the system, though, seems to be that the national institution has often not got the money to back up the Waverley decision. Special grants from the Treasury are also dependent on other factors such as the prevailing political and economic climate. I am glad to say that there have been some concessions over the years. I welcome the very useful concessions in last year's Finance Act for example, the granting of unlimited exemption from estate duty on financial 494 bequests to museums and galleries as well as to qualifying bodies such as the National Art Collections Fund. I also welcome the exemption up to £50,000 on bequests to other charities, many of which help the arts. These concessions have brought financial bequests into line with bequests of works of art which were exempt so that we shall not have any more cases like that over the bequest by Sir Robert Hart to the National Gallery of half a million pounds when most of the money was clawed back by the Treasury in estate duty.
§ In the case of exempted pictures sold to galleries by executors, as opposed to bequests, there is nothing that I can find in the Finance Acts to prevent 100 per cent. remission. I understand that the present Treasury practice is to allow a 25 per cent. remission. It would, I suggest, provide a great inducement to owners to offer their pictures to galleries in this country if the remission percentage could be raised, say, to 50 per cent. for a start. I am glad that the arrangements for exemption in lieu of duty have been broadened to include works of art suitable for collections other than national collections. It is surely right that the regional museums should have their share and that the nation's art should be more widely spread, provided always that the wishes of testators are respected.
§ But there is one anomaly that needs to be put right. In the case of national collections, if the exempt price of the work of art is below one-quarter of the annual purchasing grant of the gallery concerned, then that sum must be refunded by the gallery to the Treasury. That will be particularly onerous in the case of collections comprising items which are individually worth less than 25 per cent. of the grant. A national museum, for example, would have to pay for the whole collection. The National Gallery would not be able to accept in lieu of duty any item worth less than £120,000, which is a quarter of the Gallery's purchase grant. I hope that the Government will consider this and allow a collection to be accepted on its total value rather than on that of individual items, and thus make it easier for it to be retained in this country.
§ My Lords, all these arrangements are very complicated and the Reviewing Committee urge, quite rightly, in their last 495 Report, that a simple statement should be prepared. I understand that this statement is in preparation and I should like to ask when it is likely to be published as many executors are unaware of these fiscal advantages. May I say how delighted I am that the fund to assist local collections, which is administered by the Victoria and Albert Museum, has been increased from £150,000 to £400,000. I am also glad to see that the financial level for exports not requiring a licence has been raised from £2,000 to £4,000. But I submit that works in one category should be excepted, irrespective of value, in the way that archaeological material is excepted. These are paintings, mainly portraits of eminent men and women, where the historical importance is much greater than the monetary value. I believe that the financial level was raised without full consultation with the Standing Commission on Museums and Galleries. It is causing concern, particularly to the National Portrait Galleries in London and Edinburgh. I hope that the Minister will reconsider this matter, otherwise many works, important from an historical point of view, may be sent abroad without coming to the notice particularly of these galleries. The Reviewing Committee draw attention to this special category in their Report and suggest—and I thought that this was a very good suggestion—that historical portraits should be treated as documentary material.
§ Turning to value added tax, the original proposals to levy V.A.T. on the whole selling price of a second-hand work of art would have been particularly damaging to our art trade. I welcome, therefore, very much the concession which is to levy V.A.T. only on dealers' and auctioneers' margins and commissions and to zero-rate all exports and certain imports. These concessions, I believe, are owed in large part to the efforts of the noble Viscount, Lord Eccles, and I should like to say how much this is appreciated. They should enable Britain to maintain her position as the leading centre for the international art market, as this, of course, depends on a free flow of works of art both in and out of the country. However, the zero rating of export sales may give a slight advantage to the foreign collector and museum, since sales, even to museums, in this country are not to be 496 zero rated. I hope that the Government will reconsider this. I should like to ask particularly whether works of art sold to public galleries in this country, either direct or through supporting bodies like "Friends", can be zero rated in the same way as works of art sold to foreign museums. This proposal has the support, I believe, of the Standing Commission on Museums and Galleries.
§ I must also put in a strong plea for the living artist. I am shocked that home sales by an artist of his own work will have to bear the full V.A.T. and also that new work by living foreign artists will be liable for this tax on their importation. The effect will be to discourage collectors from bringing in contemporary works of art from abroad, and to treat works of art, which should know no frontiers, like consumer goods. This is philistine and short-sighted, and it will affect the quality and range of our private collections, and, of course, through them eventually the quality and range of our national collections. The £5,000 taxable limit will also bring into being two classes of artist, those who are taxable and those who are not. In many countries of Europe the Living artist is exempt, and so he should be here, when we claim to be a country that believes in the arts.
§ The Reviewing Committee pointed out in their report that there are a number of major works of art still in private hands which are just as important as Titian's Diana and Actaeon. The National Gallery has, of course, mortgaged a large part of its purchase grant for several years in order to acquire the Titian. It seems unlikely, therefore, that we should be able to prevent another picture of the same calibre from going abroad if it should come on the market in the near future. I should like to ask the Government whether they have any contingency plans for, say, the Michaelangelo Tondo, which is valued, I believe, at about £5 million, should the Royal Academy decide to sell this.
§ Following the sale of the Leonardo cartoon in 1962 by the Royal Academy, when this was retained in the country only by the most strenuous efforts—I think we owe a great debt to the noble Earl, Lord Crawford, for his great efforts over this; I am sorry he cannot be with us to-day —the Government set up a committee of inquiry into the sale of works of art by 497 public bodies, under the chairmanship of the noble Lord, Lord Cottesloe. The committee recommended, in their 1964 report, that the control system should be reinforced by a fund to finance special grants when necessary for important purchases, and also that the Government should announce that export licences would not be issued for works of art above a certain value in the possession of public or semi-public bodies if the committee advised that they are of national importance. Where export licences are refused, the committee recommended that the Government should usually be prepared to negotiate for the purchase. Since the Leonardo, we have had the sale by Dulwich of their Domenichino in 1971, a sale sanctioned, I am sorry to say, by the present Minister of Education; a very sad story that had a happy ending, as the picture is now owned by the National Gallery of Scotland, although it very nearly went abroad. I should like to ask the Government for their views on the Cottesloe recommendations, if I may so describe them, as these seem to me to be just as relevant to-day as when they were made nearly ten years ago.
§ The establishment of a special capital fund is also urged by the Reviewing Committee in their report, and they have urged this in many previous reports. It has also been recommended by the National Gallery Trustees. One advantage, of course, would be that it would be easier to come to a quick decision. But there might be Treasury difficulties over hypothecated finance, especially for a large amount. The Reviewing Committee suggested in their previous report that one way over the difficulty would be the provision of a more modest sum, analogous to the purchase grants available to the national collections, but non-cumulative, acting as a long-stop to ensure the retention of items of lesser value, which are often at risk—and many of these include, of course, paintings by British arists which are very much part of our heritage. It may be better, however, to give increased grants to galleries to enable them to plan ahead, and for the galleries to let the Government, the Reviewing Committee and the fine art trade know in advance what they are interested in.
§ As I have no right of reply, I should like to say at this stage that I look forward to the speeches of the Minister 498 and other noble Lords, and I hope that the Government will be able to let the House have their views on all these matters arising out of my Question.
§ 6.47 p.m.
§ LORD COTTESLOE
My Lords, I think we must all be grateful to the noble Lord, Lord Strabolgi, for raising this matter in your Lordships' House. It is a subject in which there is widespread interest among the public with their increasing awareness of our heritage in this country, the great heritage both of nature and of art, and a subject which, while an occasional facet of it may perhaps arouse Party feeling, is in essence one that quite transcends Party politics.
I have been fortunate, as the noble Lord has said—and I cannot be too grateful for his kind references to myself—to have been for 18 years, until my noble friend Lord Perth succeeded me in that position last July, the chairman of the Minister's Advisory Council on the Export of Works of Art and also of the Reviewing Committee that considers particular cases of applications for export licences for works of art and antiques, where they concern objects to the export of which objection has been raised by expert advisers on grounds of their national importance. It has been for me an assignment of absorbing interest and occasional vexations, but with many delights—delights not only due to the variety and the beauty of the objects with which we have been concerned, but no less due to the ready help and co-operation and friendship, given almost without exception by owners and dealers and museum directors alike. I have been very fortunate.
As Lord Strabolgi has said, the present control was set up 20 years ago on the recommendation of a committee under the chairmanship of John Anderson, Lord Waverley, a committee of which my noble friend Lord Robbins was a member. The basic concepts on which it rests, as they were laid down by that committee, have stood the test of time remarkably well. They were, first, that export control by a system of licensing is best applied to a small number of objects of high importance, and becomes progressively less effective and more irksome the larger the number of objects it is sought to control; secondly—the 499 essential corollary—that the grants available to the national collections should be sufficient to enable them to acquire by negotiation, or in the market, all but the most important and valuable of their desiderata; and, thirdly, that in every case where export is prevented the owner must be assured of an offer to purchase at a fair price.
The Waverley Committee also laid down criteria to be applied to assess the national importance of any work of art referred to the Reviewing Committee after scrutiny by an expert adviser of an application for an export licence. Those criteria, too, have stood the test of time, though there can be no doubt in my view that the increasing ease of movement about the world—we have just been talking about the Concorde—is making the context in which a great work of art or of literature can be studied and appreciated of greater importance, and the location in which it rests of less importance. As a case in point, if there were to-day a further great discovery of Boswell manuscripts, than which few things are more improbable, the right place for them would undoubtedly be Yale where they could be studied in the context of the great mass of Boswelliana, rather than the British Museum. Considerations of the same sort may sometimes apply to particular works of art.
Such is the system and it has, on the whole, worked well, largely owing to the fact that the arrangements are designed, unlike those in some other European countries, to operate with the greatest practicable measure of fairness to the owners of works of art and to the dealers who handle them. This has been a major factor in enabling London to regain since the last war its outstanding pre-eminence as the centre of the fine art market of the world; and, no less, it has been this fairness that has secured the co-operation of the trade without which no control could hope to operate successfully. Nor, my Lords, must it be forgotten that this has the effect that, while the objects referred to the Reviewing Committee are relatively few—less than 200 in 20 years—and, commonly, are not of extreme importance and value, the very existence of the control has had the effect that many items of the highest importance are offered to and acquired by 500 the national collections without ever coming into the export market at all—such works as the Memling Triptych, the Powys van der Weyden, the echanting Gainsborough of Mr. and Mrs. Andrews sitting by their cornfield, the Holbein cartoon of Henry VIII, the Goya of the Duke of Wellington and, of course, that object of supreme beauty, the Leonardo cartoon.
For such acquisitions the increase in the grants available to the national collections in the last two decades, and special grants from the Government towards particular purchases, have been an essential factor as well as the arrangements, now to be more broadly based than hitherto, for acceptance of works of art by the Treasury in satisfaction of estate duty. The increase in purchase grants has, in particular, been outstanding and welcome, greatly exceeding the inflationary increase in values. The National Gallery purchase grant, for instance, which 20 years ago, when the control was instituted, was £7,000, is now £480,000; the Tate Gallery grant has risen from £2,000 to £265,000 and one can say that, in general, the second of the basic concepts on which the control rests is at the present time reasonably satisfied. I should like particularly to congratulate my noble friend the Paymaster General on having obtained this year, as the noble Lord, Lord Strabolgi has said, a great increase in the sum made available to the Victoria and Albert Museum for aid to purchases by local collections—an increase to £400,000. Last year, it was only £150,000 and I think I am right in saying that 20 years ago it did not exist at all.
So much for the system. It appears in the light of experience that it is soundly based and that, on the whole, it has worked reasonably smoothly and well, though there have been one or two minor breaches of the control, due I think more to ignorance than to malice. I know of only one important evasion in these 20 years, the export to California of the only known portrait of Dr. Harvey in his prime by a fraudulent declaration, for which a salutary fine was imposed by the court. Of course the export of the very unattractive, but important, early Rubens of Daniel in the Lions' Den, at one time in the collection of Charles I, to whom it was given by his ambassador at The 501 Hague, was made possible only by the ill-advised but unquestionably bona fide acceptance by a reputable owner, of an offer of £500 for a picture that was sold a year or so later to the National Gallery in Washington for a sum said to be in excess of £170,000. But no system can be infallible. What are the real weaknesses? In my view, they are at the two ends of the scale—the middle ground is reasonably satisfactory. On the one hand, the system is not all adequate to cope with pictures of an astronomical value, of which the Velasquez from Longford Castle, sold for £2,310,000 in 1970, may be taken as the architype, and it is of course, in fact, an abnormality. Nor, on the other hand, is it in the least adequate, as at present devised, to deal with the modern historical archives that are of such importance to scholars, and now often of high monetary value.
As the whole field of manuscripts, documents and archives is, I understand, to be discussed by your Lordships on a separate Motion after Easter, I shall not attempt to say anything about it this evening—a most difficult and intractable field it is, with the most bigoted members of the trade, on the one hand, saying that nothing should ever be controlled, and the most extreme scholars, on the other, saying that nothing should ever he allowed to leave the country. There are of course less extreme men of both kinds between the entrenched extremists, but we shall be talking of these matters after Easter. There are at the other end of the scale three things that seem to me to be essential before the control can he regarded as adequate for the safeguarding of important elements of our great heritage. The first is that the arrangements for acceptance of important works of art should be such as to attract owners, and particularly executors, to surrender them to the nation to enrich our museums and galleries, rather than put them into the international saleroom.
Here there has been a very significant change. Not only can I hope, with confidence, that my noble friend will be able to tell us that the arrangements for the surrender of important works of art in satisfaction of estate duty will be clearly set out and publicised for the benefit of executors and owners and their professional advisors—and it is very necessary that they should be widely 502 known and understood—but he is to be congratulated on having broadened their base, so that executors can now surrender suitable items not only from the particular estate on which duty is charged, but from outside it, and where they have been exempted can obtain 25 per cent. of the benefit of the exemption. And they can be accepted not only for the benefit of a few national collections, but for the enrichment of local public collections, too.
My Lords, that is splendid, but there seems to be a nasty fly in this particular ointment, to which Lord Strabolgi referred. It is that if an item surrendered was worth less than 25 per cent. of the total annual purchase grant of the collection concerned, the museum or gallery could not accept it in lieu of duty but would have to pay for it. That does not seem to me to make any sense. I think I can understand the reason behind it, but it still does not seem to me to make sense. I hope that perhaps my noble friend may be able to tell me that we have been wrongly informed. Of course, the unlimited exemption from estate duty of monetary bequests to the National Gallery and some other collections, and to the National Art Collection Fund, to which Lord Strabolgi referred, with the corresponding exemption up to a limit of £50,000 for other charities, is most warmly to be welcomed. But while these measures are a real help, they are far from being enough. They would not have been any help over the Harewood Titian of Diana and Actaeon, a most important and beautiful work from Titian's last period which has been secured by the National Gallery only through a self-denying ordinance of the National Gallery Trustees which cripples them for some years, and by the notable tour de force of a great public appeal, topped up by a special Treasury grant of £381,500, to provide a total of more than £1¾ million for its purchase.
Nor, indeed, my Lords, would they have served to retain the incomparable Velasquez from Longford Castle; and, splendid though the Titian is, I would myself sooner have seen the Velasquez in the National Gallery. That picture must have attracted about £1½ million or 1¾million in estate duty and capital gains tax—a great windfall for the Treasury. But that windfall was in fact a part of our heritage of works of art. In my view, 503 it should have been ploughed back, so to speak, and not expended—I am tempted to say "frittered away" —in current Treasury expenditure. It would be an entirely logical extension of the arrangements for the acceptance of works of art in lieu of estate duty if the money attracted through taxation by their sale were made available towards their acquisition for the nation. Of course, the Treasury would fight tooth and nail against any such logic, but I hope my noble friend will fight with equal resolution, and that logic will prevail. It would, I think, make a great difference.
Finally, my Lords, I come to what has been repeatedly urged on successive Governments, as Lord Strabolgi said, not only by the Reviewing Committee and the Advisory Council, but by the National Gallery Trustees, by the Standing Commission on Museums and Galleries and by other bodies; and that is the essential need for a fund of some sort to back the control. It is true that the record of successive Governments in giving special purchase grants on occasion has been, on the whole, commendable, though there have been notable failures. The Oscote Lectern, that unique and splendid sculpture, and the Caxton Manuscript of Ovid's metamorphoses, now at Magdalene College, Cambridge, through the great generosity of an American who learned of its sale only by chance, spring to mind. No one who has anything to do with the control can rest content to accept the chances of important and valuable items falling on the market when the economic climate is severe unless there is a fund to back the control in such an emergency.
Such a long-stop might be provided in either of two ways. It might be provided as a large capital fund available to be drawn upon in emergency. The classic objection to that—that Parliament will not allow large sums to escape from its control—does not, I think, really hold water, for such a fund could be provided by ear-marking for this purpose a part of the Land Fund; and the use of the Land Fund for the maintenance of historic buildings at the instance of the Historical Buildings Committee makes a good precedent. Or, equally, it might be provided, as the Reviewing Committee have suggested, in the form of an annual grant analogous to the purchase grants 504 made available to the Trustees of the national collections—but, we have suggested, not cumulative from year to year. To that there could really be no objection in principle, and I earnestly commend this suggestion to my noble friend. I would say that that would not of course be a purchase grant in the ordinary sense; it would be a long-stop to prevent important items of our national heritage from disappearing from our country, almost certainly for ever, and that is a very different thing and a very different order of priority from a gallery's purchase grant. At all events, my Lords, in one way or another I most earnestly hope that my noble friend may be able to obtain for the control the backing that is an essential requirement if it is to ensure that the most important and valuable works of art from our heritage from the past are secure from export despite the vagaries of the economic climate.
§ 7.7 p.m.
§ THE EARL OF PERTH
My Lords, I, too, I am most grateful to the noble Lord, Lord Strabolgi, for having initiated this Motion. I found myself very much in agreement with many of the points he made and nut forward. Of course, on a question like this—the export of works of art—a system can never be perfect, and I think it is of the greatest importance that suggestions are put forward for consideration by all those who care about and know a good deal about the subject. Certainly various of the things that the noble Lord has suggested to-day I feel sure will be taken very much to heart and thought about by the Paymaster General. The noble Lord paid tribute to Lord Crawford, who is not here to-day, for the efforts he made in saving the Leonardo, and I would certainly echo what the noble Lord said. He also paid tribute to the noble Lord, Lord Cottesloe, and in that respect I can say that there is only one section of this Report in which I played some part, and that is the Addendum, which expressed how great was the debt that we all owed to Lord Cottesloe for his work over the last 18 years. That, anyhow, I drafted. If proof were needed of what is said there, it is to be found in what we have heard to-day in his speech. That speech, with the various concrete suggestions that he 505 has made and the experience which he has recalled of various happenings, is certainly something that we, the present members of the Committee, will study. I shall see that my fellow members have it as compulsory reading; and I am sure that what I say for us will also be true for others who are concerned in Government quarters.
My Lords, the Report made four recommendations. It is not for me to comment on those broadly; that will be for the Paymaster General. However, there is one recommendation on which I can throw a little light, and that is the recommendation that a clear and simple statement of the provisions in the various Finance Acts should be made available particularly for those who are involved, be they solicitors, be they trustees of estates or what you will. I have seen this pamphlet or statement—call it what you will—in first draft, so it does exist; but I am sure all will appreciate that it is a very difficult document to get right. So perhaps we have to be patient a little longer. I have no idea of the timetable, but there is progress and, as I say, something is on paper already.
I have for long been interested in the whole question of works of art but I feel I am too new a boy to make detailed comments such as we have heard from the noble Lord, Lord Cottesloe. But two thoughts have come to me which are of great importance. One concerns an ever-closer relationship between the museum curators, directors and keepers, and the trade. Often there is a temptation on the part of museum directors to wait until, for example, something has come up at auction, and then to say, "Oh, well! perhaps we had better get this." It is one of their vital and important tasks that they should let the trade know what they are after; they should cultivate dealers, be they in London or in the country. In that way one might ensure that in respect of various treasures we did not go through the agony of wondering whether or not we were going to be able to save them at the last moment. I have found in every instance I have seen that those in the trade are only too anxious to have the right things go to the museums. So more initiative is needed on the part of the museum directors and keepers, and I am sure that the dealers will respond.
506 My second thought or realisation is the importance of the National Art Collections Fund, which has been mentioned by noble Lords who have spoken in this debate. It happens that it is celebrating its 70th birthday this year. Dare I say that I hope that all noble Lords who are sitting here are members of the Fund? If they are not, I strongly recommend that they should become members. My reason for this is that I believe that if this Fund had more money and more members it would provide one of the solutions towards solving crises which arise when a great work comes up and the gallery concerned is not able to raise the money that is needed. If we could reach a point where on such occasions the National Art Collections Fund could say, "Well, we can go half way in finding the money", it would be extremely difficult for a Government to say, "We will not match that." For those who want to put pressure on the Government or the Treasury, one of the best ways of doing it is to increase in every way the National Art Collections Fund's money and membership. If an organisation has many members, then it is a pretty strong lobby as well.
To come to the end of my remarks, perhaps one might ask whether one is satisfied with the system as it stands. I think I have said that one should never be satisfied, because nothing is perfect. But various Governments, and particularly the noble Viscount the Paymaster General, have gone a long way to help us in the whole of this task. His success is an outstanding one in getting us money for such things as local museums and in getting improvements of Finance Acts, and his efforts have not been adequately realised to date. I certainly want to join the others who paid their tributes to him. We have heard from the noble Lord, Lord Cottesloe, that the Waverley Criteria have, in his opinion—and I would support this—stood the test of time in the most extraordinary way. It would be hard to change them in any substantial degree; there may be room for some minor improvements, but, broadly, the work that was done 18 or 20 years ago still stands now. I feel that one can say with confidence that the system is working pretty well. When I look elsewhere to other countries in Europe where there is equally a system for defending 507 their treasures, I think that our system is better. If that is right, I believe the basic reason is that both the trade and the owners recognise that they are going to get a fair deal. In that respect, I would only say if ever that situation were changed, if ever the principle of a fair price, or non-penalisation of owners, were threatened, then it would be a sad day and the outlook would be black. Successive Governments have always stood against that threat. Long may their stand continue!
§ 7.17 p.m.
§ THE PAYMASTER GENERAL (VISCOUNT ECCLES)
My Lords, the noble Lord, Lord Strabolgi, has asked a very interesting Question. He has raised a great many facets or minor questions in his interesting speech, as have my two noble friends who have spoken in the debate. I will do my best to answer them, but it will take a few moments because of the importance and intricacy of the subject we are debating. I would add from the Government Front Bench to the tribute to the noble Lord, Lord Cottesloe, and his 18 years of chairmanship of the Reviewing Committee. I remember well when Sir John Anderson held his first inquiry and I submitted a memorandum to it at that day which was pigeonholed and nothing was ever done about it. But the Criteria, when they came out, were, and have been, a great testimony to a very wise man's drafting capacity on a very difficult subject.
There is no division among us in the House that we ought to try to keep in this country, and in a good state of repair, as many beautiful and interesting buildings and objects as we possibly can. The Government's problem is how to do this with justice to the owner and within the limited funds available, when the boom in prices on the art market looks as though it will never end. It is against this background of what one must describe as permanent inflation—more and more money chasing fewer and fewer fine objects—that I have to reply to the Question whether we think the "present system of export control for works of art" is satisfactory. Many experts are constantly telling me that it is not satisfactory; and that may be due to the fact that their judgments differ so widely on what it is we ought to keep in the coun- 508 try. I think I may say that the noble Lord, Lord Strabolgi, and I happen to be liberal in our approach to international trade in the arts, and therefore we really agree in principle that one ought not to swing over to heavy protectionism. I do not know whether that is true for all other noble Lords. It is certainly not true of many critics and curators, and I think they must have some squirrels among their ancestors. But, speaking for the Government, I can endorse what my two noble friends have said—that the present control works uncommonly well; very much better than any parallel system in any other country with which I am acquainted.
What is the reason for the enviable comparison that we can justly make? My Lords, we ought to be quite clear about this before we support any demand for an extension in the present control system. We are talking about delectable objects, small in size and very valuable in money—many of them would go into the boot of a car. I doubt whether your Lordships can think of one masterpiece that could not be concealed in a juggernaut lorry rolling on to a channel ferry. It follows that the effectiveness of our system of control depends upon the good will and integrity of owners, dealers, auctioneers, experts and officials. Our system, as the House will know, requires individual licences to be obtained for objects above a certain value, age, and length of time which they have been in this country. And these licences have to be applied for voluntarily. The system works because we have been able to count on the good will and integrity of all concerned in the trade in which very large sums of money are always at stake. If we lowered the limit of value and age so that many more works would require an export licence, or we asked the Government's advisors to refer many more objects to the Reviewing Committee, your Lordships would see that the area in which evasion must always be a temptation would be correspondingly increased. There is some evasion to-day, but we have reason to think that in the great majority of cases licences are applied for when they should be and that our control works because the area to which it is applied is small and the system itself is clearly seen to be in the public interest.
509 My Lords, we have in fact done something to enlarge the area in which licences are required. We only doubled the limit above which licences must be sought from £2,000 to £4,000, although prices have more than doubled since the £2,000 limit was fixed in 1966. It must be obvious that if a control at the point of export cannot be made as comprehensive as one would wish—and it never can be in any country—the alternative is to buy for a public collection an object that might otherwise have slipped out of the country. This is why we have been quietly improving the benefits to a British owner who gives, sells or bequeaths some work of national importance to a public collection or offers it in lieu of estate duty. The improvements that we have made are in the nature of a deliberate reply to the United States tax reliefs which we think would not be suitable in this country. The Finance Act of 1972, as noble Lords have already mentioned, made changes relating to cash gifts and bequests to national collections and arts charities. The Government also broadened the standards for acceptance of works in lieu of duty.
I now come to a point raised by both the noble Lord, Lord Strabolgi, and my noble friend Lord Cottesloe. In 1956 in another place, the Government made clear their intention not to do this in such a way that the national museums would get a straight increase in their acquisition grants, and that intention was confirmed last year during the passage of the Finance Bill. The Treasury requires this 25 per cent. rule to make the system workable so that the cases can be readily ascertained which cannot be treated as outside the scope of the normal acquisition grants. Of course, on the borderline there will be room for some argument on the application of the general rules, and these modified provisions are, as the noble Earl, Lord Perth, indicated, more than a little complicated. They are being set out in the Treasury Memorandum soon to be published—I hope within a very few weeks now—and we are very grateful for the help which the noble Earl, Lord Perth, has been giving us in drawing up a clear statement of a difficult position. When the memorandum is in the hands of owners and their advisers we can expect the offers to public collections and to the Treasury to increase. 510 Much has already happened. The Chancellor of the Exchequer must be very pleased that before all the advantages are widely known we have had a significant increase in the number of interesting offers—something of the order of as many a month now as before 1972 we had in a year. The Provincial galleries are quite obviously going to benefit greatly from the new arrangements.
I think the noble Lord, Lord Strabolgi, thought that when a picture is sold to a public collection and is thereby exempted from estate duty, the Treasury ought to offer a larger margin than 25 per cent.—this happens to be the same figure as in another instance—but I think he will remember that there is now a double concession, not only exemption from estate duty but exemption from capital gains tax. Of course, the position is complicated and that is why we had to set it out in the memorandum. I can assure him that the fact that it is 25 per cent. of the difference between the price he might have got in the market and the price at which the picture is accepted by the gallery—it is then 25 per cent. of the death duties—is already showing itself to be a very powerful incentive. So far as we can see now, there is no need to offer any greater incentive but I undertake that I will watch this matter very carefully.
I think the noble Lord asked that the limit of £4,000 above which a licence must be sought should not apply to historical portraits. We have looked at that, but it is extremely difficult to define what is a historical portrait and what is not. Further, objects of this price range —that is, below £4,000—really ought to be taken care of by the annual acquisition grant of the gallery concerned, and if it can be shown that this is not so they will no doubt make a case for an increase in grant when the present quinquennium comes to an end.
I have to say to my noble friend Lord Cottesloe that I suppose I have a dash of Treasury training in me, but the idea of earmarking the proceeds of estate duties on one kind of property to be reinvested in the same kind of property really horrifies me, and I feel that if this were to be communicated to the Treasury there might be great consternation. I think that one is simply not "on". But it leads me to say a word in answer to 511 the noble Lord's inquiry about the repeated requests by the Reviewing Committee for a large fund out of which they could assist the purchase of masterpieces for which they had held up an export licence. This matter has been looked at a great many times, and no Government have favoured such a fund, for reasons which appear to us to be convincing. The Reviewing Committee was established to warn us when a work of art should be retained in this country, and that it has done extremely well. It was not established to buy works of art. In our view it is for one of the museums to say whether they wish to acquire a particular work for which the export licence has been challenged and, having regard to their acquisition grant and such other funds as they can muster, to make the case for a special grant from the Treasury. No Government have thought it right to hand over these functions to an independent body, however eminent. Money such as is required to buy a picture like the Titian can be made available only when the gallery and the Government have considered all the circumstances, including the other claims in the field of the arts which, I can assure noble Lords, are many and urgent.
Of course, my Lords, the rise in the art market is highly embarrassing. The inflation, if that is the right word, has escalated in the last three or four years at such a rate that it is unreasonable to expect any Government to increase the grant for acquisitions to the same extent. Therefore we have to be more, and not less, selective in the use of the funds available, and each case must be judged on its merits and according to the financial circumstances. I hope I carry your Lordships with me when I say that the need to be selective lays an added emphasis on retaining works of art that have a direct connection with our own history. We must not let them go, and in the last two years we have used the special grant system to secure all the important objects of that kind that have been brought to our notice. If we had used all the money on buying one or two foreign paintings in the seven-figure class we would justly have been criticised.
512 That brings me to the very difficult question of drawing up lists of those masterpieces by foreign artists which have been in British ownership for more than 50 years and therefore could be refused an export licence if they were bought for a collection overseas. Such lists are bound to differ from author to author and in accordance with the prevailing fashion in taste. In my office we have received four or five such lists, and we are very grateful for the trouble which the museums concerned have taken in their compilation. But a cursory inspection shows that none could be accepted as definitive, and I must put it to your Lordships that we ought not to publish any of these lists or any conflation made from them. It could not be either exhaustive or a firm commitment to acquire at any cost. It would be unfair on the owners and perhaps encourage them to sell sooner than otherwise they might. It would put an artificial value on pictures not on the list but next in quality to those that were on the list.
We do not know of many British collectors willing to pay, say, £250,000 or upwards for Old Masters by foreign painters. We believe there are very few and one must assume that once lists were published our museums would not bid, since there would be no prospect of the picture going out of the country. The value of the picture would be very different when it could be sold only to a domestic buyer. Therefore the right policy is to rely on the advantages to the private owner of keeping his works of art within his family, and to increase the benefits he can get if he sells to a British institution, or if the pictures are offered to the Treasury in lieu of estate duty. For these reasons I hope that your Lordships will support us in the decision not to publish any of the lists of works of art, for which we would then be morally committed never to allow the export whatever the cost or the circumstances.
The noble Lord, Lord Straboigi, asked what about Michelangelo's Tondo? I cannot give the answer because I have not the slightest information that the Royal Academy contemplates selling that great work. I think we must assume—and I hope I am right—that they have no such intention. There are two further 513 points I must make in answer to questions which were asked. The first was asked by the noble Lord, Lord Strabolgi, and concerns objects of national importance held by a charity or trust or churches, or something like that—
§ LORD STRABOLGI
If I may assist the noble Viscount, it was public or semi-public bodies; that is, bodies having a charitable status.
§ VISCOUNT ECCLES
My Lords, I am sorry; it was public or semi-public bodies which, of course, would include churches. When these bodies decide to sell an object—and it may be in desperation in' order to raise money to preserve their other assets—they do not receive any tax advantage if they offer the object to a national collection. Therefore they are likely to go to the market to get the highest price, and the danger of export follows. We are thinking about this, and I hope we can do something helpful to meet a situation which could very easily become serious.
The second point concerned the status of a collection of objects none of which, if considered separately, would come within the Waverley Criteria. I can reassure noble Lords on that point. The Chancellor of the Exchequer, in his Budget speech earlier this month, said that the 1930 Finance Act and the 1956 Finance Act would be aligned, so now the definitions would be the same. That means that collections as a whole can be accepted as of national importance and valued as such; and also documents. So I think that settles that point.
The noble Lord asked about V.A.T. on purchases by museums. The position is that when a museum buys an object from a private person who is not registered as a trader there will not be any tax, but when a museum buys an object from a dealer the tax will be approximately 1 per cent. on the price; that is to say, 10 per cent. on the dealer's margin of 10 per cent. But if a national museum can show that it has paid V.A.T. in this way, the Government, in the 1973–74 Supplementary Estimates, will consider increasing the acquisition grant by the amount of the tax, so that the national museum is out so far as V.A.T. on acquisition is concerned. The 514 acquisition fund for provincial museums has been raised from £150,000 to £400,000 and we consider that that very large increase is quite adequate to take care of any small V.A.T. there may be on objects bought by those museums from registered dealers. The application of V.A.T. to living artists applies only after the first £5,000 of their output, because the first £5,000 is free. That figure is considerably higher than in many of the other V.A.T. countries. We do not see any reason to single out contemporary works of art from other forms of art—music, drama, or even entertainment or other small businesses. There is no reason that I can see why this particular form of artistic activity should be put into a privileged tax position.
My Lords, I have kept the House much too long, but I have been asked so many questions. I agree entirely with my noble friend Lord Perth that we all ought to support the National Art Collections Fund, and I wish him and Sir Anthony Hornby every success. I believe that close consultation between museum curators and dealers is a good thing. It is not so easy to do in respect of some departments as others, but I have seen it working well at the British Museum and I hope that it will be extended. We are ready to consider all suggestions within the main principles of our export control, because we yield to no one in our desire to keep in this country the fine things that we have. Therefore I should like to thank the three noble Lords who have spoken, and to say that we will do all we can; but so long as prices continue to rise it is obvious that when great masterpieces come on the market each case will have to be considered on its merits.