HL Deb 22 July 1987 vol 488 cc1381-2
Baroness Birk

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether they are proposing to alter the mechanism whereby works of art are accepted in lieu of inheritance tax on the advice of the Museums and Galleries Commission.

Lord Hesketh

My Lords, we have no further plans to alter the arrangements for acceptances in lieu at present. A recent change was made in the Finance Act 1987.

Baroness Birk

My Lords, I thank the Minister for that reply, but may I ask him why the Government did not consult the Board of the Museums and Galleries Commission as a whole over the valuation of Constable's Flatford Mill, which was accepted in lieu for £10 million? It is responsible for providing the Minister with expert advice. That sum of £10 million was over double the price of any other picture by Constable and is considered by experts in the art world to be way above its current market value.

Lord Hesketh

My Lords, I am sure that everyone in this House will be aware of substantial increases in the prices of works of art throughout the nation. I remind the noble Baroness that only two weeks after this picture came to the nation Van Gogh's Sunflowers made almost £25 million.

Lord Strabolgi

My Lords, would the Government consider increasing the tax exemption figure for acceptance in lieu—the so-called douceur—from 25 per cent. to 50 per cent. of the taxable amount, rather than pushing up these works of art to artificially high prices, as happened in the case of the Constable, in order to achieve the same objective?

Lord Hesketh

My Lords, I certainly do not accept the noble Lord's suggestion on the basis of the price reached by the Constable. However, I am aware that the belief exists that a higher rate of douceur would encourage more offers. An upward change would result in items requiring more funds from the AIL budget. This must be taken into consideration. However, we keep the rate under review, as we do generally all the AIL procedures. Any change in the rate would be administrative and would not require legislation.

Lord Peston

My Lords, will the noble Lord confirm that the principal criterion to be applied here is what the work of art in question would fetch on the open market at the time?

Lord Hesketh

My Lords, I accept that. That is why I produced the example of Van Gogh's Sunflowers, where there was a substantial increase only a fortnight later. The prices of works of other artists have increased even more dramatically.

Lord Jenkins of Putney

My Lords, does the noble Lord agree that while the in lieu arrangements are highly desirable, if they are to be maintained they must not be abused? Will he take great care, and ask his right honourable friend to take great care, that abuse does not occur, because the system cannot be sustained if it is abused?

Lord Hesketh

My Lords, I fully accept the point made by the noble Lord. I assure him that the greatest care is taken.

Baroness Birk

My Lords, the Minister mentioned the Van Gogh that was sold a little later. Will he accept that the valuations and prices of different artists vary absolutely enormously and that my Question dealt with the Constable? That painting was taken in lieu at a price far above not only that for any other Constable but for any British artist. Is this not a dangerous precedent, and will the Minister for the Arts make sure that the Board of the Museums and Galleries Commission is not bypassed in this way in the future?

Lord Hesketh

My Lords, given the choice between the two pictures I know that I personally should have said no to Van Gogh's Sunflowers.

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