§ Lord Pearson of Rannochasked Her Majesty's Government:
Further to the debate on 10th December 1997 and the Written Answer by Lord Simon of Highbury on 8th April (WA 147), whether they believe that they can successfully argue against the European Union's proposed imposition of increased VAT and droit de suite tax on the British international art market.
§ Lord HaskelMy Lords, the noble Lord raises two issues: VAT, and droit de suite. Regarding VAT, the European Commission is committed to re-examining this year the impact of the seventh Value Added Tax Directive on the competitiveness of the Community art market compared with third countries' art markets. The conclusions are due to be reported to the Council of Ministers by the end of the year. The United Kingdom will be actively involved in that review to ensure that the special position of the British art market will be properly represented.
Negotiations on the Commission's proposal to harmonise droit de suite still have some way to go. We shall continue to focus on the need to maintain and improve the international competitiveness of the Community art market in relation to third country markets. The proposal is subject to qualified majority voting. We are actively seeking the support of other member states to defeat it.
§ Lord Pearson of RannochMy Lords, I thank the Minister for that rather less than confident reply. Bearing in mind that we are considering a hugely important British industry, it does not give one a lot of faith in the Government's new charm offensive in Brussels.
First, can the Minister confirm that our problems in this case, as in so many others, are caused by our powerlessness to stand up to the qualified majority voting system of the European single market, which does not respect our unique global economic interests?
Secondly, can the Minister confirm that the European Commission has so far refused to produce a cost-benefit analysis of these crazy and destructive plans?
§ Lord HaskelMy Lords, I can confirm that the Commission has not yet produced a cost-benefit analysis.
As regards qualified majority voting, in order to block the proposal in the Council of Ministers, we would need 26 out of a total of 87 votes. We have 10. The 1272 Netherlands and Ireland, which are also opposed to the proposal, have eight votes between them. That leaves a shortfall of eight. Should the Council adopt a common position, another possibility would be for the European Parliament to reject that position by an absolute majority.
§ Lord Jenkins of PutneyMy Lords, is the Minister aware that the European Foundation and, if I understood my noble friend correctly, the Government have got it wrong about droit de suite? Droit de suite is an excellent institution. It has developed well. It benefits the artist, not the fat cats. That may be one reason why the fat cat dealers oppose it. However, so far as concerns the artist it is working well in several civilised European countries, and even in California.
Under those circumstances, will the Government reconsider their attitude to droit de suite? The previous Labour Government intended to introduce it, and, but for my premature departure as Arts Minister, it would have been introduced 10 years ago or more.
§ Lord HaskelMy Lords, I shall not ask my noble friend to list what he calls the civilised countries. However, the Government seek to help artists in other ways. Funds are distributed by the Arts Council. We set up the lottery funded Endowment for Science, Technology and the Arts. The Government are committed to encouraging links between business and the arts. The national heritage pairing scheme is a strong force in forging such links. We encourage a wide range of imaginative and valuable partnerships between the private sector and the arts. The Government think that that is of far more value than droit de suite.
§ Lord StrabolgiMy Lords, in contrast to the view expressed by my noble friend Lord Jenkins, is my noble friend aware that droit de suite will result in many art sales being diverted from London, not to Paris but to Geneva or New York, with the consequent loss of millions of pounds in revenue and thousands of jobs not only in this country but in the Community as a whole?
§ Lord HaskelMy Lords, the Government are aware of the points made by my noble friend. That is why we seek to have the rules changed.
§ Baroness RawlingsMy Lords, have the Government succeeded in linking the review of the seventh VAT directive with a droit de suite impact study? Will they agree, as the noble Lord, Lord Strabolgi, said, that, unless that is done, further sales will be it driven out of the UK to the US and Switzerland?
§ Lord HaskelYes, my Lords, the Government have tried to carry out a study as to what the effect would be. A study by the Department of Trade and Industry indicated that, if all works eligible for the right were transferred abroad, British dealers and auctioneers would lose fees of up to £68 million per annum. And up to 5,000 jobs could be affected. That is a worst-case 1273 scenario. On the other hand, if only non-EU originated trade were lost, the losses would amount to some £17 million and 1,300 jobs.
§ Lord Stoddart of SwindonMy Lords, is my noble friend aware that the figures he has just given appear rather modest compared with the advice that I have received; namely, that 10,000 businesses may well be involved, and a possible 40,000 jobs which attract (if I may put it this way) high-class art visitors to this country? Will my noble friend explain how it is that we are continually informed that the European Union has no jurisdiction over British taxes, yet we find the Union trying to impose VAT?
§ Lord HaskelMy Lords, droit de suite is not a tax. While VAT is a tax, it is a question of harmonising VAT throughout Europe. I am afraid that my noble friend's figures bear no relationship to those in the study carried out by the Department of Trade and Industry which I gave in reply to a previous question.