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Baroness Anelay of St. Johns: I am glad he did so. I am extremely grateful not only to the Minister but also his officials for making it possible for the House to know the result: Manchester United won, 2:1. We are delighted.
Returning to the debate tonight, on this occasion I have no personal interest to declare, but I am interested in the implications of the issue for the heritage of our country. I am interested in ensuring that whatever system is in place is fair to both the owner of the historic items and to the taxpayer. The rules should be fair in their composition and in their application. It would not be in the public interest if the rules were applied in such a way that collections were broken up or works of art sold and lost to an overseas buyer.
Tonight noble Lords have examined the implications of the changes introduced by the Finance Act 1998. First, there is the requirement that those who have already obtained exemption from tax on their works of art in exchange for an undertaking to make them available to the public by appointment should renegotiate those undertakings so that they will in future have to allow access without prior appointments. Secondly, there is the requirement that in future the standard of the work of art, in order to qualify for exemption from tax, will have to be of pre-eminent instead of museum quality.
The first change is the one that has attracted most of the publicity. It is possible that many people will pay the tax rather than allow open access to the work of art and that those who cannot afford the tax will sell their work of art. But the second change, of definition, is also a serious threat to the retention of works of art in collections in this country.
Like my noble friend Lord Luke, I intend to be relatively brief so I do not propose to rehearse again all the arguments which have been adduced so effectively this evening. I listened with interest to the points argued so effectively by my noble friend Lord Montagu. I wish to associate myself with them. I also wish to thank the HHA for the time it has taken to provide me with most helpful briefing material and for meeting Lord Luke and myself to discuss the issues in some detail. I also endorse the remarks made by my noble friend with
I also wish to ask what evidence exists to prove that museums are ready, willing and able to give room to those works of art which are currently open to view in homes, but which owners may wish to show outside their home under the operation of the changed rules.
In preparation for this debate I was made aware that there had been extensive and constructive discussions on the matter between the Inland Revenue, interested representative organisations and the Government. I have of course not been party to those discussions, but believe that they have made significant progress. I would be grateful if the Minister could give the House such information as is not confidential about the progress of those discussions and their likely outcome.
Lord McIntosh of Haringey: My Lords, this debate can take place only on the basis that it is about public policy. The noble Lord, Lord Chesham, made that clear and I respect him for it. Your Lordships will therefore understand that although a considerable number of contributions have been about noble Lords' own personal circumstances, it would be quite improper for me to attempt to reply to that part of the debate. What I shall seek to do is to talk about the public policy issues which are raised by the Question.
First, I shall say something about the changes which have taken place to the inheritance tax rules for conditionally exempt chattels. I understand that we are not talking about land and buildings. I shall then say something about the nature of the problem that gave rise to the change in the law. I shall explain what the Inland Revenue has done and is doing. Finally, I shall make some suggestions--perhaps modest and inadequate--about possible solutions to the problem that has been identified.
Two changes were made to the inheritance tax rules by the 1998 Budget. The first related to the quality of the items. It was made clear that in order to qualify for conditional exemption in future, items should be of pre-eminent quality rather than, as under the past rule, of a quality sufficient for them to be shown in a local authority collection. There has not been any debate on that side of the issue tonight and I shall not go into it any further.
The second change in rule which has been the subject of debate is that there should be improved access. I shall deal with how that is intended to be achieved. It is proposed that there should be improved access only where there is already in the agreement a requirement for reasonable public access. That makes it clear that this is not retrospective legislation as claimed by the noble Lord, Lord Chesham, and a number of other noble Lords.
The Revenue has the intention as far as possible to proceed by case-by-case negotiations, but if there is no agreement arrangements must be made which are subject to legal process by the Special Commissioners. But the Revenue concedes, rightly I believe, that it has a duty under the Finance Act 1998 to review access to existing exempt chattels, to seek open access to them where appropriate and to require special access on conditions which the Special Commissioners must approve.
Before I leave the question of what the law says, I should like to respond to the argument of the noble Lord, Lord Chesham, that this may be in breach of Article 1 of the European Convention on Human Rights. There is a very simple solution for those who fear that their human rights are being infringed by the access proposals: they can remove the chattels from their houses for the amount of time that is proposed or, in an extreme case, sell them and pay the tax. Under those circumstances, I cannot conceive that there is any infringement of the European Convention on Human Rights.
I now turn to the scale of the problem. From the public point of view, this is costing the taxpayer £25 million to £30 million a year. There are 900 owners of conditionally exempt chattels and there are approximately 20,000 chattels concerned. When the system was set up it was intended that the prior appointment system should be the last resort. The basis was that there should be reasonable public access, and clearly prior appointment is not reasonable public access. Now in all too many cases it is the first resort. I know that noble Lords will not wish to hear the name of Mark Thomas and Channel 4. The three-tier mahogany buffet with partially reeded slender balustrade upright supports was a theme of his television programme.
I appreciate the difficulties which have been described in public policy terms. I shall turn to possible solutions in a moment. In the meantime, I have to assert implacably that some public access is essential.
I turn to what the Inland Revenue has been doing. In January of this year, the Capital Taxes Office produced a booklet. It has been inadequately quoted today by the noble Earl, Lord Kintore. He quoted the full address and the opening times of a building open to the public. The Capital Taxes Office pamphlet states:
A letter which has gone out today or yesterday--I do not know the date; I saw only the final draft--goes rather further. It invites people to telephone for further help and advice. It gives an extension to 31st July for a reply. It invites owners of conditionally exempt chattels to make their own suggestion in the hope that there can be an agreement. If not, it repeats that there have to be Inland Revenue proposals to these Special Commissioners.
As far as the 25-day period is concerned, it describes this as a fair starting period for currently exempt heritage objects of the highest quality; in other words, those which have been displayed or would be suitable to be displayed in a national collection. Where the quality standard does not apply, a lower level may be appropriate. But still, except where there are conservation problems, it would expect at least five days' access.
What are the solutions? I do not know that there are complete solutions and I cannot suggest that there are. The helpful suggestion was made by the noble Lord, Lord Palmer, that there could be access in larger houses which are already open to the public. The suggestion has also been made that objects could be on loan to a public collection. There is at the moment in the Fitzwilliam Museum in Cambridge a display, which I am told is very attractive, of conditionally exempt items from eastern England.
I recognise that the supply and demand are not meshed together. There is a market failure, one might say, between the museums and galleries that might show these items and owners who would wish to have them shown in order not to be required to show them without appointment in their houses. Digitised images on the register may be appropriate; it would be valuable if it could be done, but it could not be suggested that this would be an alternative to actually showing the items themselves.
What I should like to suggest, and I have discussed this with the Secretary of State for Culture, Media and Sport, is that we seek to set up a clearing-house, a way in which those who might show the items could be put in touch with those who might wish to have the items
In the end, however, the result must be more public access, wider public enjoyment of the heritage and public support for the inheritance tax relief which is in existence and for which I suggest there is inadequate public support. The noble Lord, Lord Hamilton of Dalzell, asked: what is the heritage if it is not what we inherit? I take the heritage as being what we collectively inherit in this country: the public heritage of this country, rather than what individuals inherit. That is how I think the public see it and that is how I think the public will see the issue before the House this evening.
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