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Lord Newby: My Lords, I had not intended to speak again, but as the relationship between myself and the noble Lord, Lord Saatchi, has been made so much of, I cannot help but reciprocate. I echo the thanks expressed to the Minister and his team for the huge amount of time and effort they have expended in dealing with questions that we have put to them. I also thank officials in the FSA and the director and officials of the Takeover Panel, who have been extremely assiduous. I also, of course, thank my colleagues, not least my noble friend Lord Sharman, who has been a great source of information and help to me.

It has, indeed, been a pleasure working with the noble Lord, Lord Saatchi. I am not absolutely sure whether it will be possible to develop this relationship with regard to other matters. However, we on these Benches have greatly appreciated the close working relationship we have had with the noble Lord and his noble friend.

Lord McIntosh of Haringey: My Lords, I do not believe in making Bill do now pass speeches. However, two contributions have been made which have revealed the subterranean links between the Conservative Party and the Liberal Democrat Party. I always suspected that those links existed but I have never heard them so clearly expressed. I believe that that serious mistake will have to be corrected in some form or another. Nevertheless, I pay tribute to the noble Lord, Lord Newby, to the noble Lord, Lord Saatchi, who did the glamorous bit, and to the noble Lord, Lord Kingsland, who did the work! Above all, I pay tribute to the Treasury team who have been responsible for this Bill. We have been involved with it for only a couple of months; they have been involved with it for two years. If we express relief at seeing the Bill pass out of our hands, we can imagine how they must feel. They have done a fantastic job.

On Question, Bill passed, and returned to the Commons with amendments.


Lord Bach: My Lords, as consideration of the Financial Services and Markets Bill is now finally complete, this evening's Unstarred Question is no longer restricted to the one-hour available for dinner break business. Instead, a limit of one-and-a-half hours will apply. As a result, everyone on the list now has 12 minutes in which to speak. However, if noble

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Lords prefer to avoid the inconvenience of extending their speeches at such short notice, I can assure them that they will attract no criticism from these Benches, nor, I suspect, from the rest of the House!

Export of Works of Art

8.2 p.m.

Lord Freyberg rose to ask Her Majesty's Government what is their response to the Forty-fifth Report of the Reviewing Committee on the Export of Works of Art.

The noble Lord said: My Lords, it gives me great pleasure to introduce tonight's debate to examine the findings of the forty-fifth report of the Reviewing Committee on the Export of Works of Art.

The purpose of the committee is to help retain in the UK objects of outstanding importance which would otherwise go abroad. Set up by the Chancellor of the Exchequer in December 1952, it consists of eight members appointed by the Secretary of State for Culture, Media and Sport who have expertise in such fields as paintings, furniture, manuscripts and suchlike. There are three criteria for recommending the deferral of the decision for export licence which can broadly be described as national, aesthetic or academic importance. These are known as the Waverley criteria.

In 1998-99, the most recent year for which we have published figures, there were 8,019 applications for export licences, and of these 20 were deemed potentially to fall under the Waverley criteria and therefore to be considered as individual cases by the committee--a slightly lower number than usual.

The committee's thoughtful report voices a number of concerns to which I should like to draw further attention. The most serious of these is the declining amount of money available to help purchase threatened works of national importance. There are several reasons for this. First, over the past few decades the level of museum funding for acquisitions has dwindled in line with the funding for museums themselves, while at the same time the cost of art and artefacts has soared. Thus most museums are unable to find the money to buy even a single major work of art per year and are reliant on the Heritage Lottery Fund, the National Heritage Memorial Fund and private funding bodies such as the National Art Collections Fund.

The arrival of the lottery in 1994 led to the belief that there need never be another crisis over important works of art leaving Britain for lack of funds, but this has so far proved incorrect. For a start, the focus of one of the important contributors, the Heritage Lottery Fund, has changed in line with government demands for greater emphasis on regional equality and small community projects rather than large national ones. It has also been heavily oversubscribed, with present demands exceeding supply by approximately four times. Thus funding of ever more expensive acquisitions has had stiff competition with the funding

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of similarly desirable historic buildings, land and countryside, libraries, industrial transport and maritime projects, churches, urban parks, archaeology and coalfields. The list continues.

This would not have had such an impact were it not for the swingeing cuts to the budget of the National Heritage Memorial Fund, the other most important contributor, for museum acquisitions. This went from £12 million pre-Lottery to just £2 million in 1998-99, and dramatically affected its ability to assist acquisitions. In 1996-97 the National Heritage Memorial Fund and the Heritage Lottery Fund total was £24 million, but just two years later it had dropped to £5.8 million.

The Government's decision to increase the National Heritage Memorial Fund's grant-in-aid gradually over a three-year period--1999-2002--is most welcome, but in the meantime the National Heritage Memorial Fund has announced that it cannot consider acquiring works of art which are threatened "only" by loss through export. The Heritage Lottery Fund is so concerned at the impact of the fall in National Heritage Memorial Fund funding that it is taking the highly unusual step of subsidising the National Heritage Memorial Fund's 2000-01 grant-in-aid by £1.5 million in order to bring the total to £5 million. This is the sum the Heritage Lottery Fund considers,

    "the minimum amount necessary in a year to maintain even the most basic defence of the most outstanding parts of our national heritage which are at risk".

This does not bode well for the future. The Heritage Lottery Fund has so many demands on its funding, which makes it even more important that the National Heritage Memorial Fund--which has always considered works of art important--has enough for cultural acquisitions.

The introduction to the reviewing committee's 45th report confirms the consequences of this change in funding policy; namely, its contribution to,

    "the continuing loss of significant objects from our shores".

Worryingly, it warns that,

    "Unless current policies are changed, the situation is likely to become more acute".

The Heritage Lottery Fund's decision to double its planned annual acquisitions allocation from £5 million to £10 million is welcome, but even this is far short of what it was spending on acquisitions a few years ago.

As a result of the reduced moneys available, some museums no longer even bother to apply for funds because they believe that their chances with the HLF are so slight. One notable recent exception was the Heritage Lottery Fund's generous support towards the purchase of Botticelli's Madonna and Child by the National Museums and Galleries of Scotland. However, the circumstances in that case are, strictly speaking, outside this debate as the Botticelli was purchased before an export licence application had been made. Nevertheless, the case illustrates the problems that museums encounter in making major acquisitions. If Heritage Lottery funding had not been forthcoming and an export licence applied for and deferred, the inability of our national institutions to

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purchase the work would have made a mockery of the whole rationale of the reviewing committee. A number of other outstanding works have been lost precisely because of insufficient public funding. While the private sector can, and does, supplement government funding, it cannot act as a substitute.

I am also worried about what chance non-national museums have of raising the required 25 per cent of acquisition over £100,000. It seems quite unreasonable that institutions, notably in areas of social and economic deprivation with limited means of fundraising, should be put off applying for funds. The short deferral periods regularly imposed for an export stop constitute a further disincentive. If the Heritage Lottery Fund is to be an inclusive fund, it should not penalise the poorer institutions. Perhaps it could give further attention to the levels of their partnership funding requirements.

A subject much on my mind in the past few months has been VAT on free museums. In this instance, because VAT is liable on sales of art to domestic buyers, museums--particularly free ones--are at a particular financial disadvantage when competing against overseas buyers. For example, when in 1996 the Ashmolean Museum in Oxford purchased a female bust by Canova for £695,000 (the purchase price agreed by the Getty Museum) it was obliged to pay an extra £51,000 in VAT. Being a free museum, it was unable to reclaim the VAT, an option that would have been available to the admission-charging Victoria and Albert Museum. Such a distinction seems unfair and divisive.

Another issue raised by the reviewing committee which is well worth the Government considering is a fourth Waverley criteria. This would introduce a provision for preserving special collections intact. In some cases, a collection of items which are not in themselves of great value--that is, individually below the minimum threshold--or interest is worth preserving as a whole. An excellent example is the extraordinary Indian collection of Clive of India, the great majority of which is now in the ownership of the National Trust at Powis Castle.

I should also like the Government to consider the wider use of private treaty sales and the possible introduction of a system of "Gift aid in kind". I know that my noble and learned friend Lord Simon of Glaisdale will discuss this possibility further.

Finally, in the light of both devolution and fairness, I wonder whether there should be greater consultation with the Scottish, Welsh and Northern Ireland museums over what is being considered for export control. At the moment, it is up to the entirely London-based experts to decide whether to inform these or other regional museums about individual objects, rather than simply to let them know what is being considered. It would surely be relatively straightforward to send the relevant information to them as well, rather than making decisions on their behalf.

The sums of money available to buy major works of art have fallen considerably in the past few years and spending on acquisitions has dropped to its lowest

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level ever. One has to be realistic and recognise that there are other calls and obligations, but acquisitions should not be marginalised either. A museum with a healthy and imaginative acquisition policy is likely to be a lively institution. The purchase of an important work of art can generate excitement, publicity and pride, leading to increased access---that crucial mainstay of the Government's museum policy.

In conclusion, while I understand that art acquisitions must take their place with other purchasing demands, it is important that the right balance is struck. At the moment the balance is not right. To make it more so, the National Heritage Memorial Fund funding needs to be increased to its former, pre-lottery level, and therefore updated in line with other spending commitments.

8.13 p.m.

Lord Strabolgi: My Lords, once again we are indebted to the noble Lord, Lord Freyberg, for initiating a debate on the arts. I have listened with the greatest of interest to his speech and the very detailed points he made about this continuing problem. The reviewing committee is concerned at the low level of retention of Waverley standard items, despite the temporary deferment of export licences to enable matching offers to be made.

As the noble Lord said, support comes from two official bodies--the Heritage Lottery Fund and the National Heritage Memorial Fund--but this support is not as effective as it might be and no longer carries out the initial intention of protecting our national heritage. The Heritage Lottery Fund was able to contribute only some £5 million in 1998-99, compared with £17 million for purchases the previous year. That is a very big decline. This is because the Department for Culture, Media and Sport has decided to widen the definition of "heritage" and considerable sums have been diverted to other needs. There is a problem over grants. For items costing more than £100,000, grants are awarded at up to 75 per cent, leaving a museum or gallery to raise 25 per cent. This can be a quite considerable sum for very important artworks and beyond the means of most institutions.

It is the same story with the National Heritage Memorial Fund, which was intended to be a fund of last resort. Its annual allocation has been reduced by successive governments from £12 million in 1993-94 to a paltry £2 million in 1997-98--a period for which, although the noble Lord, Lord Freyberg, was too kind to say so, the previous administration were responsible. The present Government are increasing this to £5 million in 2001-02, but it is still under half of what it was seven years ago.

Fortunately, the National Art Collections Fund (NACF) is able to come to the rescue from time to time. The fund, which is supported by subscriptions and bequests from members of the public throughout the land, has been able to assist towards saving several important items, such as the Botticelli mentioned by the noble Lord, Lord Freyberg, which is now, happily, in the National Gallery of Scotland.

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Help is also given by the Museums and Galleries Commission which, together with the Victoria and Albert Museum, enables non-national museums to acquire objects valued at less than £300,000. I am pleased to say that this enabled the Doncaster Museum and Art Gallery, with help from the HLF and the NACF, to acquire three 18th-century portraits by Joseph Wright of Derby of notable Doncaster people.

In spite of the help given by these bodies and special appeals for subscriptions from members of the public, the reviewing committee points out that several starred items have had to go abroad. These include a superb late Rembrandt which was valued at more than £9 million and a Poussin valued at £4.5 million. An important Cezanne, valued at between £9 million and £12 million, is coming up at auction next month. This is at present on loan to the National Gallery.

What long-term policy do the Government have for retaining starred works of art when they come on the market? Is the Waverley system still working? Is it better that we should concentrate on saving important works that are an integral part of our national heritage, such as the Sherborne Missal, which was accepted by the Government in part satisfaction of inheritance tax from the Northumberland estate and is now permanently in the British Library? It had of course been formerly on permanent loan, generously lent by the noble Duke, the Duke of Northumberland.

But can we--indeed, should we--always try to retain every work of art of foreign origin, many of which were bought on the grand tour by our 18th-century ancestors? While we must all be sad at the loss of the Rembrandt, it has gone back to the Netherlands; and the Poussin painting of the "Destruction of the Temple" has been exported to the Israel Museum in Jerusalem, where of course it has great significance.

Great masterpieces belong to the world. Many have been brought here in previous centuries. If they go on to other countries such as the United States, they are equally appreciated and well cared for, and they will continue to provide, in their life-enhancing qualities, inspiration and pleasure for future generations.

8.19 p.m.

Lord Renfrew of Kaimsthorn: My Lords, once again we are indebted to the noble Lord, Lord Freyberg, for initiating a debate on the arts. This is a very appropriate occasion to discuss the report of the reviewing committee. We should also praise the work of the reviewing committee, which has had a number of successes in preventing important national treasures from leaving this country. But the noble Lords, Lord Freyberg and Lord Strabolgi, have been entirely right to emphasise that the funding that has been made available to the National Heritage Memorial Fund has decreased significantly, while the Heritage Lottery Fund has signally failed to step in in this area. So I can only underline the points which they have very effectively made.

In general, one certainly wishes to praise the 45th report of the reviewing committee. However, I have a concern of my own, which is with antiquities

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and with the traffic in unprovenanced antiquities. I note in the report what at first sight seems a success with the Roman gold finger ring--Case 16--which after deferral of licence was generously presented by its owner to the British Museum. That should rank as a success. It ended up in the British Museum. What concerns me, however--this is a matter for the reviewing committee--is that there is in the report no reference to the provenance of the ring. It is understood to have originated within the British Isles, but where was it found and when? We are not told that in the report. Was it subject to the usual Treasure Act procedures under the terms of which any find of an antiquity of gold in England or Wales must be reported to the local coroner. We are not told.

That is not good enough. There may be honest and understandable reasons for the lack of details as to the find spot of this antiquity, but, if so, they should be given. If it meets the third Waverley criterion, as we are assured by the committee it does--namely, that it is of outstanding significance for some particular branch of art, learning or history--and if it was found in the soil of Britain, we should know more about it. Therefore I should like to ask for an assurance from the Minister that she will suggest to the Secretary of State that the reviewing committee be requested to inquire into the provenance of all antiquities, and indeed other works of art, which come before it, not least those of British origin, and to give clearly in the report the results of its inquiries. The reader should not be left to wonder whether the law of the land has been broken and whether this issue has even occurred to the reviewing committee.

That, however, is not my main point. As we have heard, the reviewing committee was appointed by the Chancellor of the Exchequer in 1952 and its primary purpose is to help retain in the United Kingdom objects of outstanding importance. But the terms of reference of the committee, as set out in Appendix A, are wider and include the provision to supervise the operation of the export control system generally. I should like to ask what considerations the reviewing committee has given to a particular set of important responsibilities which arise under European Council Regulation No. 3911 of 1992 on the export of cultural goods. Noble Lords may well recall the debate some eight years ago when the matter was indeed discussed by the House before these provisions were adopted and became part of British law.

The point here--it is not as trivial a point as it might first sound, or indeed unduly technical--is that we have in this country very few checks on the illicit trade of antiquities where antiquities flow into this country from overseas, are freely sold here without any check or restraint and are then relatively freely exported. But there are the export licensing requirements and, as I understand the position, any objects which originate within the European Community are supposed to leave their country of origin with a certificate indicating that they have done so legally. When they leave this country for a destination outside the European Community they require an export licence.

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Part of that export licensing procedure involves seeking the documentation from the state of origin that the objects left legally. I am not at all clear that these procedures are being adequately followed and I am very clear that they are not adequately discussed in the report of the reviewing committee, although certain figures are touched on in table 1.

Perhaps I may refer to two provisions. The 1997 guidance to exporters of antiquities from the Department of National Heritage, as it then was, indicates that objects certainly do require an export licence under the regulation if they are the direct product of excavations, finds and archaeological sites within a member state. The concern is that they may have come straight on to the market after being recently discovered. That is fully dealt with there. Under the Export Licensing for Cultural Goods, Procedures and Guidance, issued by the Department of National Heritage, again in 1997, we read that,

    "where an object has come from another EU Member State on or after 1 January 1993, either directly or via a non-EU country, applicants requiring an EC licence should include with their application evidence that the object was legally despatched from the originating Member State. The Export Licensing Unit can provide details of the evidence that is required for a particular originating Member State".

I do not read in the report of the reviewing committee, where I would expect to read it, a discussion of these issues. I do not expect the Minister to give us a full account of the matter this evening, but I hope that she will assure us that she will suggest to the reviewing committee that in future it takes adequate note of these points, which are provisions under British law as well as under EC law.

I shall give a brief example. I do not want to take too much of the time of House but I should like to suggest, by way of example, the case of an Apulian vase from Italy, such as the one sold at Christies on 21st April 1999, which was in the time period covered by the report. It was a large Apulian pottery amphora attributed to the Baltimore painter. No provenance was given. There was a valuation of the order of £12,000. I do not want to go into detail on that piece and I do not expect the Minister to do so. But I would expect it to require an export licence because it is clear that many Apulian vases are appearing on the British market that have been looted in Italy and illegally exported from there. Therefore, it would certainly be expected that if an export licence were issued by this country, that piece would come accompanied by documentation from the Italian Government that it had left the nation of Italy legally.

I have the gravest doubts as to whether these procedures are being adequately followed. Certainly, the report of the reviewing committee gives no adequate indication that they are. This is an important area which falls within the province of the reviewing committee. I look forward to the Minister's reply on these points and to a rather better balance in future reports of the reviewing committee, where I believe it is its duty to address these matters adequately.

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8.28 p.m.

Lord Simon of Glaisdale: My Lords, it is a real privilege to follow the noble Lord, Lord Renfrew, who speaks with incomparable authority on the matters that he has been discussing. I share in the expression of the debt we owe to my noble friend in raising this matter because we are indeed facing a breakdown of the export system, based on the Waverley criteria. As paragraph 2 of the report states, referring to the continuing loss of some significant objects from our shores:

    "Unless current policies are changed, the situation is likely to become more acute".

I hope that the noble Baroness will not be dismayed if I say that the House looks to her to explain what change of policy the Government have in mind to rectify the situation.

My noble friend gave detailed figures, but I invite noble Lords to consider one or two more general matters. I shall leave aside those matters where the Waverley Committee was not satisfied and the application was withdrawn, as well as matters of deferral; also the very important Gauguin picture, which was acquired privately and is now very generously on loan to the National Museum of Wales. Instead, I shall concern myself only with matters that satisfied the Waverley criteria and on which the committee made a recommendation.

The works which were retained in this country numbered five. Their total value was a little under £1,100,000. In addition, on every one of those items, the National Art Collections Fund, a privately funded charity, made a contribution. There we have the figure--a little under £1,100,000. On the other hand, the value of all the items recommended for retention came to a little short of £17 million, more than 16 times as much.

The most important item has been referred to by the noble Lord, Lord Strabolgi; namely, the Rembrandt, a major late Rembrandt. It was valued at £9,300,000. It was a starred recommendation. In other words, the committee regarded it as a major matter. Nevertheless, that painting has gone abroad through lack of funds. It certainly would be valuable if the contributions of the National Heritage Memorial Fund were to be restored, as has been recommended by my noble friend and by the noble Lord, Lord Strabolgi.

Perhaps I may make two further points. First, the committee, in paragraph 17 headed "Starred Items", having noted that the Rembrandt had gone abroad in spite of being a starred item, recommended the revival of a system of special government grants towards acquisitions that preceded funding from the National Heritage Memorial Fund. I have spent quite a lot of my life saying that I must not "anticipate the Budget proposals of my right honourable friend", but I should be most grateful if the noble Baroness could at least say that that is being seriously considered.

Secondly, there is another way to meet this problem; that is, to utilise the American fiscal system. I am sorry that I did not give the noble Baroness notice that I was going to raise this subject. I had thought that

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the noble Lord, Lord McIntosh, was to reply to the debate. He knows all about it. The system works along these lines. A private individual can buy a work of art and, on his agreeing that it shall pass to a national institution on his death, he can set off the expense of the acquisition against his taxable income. In fact, when I looked deeper into the American system, I saw that it goes a little further. As the market has become more restricted and, over time, the works of art have become more valuable, that difference in value can also be offset annually against the individual's taxable income. I certainly do not recommend that.

When I raised this matter rather generally and tentatively in a debate on a finance Act, I was cautious about the possibility of "fiscal enormity". However, it seemed to me that, when considering the crisis we are facing, and bearing in mind in particular the Rembrandt which went to Holland, we should consider seriously the American system, or at any rate its initial stage; namely, that the price of the object could be set off against taxable income on condition that the item was left to the public on the owner's death. Although I know that we would be giving rich individuals a very great advantage--I can see the difficulty for a government that are egalitarian in their view how this would go fundamentally against their way of thinking--it seems to me that, realistically, we should examine the situation very carefully. I hope that the noble Baroness will be able to say that the suggestion will be considered.

8.37 p.m.

Viscount Falkland: My Lords, the House will be grateful once again to the noble Lord, Lord Freyberg, for introducing an arts debate on another important issue. I have to say that I found the time spent in my preparation for this evening's debate rather uplifting, although the story underlying the review committee's report is sombre in that losses continue owing to lack of funds. Nevertheless, the report itself is presented very well. It has been written in surprisingly good English and is clear and well illustrated. I congratulate all those who were involved in its production, including the department.

The continuing loss of artworks is disappointing because many of us thought that, once lottery funding aimed at specific causes concerning works of art was introduced, the condition as regards retention of works of art in this country would improve. However, I do not think that that is the case. I take very seriously what has been said by other noble Lords--and in particular the remarks of the noble Lord, Lord Renfrew--who drew to our attention various cases summarised in the report which do not indicate that the right and proper information has been put forward.

Not being an expert in this field, I am glad that a number of speakers are experts so that my rather superficial view can be corrected. The report was rather like a well-made film or a well-written book: a great many questions were not answered--which rather appealed to me. It gave me great joy to read many of the individual export cases, which are so well

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set out. The noble Lord, Lord Renfrew, drew our attention to the case of the Roman gold finger-ring which, happily, has ended up in the British Museum. I was fascinated, and it added to my enjoyment that there was some uncertainty about the ring's provenance. I follow the noble Lord's point that it is the responsibility of the committee in such cases to produce the kind of information that he drew to our attention.

The report highlights looking on the good side. Looking at the cases set out, if money were available--which, sadly, it is not, for reasons that have been well presented--we are in relatively good hands. I include the Department for Culture, Media and Sport, which is not always given a good press. Even from these Benches the noble Lord, Lord McIntosh, has received quite a rough or irritating time. The noble Lord is a doughty performer. I noted that, tonight, he had lost his voice. I am delighted that the noble Baroness will reply to the debate, as she is able and competent to do so, and I am glad that the noble Lord, Lord McIntosh of Haringey, will be able to rest his voice. He undertakes a very large amount of work and taxes himself to the utmost.

From reading the report, it seems that the Waverley criteria are working quite well. However, it is clear that the Heritage Lottery Fund and the National Heritage Memorial Fund are not able to stem the flow of important works of art from this country. We retain a very small proportion of the works that should return to us. The reason is simply lack of funding. I do not know how the Government will be able to stop this draining of priceless works of art. I hope that the noble Baroness will be able to give us some comfort and tell us where the money will come from.

If we are taking the matter seriously, we ought to consider replacing some of the grant-making procedures that have disappeared. The amount available in terms of grant has dropped markedly. One cannot help being encouraged by the wide range of works that come within the scope of the Waverley criteria as indicated in the report. Examples include such important names in British art as Stubbs, Joseph Wright of Derby and others. I was particularly struck by two items, which are possibly at the lower end of the scale in terms of importance. Although I have not seen the original, the reproduction of an 18th century painting by Tilly Kettle, "The Meritorious Officer" is fascinating, as is the story behind the picture. As I understand it, the work of this artist is not represented in this country at all; most of his paintings are elsewhere. That in itself is no disastrous thing these days. Exhibitions travel round the world and works of art are available to us in a way that they were not previously. I hope that at some time an exhibition will be mounted of Raj or pre-Raj painting. If I am still here, I hope that I shall be a member of the All-Party Arts and Heritage Group, whose members will doubtless go to that exhibition. Access to pictures is not completely denied us because paintings go abroad; however, very good reasons are given as to why pictures, sculptures and other works should remain here.

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The report recognises the principle of being even-handed with local authority galleries. I share that view. However, I also share the committee's concern that we should not forget the importance of our national museums and galleries, which attract a huge amount of interest both in this country and abroad. The National Gallery has an enormous number of visitors from the regions.

I should like to confirm and support what has been said about VAT. We have argued this point in the House on other occasions--although not very satisfactorily. VAT is an area that I would rather avoid, if possible. It seems to be an esoteric area where one makes no progress at all. We have now had some seeming comfort from the department regarding a change. We are told that, in order partially to correct the extraordinary anomaly that museums and galleries which allow free entry cannot claim back their VAT--the result in terms of acquisition and extension is clear to see--they can now levy a minimal charge that, it is implied, will satisfy the requirements of Customs and Excise, which has stated clearly in the past that token charges will not wash. Perhaps the noble Baroness will amplify the point. Although we have discussed the position in previous debates, it has now changed.

The Government have made it clear that they support free entry to museums and galleries, and we know the difficulties and the cost of that. The amounts that were originally estimated to cover the requirements of free entry to all our national museums and galleries were hopelessly inadequate, and other arrangements had to be envisaged. Most noble Lords who take part in these debates support the principle of free entry.

In conclusion, perhaps I may refer to the Finance Act 1998, which is mentioned in the report--and I apologise for speaking for longer than my allotted time. The Government were not so understanding of our concerns about those objects which, for taxation reasons, would be subject to a deferred tax provided that certain conditions, such as access, were met. Many of those conditions seemed to us to be too constraining and too rigorous; it seemed that they would probably have the effect of making owners feel that it was not worth going through these procedures and the works would go abroad. We have expressed those fears. It appears that that is happening, and I wonder whether there is any realisation of it. I understand that there is a system of review of that particular part of the Finance Act.

Having said that, the hour is late. This has been a very well informed discussion, as are most of our debates on art. I have much enjoyed the report of the reviewing committee and look forward to hearing the reply of the noble Baroness.

8.50 p.m.

Lord Luke: My Lords, I, too, thank the noble Lord, Lord Freyberg, for giving us the opportunity to debate this important subject. The contributions so far exemplify the superiority of quality over quantity. The

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debate has been interesting and, for me, most instructive. In particular, I welcome the speech of my noble friend Lord Renfrew. I, too, look forward to hearing the reply of the Minister. I declare an interest as a dealer in watercolours, none of which, sadly, has attracted the attention of the reviewing committee--before or after I bought them.

The report on which this debate centres covers the year to the end of June 1999 and was published last November. We are, therefore, not far from the end of another year of activity by the reviewing committee. Let us hope that in this year's report the reviewing committee will not find it necessary to repeat the devastating indictment set out in paragraph 2 on page 7 of the report where reference is made to the persistently low level of funding available to museums and galleries and to some of the policies adopted by the trustees of the Heritage Lottery Fund and the National Heritage Memorial Fund. As the noble Lord, Lord Freyberg, observed, the Government have increased some grants by small amounts, but have really only tinkered with the problem. In the year under review, 35 per cent of the number of articles deferred have found purchasers in the UK. That does not sound too bad. However, only 10 per cent by value of the items deferred have been saved for the nation.

As the noble and learned Lord, Lord Simon of Glaisdale, and the noble Lord, Lord Strabolgi, pointed out, the reviewing committee was particularly disappointed by the response to the appeal for funds to purchase "Portrait of an Elderly Man" by Rembrandt. That particular case raises the question whether the Waverley criteria as they relate to the reviewing committee's recommendations should be modified and possibly limited to items which have a pre-eminent importance relevant to the culture and/or history of these islands, but including really important collections, which perhaps are a different matter, as the noble Lord, Lord Freyberg, said--and eschew efforts to keep in this country great works of art which do not satisfy that particular qualification, however important they may be in other ways. After all, in this country we already have a great number of important and representative works of art of foreign origin. Funds are clearly not there, and perhaps we should cut our cloth accordingly.

The Government are entirely to blame for this situation in that their policy of siphoning off lottery money originally intended for the arts to fund other projects, however worth while, has created a much smaller pot for heritage spend. A remedy such as I have outlined would force the Government to acknowledge that they had failed abysmally to resolve the problem. I look forward to hearing what the noble Baroness has to say on this matter. I also support the suggestion of my noble friend Lord Renfrew that the reviewing committee should include the provenance of each object in both its deliberations and recommendations.

Customs and Excise could help a great deal by persuading the European Union that VAT need not be charged on matching offers for deferred items by non-charging museums. I believe that if that was agreed, it would produce a much better result than the proposed

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£1 charge, to which the noble Viscount referred. I do not believe that that would work. Customs and Excise and the Government could also continue to press the European Union to abandon the 5 per cent rate on imported works of art which makes it much more difficult, or even impossible, for British museums and galleries to acquire objects from outside the EU in competition with similar institutions based outside continental Europe.

Like my noble friend Lord Renfrew and the noble Viscount, Lord Falkland, I congratulate the reviewing committee on the production of a very readable report, the whole of which I understood. I cannot say the same for the reports of some other important bodies. I also congratulate the reviewing committee on doing a difficult job well in increasingly annoying circumstances. To spend a great deal of time making recommendations with regard to outstanding items only to have one's views, in effect, spurned as a result of totally inadequate funding for purchase must be very frustrating.

I must declare another interest as an enthusiastic member of the National Art Collections Fund, which was referred to by the noble Lord, Lord Strabolgi. That has helped to fund the purchase of a great number of works of art since its foundation in 1903. The report is concerned that the NACF will be put under increasing pressure to contribute, especially where the trustees of the National Lottery Fund decline to help. The trustees have been constrained by the instruction of the Secretary of State that they must increasingly fund new and better means of access for people to our heritage. That is all very estimable, but the reviewing committee considers that the continuing pressure on the funds of the HLF available for acquisitions will inevitably lead to the irretrievable loss to the nation of many important objects. That would be a great pity. Together with other noble Lords, I hope that the Government will reconsider their policy in this area.

8.56 p.m.

Baroness Ramsay of Cartvale: My Lords, we are all grateful to the noble Lord, Lord Freyberg, for raising the subject of the export of works of art and giving us an opportunity to speak about the many great treasures that we are so fortunate to have in this country. We have heard some interesting and informative speeches by noble Lords with considerable expertise in this field. Some of that expertise is well known; some has just been revealed tonight, like that of the noble Lord, Lord Luke, who declared an interest in watercolours.

We are united in our regard for the tremendous importance of keeping in this country cultural objects of outstanding national importance, and we are indebted to the reviewing committee which advises Ministers in the Department for Culture, Media and Sport on whether an object for which an application for an export licence has been made is one that we should aim to keep in this country. Noble Lords will agree that the fact we have been considering the 45th report of the committee is a testament to the stature

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and continuing effectiveness of this most distinguished group of advisers. I pay tribute to the excellent work of the committee under the chairmanship of Sir John Guinness. The complimentary remarks of the noble Viscount, Lord Falkland, about the presentation of the report will be received with pleasure by members of that committee.

I can reassure my noble friend Lord Strabolgi that the committee continues to make its recommendations against the tried and tested criteria drawn up by the Waverley Committee in 1952. When Ministers accept a recommendation from the committee that a cultural object satisfies one or more of those criteria, and the decision whether to grant an export licence is deferred, it provides an opportunity for an item considered to be of outstanding national importance to remain in the UK.

The system is regarded throughout the world as one of the fairest in terms of balancing the varying interests of all those concerned: the protection of the national heritage; the rights of the owner selling the goods; the exporter or overseas purchaser; and the position and reputation of the UK as an international art market. However, once Ministers have export-stopped an item, it is then for public institutions, or indeed for private individuals, to decide whether they wish to take the opportunity to acquire the export-stopped item.

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