Select Committee on London Local Authorities Minutes of Evidence


Evidence Session (Sections 3300-3399)

DAY EIGHT

23 MARCH 2006

 3300. Although Part 4 of the Bill does not specify its objectives, the Kent report, as we have heard, sets out what its authors consider to be the priority targets for the legislation in terms of theft, arranging the categories in descending order of risk on pages 10-11 of the Kent Report. The high risk category, defined as those items most frequently stolen, covers "any electrically or battery powered goods or any medium on or by which sound, images or other data may be stored or recorded and which is intended for use with any such goods". The registration of our federation's members would have no impact at all on this part of the highest risk category. The medium risk covers vehicle parts, jewellery, watches, photographic equipment, sports equipment, equestrian equipment, boating equipment, musical instruments, tools, bicycles, optical equipment, firearms and gardening equipment, and while some of our members will sell some of those things occasionally, principally, of course, jewellery probably towards the more expensive end of the second hand jewellery market, and from time to time firearms and photographic material, this does not really apply to the vast bulk of the things that our members would be selling. When we come to the lower risk, most articles sold by antique dealers fall into this category, many of which are correctly described as works of art or collectable items, and this also refers to the fact that, in this section, most are collectable items sold for less than £50.

 3301. The PITO study, to which I have already referred, also makes the point that the police attach greatest priority to volume crimes. It says, if you want to look at the document I refer to, it falls on page 19 at 6.2.1: "The police service priority of crime reduction tends to focus upon those offences where the biggest impact can be made. Inevitably this is in the area of volume crime. Before ACPO" - the Association of Chief Police Officers - "would consider allocating additional resources in tackling cultural property offences they would expect to see an outline business case to justify the investment. As the nature and scale of the problem remain unclear, at this time it is not possible to produce a reliable business case with quantifiable benefits for the police." To our disappointment, therefore, the plans for a publicly available database of stolen art have been dropped and our members continue to rely on commercial databases of stolen art which I want to mention a bit later.

 3302. The Kent report makes it clear that the art and antiques market is in the lower risk category, as we have said, but the key question I would ask therefore is to what extent is the proposed requirement for registration and the creation of new and extensive powers of entry, seizure and inspection proportionate to the problems that it is intended to remedy? If registration is intended to catch the Arthur Daley types, as its supporters intend, it is difficult to understand why it is necessary to extend it to dealers with established premises who are already required to keep records as a result of VAT registration and other administrative requirements.

 3303. I believe that whichever you look at this, the piecemeal approach to legislation county by county and borough by borough is surely inappropriate. When considering the whole question of the illicit market and cultural goods, the Illicit Trade Advisory Panel Report did comment on the Kent and Medway Act 2001, that is in the Illicit Trade Advisory Panel Report on page 34, paragraph 105. Its conclusions are, in our view, highly relevant to the present discussion surrounding Part 4. It says, "While we support the aims of these Bills in giving powers to councils to regulate this market, we are very concerned about the piecemeal implementation of such private legislation which is likely to result in variations in regulatory regimes between different council areas. We believe this would be extremely confusing and highly undesirable". The panel therefore recommended the Government should reconsider the case for national legislation and that such legislation should be introduced at an early stage. We support the case for targeted national legislation and we are clearly not alone in this.

 3304. CHAIRMAN: Mr Browne, can I stop you for a moment. Are you aware of any intention from the Home Office, who would have to be the sponsoring department I think, to bring forward such legislation?

 3305. MR BROWNE: You have anticipated my next point. I would like to come to it because I think this is quite a key point. Before I do, I would like to mention that the House of Lords Committee, as I think I referred to this morning which looked at the Kent and Medway Bills, thought that national legislation was the best answer and on the second page of the summary of the report which is document K, it says, "We strongly believe that any proposal to decrease the market in stolen goods should decrease the market, not displace it. This can only be achieved by the introduction of a national regulatory structure". I promise you, I am coming to this point.

 3306. CHAIRMAN: I am sure you are.

 3307. MR BROWNE: I would quite like to build up to it, if I may. This view was shared by the Under Secretary of State for the Home Department, Mr Mike O'Brien during a debate in the House of Commons on the Kent County Council Bill on 22 March 2001, when he announced, and this is document L, Column 562, "We will consider carefully whether the Bill and those like it that have already been passed should form the basis of national legislation". The Bill's sponsor, Paul Clark MP responded that clause 20 of the Bill required the Promoters and the police to report to the Secretary of State on the benefits or otherwise of the Bill, no more than three years after the appointed date, so that an assessment could be made based on the experience of Kent and Medway as to whether national legislation would be appropriate and, as a result of this, we now, of course, as you know, have the Kent Report which was produced and submitted to the Secretary of State. As we know the Kent Report is the inspiration behind Part 4, as has been discussed this morning, of the London Local Authorities Bill. I think it is relevant to examine the Kent Report's view on the case for national legislation and the first thing that stands out is the title of the Kent Report which says, "The Kent Acts" and the subtitle is "A case for national legislation". Its authors clearly believe that national legislation is the desirable option. Its contents reflect this on page three, it says, "Disparate local acts could be replaced by a single act, thereby providing standard recording, registration and inspection requirements throughout the country". On page 15 it says, "If other authorities promote their own legislation further anomalies will arise making it difficult for legitimate dealers to understand and comply with local variations". The supporters of the London Local Authorises Bill acknowledged at a meeting with us in November 2004 that a national approach to this would be much more effective. They were concerned that the Home Office might not proceed with an assessment of the advisability of national legislation and therefore they decided to press ahead with the piecemeal approach willy-nilly. However, and I now have come to this, since the publication of the Kent and Medway Report, the Home Office has now announced its intention to consult on the need for national legislation, and our members and you will find document N amongst the papers, our members were approached in August last year for their views on an overview paper preparatory to formal public consultation by the Home Office. You will see from this paper the attachment, rather than the email itself. The email is from Nina Shuttlewood at the Home Office sent to British Antique Dealers Association. The overview paper sets out three options that the Government propose to consider. One is enabling legislation to allow local authorities to implement legislation if they want to. The second is national legislation to supersede current local legislation and the third is the status quo. I would also draw your attention towards the bottom of that page on the overview paper, it also alludes to the need to define what is meant by second hand goods. As with all consultation of this sort that involves the market, we will certainly and we have already offered the Home Office to help find practical and workable solutions to the problems that emerge. There does seem to be widespread agreement that a national approach would be more effective and less confusing. The Home Office has clearly decided to evaluate this and will no doubt reach a decision to put before Parliament. Proceeding with the present Bill is therefore in our opinion premature.

 3308. CHAIRMAN: Mr Browne, could we ask you to identify the date of this document, there is nothing on it.

 3309. MR BROWNE: It was an email sent to us in August 2005.

 3310. CHAIRMAN: So it is within the last year?

 3311. MR BROWNE: Yes.

 3312. BARONESS O'CATHAIN: Was there any subsequent conversation between Ms Shuttlewood and people like you and giving you a timetable and a period where the consultation should take place and by which time it should stop?

 3313. MR BROWNE: The answer to the first question is yes, we have been in touch with them and they know that we are very keen to respond to the consultation and take part in it. The latest information that I have is that they have not got a date to start consultation but the fact is their intention is quite clearly there and that has been confirmed to us.

 3314. CHAIRMAN: Are you aware of how long similar processes have taken, say from an intention to consult, through to legislation being on the statute books?

 3315. MR BROWNE: I have been involved in one or two of my own, yes.

 3316. CHAIRMAN: I rather thought you might have been.

 3317. MR BROWNE: I would like to make a point in connection with that, as I hope to demonstrate, this is such a fundamental change for us that to rush through local legislation just because you think, or the proponents think, that the Home Office may take a long time to assess this is in our view really a great mistake. I think part of the point that we are trying to make is that this thing needs to be properly targeted, it needs to be properly assessed and because of the changes, I want to come on to those, are really quite substantial and the effects are likely to be pretty substantial too. Although, of course, it may take longer, it would surely be better to have legislation which is more appropriate and better targeted and more proportionate than rushing ahead just because everybody is worried about the fact that the Home Office may not get its act together quickly.

 3318. BARONESS O'CATHAIN: The point that the Chairman made is a very valid one. Today, we have heard of work going on a Bill for the last eight years and it has now been thrown out. If you have not even started the consultation, it is between the unsatisfactory thing that you would have, to nothing.

 3319. MR BROWNE: Not necessarily nothing. I just think it needs to be thought out properly. I do want to go into some detail where we are worried about it because I have not got to that.

 3320. LORD FAULKNER OF WORCESTER: How much damage have the Kent Acts done to your members' business in the county of Kent?

 3321. MR BROWNE: There are very few of them, that is the problem. There is a handful of members. We have got some anecdotal material; I know anecdotal material is not always helpful. There are very few members in Kent and the Medway area. We did a straw poll, at least one of my colleagues did. A sample reaction to it is one of them said: "The whole Act is a waste of time and money. The authorities are targeting the wrong people"; another said: "The amount of details demanded by the Act is a terrible waste of time"; and a third said: "The Act is the not targeting the right people and the inspectors are not visiting car boot sales so the whole thing is a complete farce".

 3322. LORD FAULKNER OF WORCESTER: That is different from what the superintendent said.

 3323. MR BROWNE: I realise that. I want to come on to the Kent report because I think that is quite an important thing to concentrate on. We do think that, in spite of what we just said, it is premature to rush ahead because firstly the present position is already confusing enough with similar but slightly different legislation in about a dozen local authority areas and needs to be addressed in the context of the merits of the national scheme. As I have outlined above, the narrative of events post the passing of the Kent and Medway Act indicates that informed opinion is in favour of formal consideration being given to the need for national legislation.

 3324. I would like to now address Lord Faulkner's point about the efficacy of the Kent and Medway Act. I believe that the report and the conclusions of this report are inconclusive. I have already referred to the report on the Kent Acts in the context of the case it makes for national legislation but since, as I say, the supporters want to press ahead with local legislation, I think it is also relevant to consider the strength of the case that is being made in the Kent report for its successes in combatting crime. I suggest that the evidence is very far from being conclusive. From our point of view, one of the striking features of the report is no single example is given of an instance involving arts and antiques. Of the six prosecutions carried out, which are on page 26, one relates to odometer records or car clockings, which was discussed this morning, one involved the sale of a video-cassette player and another involved the sale of unsafe vehicles. The subject of the other three prosecutions was not recorded, but the concern for motor dealers is reflected elsewhere in the report when it refers to the registration of 1,200 motor dealers and when it concerns itself with the roadside selling of cars. Other targets identified in the report, which came out in the discussion this morning, were occasional sales, squat trading and sale of counterfeit items, mainly clothes, DVDs, sunglasses and so on. I am still not convinced that the case for a decline in burglary has been made by the Kent report or the case that the system of registration in the Kent Acts have led to a decline in burglary because even the revised figures we have got, which we were given this morning, show that Avon and Somerset did rather better than Kent without having a system of registration. We have looked at Home Office statistics for the period 2001 to 2004­2005, which is document O on your papers. I do not expect you to plough through the whole thing.

 3325. CHAIRMAN: They are very tiny. Is there anything in particular?

 3326. MR BROWNE: The point I was going to draw your attention to was the average decline in burglaries in England and Wales over that period is 25 per cent.

 3327. CHAIRMAN: It is the bottom line?

 3328. MR BROWNE: Yes, that is it. I think of the 39 regions in England and Wales, only six recorded an increase in burglary during that period and only one in vehicle crime. As things stand, we suggest an objective assessment of the Kent and Medway report does not in itself provide conclusive evidence of its effectiveness in dealing with crime and does not precisely identify the problems it is intended to deal with. It is by no means obvious to us that a registration system holds the key to reduction in theft. To come back to what I was saying in answer to you before, only a hard-headed and thorough appraisal can judge this and we hope that the Home Office can carry out such an appraisal. I think one of the major preoccupations we have is that London is very different from the other local authority areas to which legislation has applied in the past. It is the hub of our art and antiques market which, as I say, accounts for over half the European Union's market as a whole. It is truly - not a tautology - a cosmopolitan centre where dealers with premises elsewhere frequently take part in art and antique fairs and these fairs form a very important part of London as an art market. For example, at this moment the British Antique Dealers Association Fair is taking place in the Duke of York's headquarters in Chelsea and has 92 exhibitors from 19 different counties and ten different London boroughs. There are two very large fairs at the Olympia each year; the winter fair had 199 exhibitors from 31 different counties and 12 different London boroughs.

 3329. CHAIRMAN: May I stop you, Mr Browne. I am sure these figures are very relevant, but if one were to take the example of the fair, that you just referred to which is going on now, which has some international components and a number of exhibitors from London boroughs, if the provisions in this Bill were to be enforced now, what impact would that be likely to have on those exhibitors?

 3330. MR BROWNE: Presumably, an exhibitor would have to register before he came.

 3331. CHAIRMAN: Your understanding of the legislation is that each exhibitor would have to register?

 3332. MR BROWNE: That is our understanding of it.

 3333. CHAIRMAN: With Kensington and Chelsea?

 3334. MR BROWNE: Presumably, you see. This is where it is so utterly confusing at the moment. If you do not have to register, you have this rather odd situation where you have one chap on a stand who is from Kensington and Chelsea who might have to register and a fellow who comes from Broadway who does not have to. It seems to me at the very least very confusing. There is also an international dimension because the big summer fair in the Olympia had 41 counties represented and there were 34 dealers from overseas. We need to try and attract these people to these events. One point that I was going to come to, but I do think it is very important, is this whole question of perception. It is the perception of how complicated a place it is to do business is which is likely to be unsettled by this, we feel.

 3335. CHAIRMAN: Is it your submission that that perception is affected by the question of registration per se or by the practical details of how to register?

 3336. MR BROWNE: I think it is not just the question of registration, it is also the very extensive powers that are attached to this Bill, which I want to come to, that are really quite radical in terms of entry, search and seizure. People understand, of course, that law enforcement officers have the right, under certain conditions, to gain access to confidential information, so does the tax authority, but this does open up a whole new area where people can have access to information. I would like to come to that, if I may.

 3337. CHAIRMAN: Please.

 3338. MR BROWNE: I do feel that any change which might damage the perception that London as an advantageous place to do business should surely be addressed very carefully, and that is the point about perception.

 3339. LORD FAULKNER OF WORCESTER: Would that apply if it was a national scheme as well?

 3340. MR BROWNE: Yes. I think one of the problems in saying this is that cultural property is very different; these are unique objects and it is not the same as the theft of consumer goods. There are different measures you can take with cultural property, for example the use of databases and so on, which you cannot really use for consumer goods because they are not unique. The point is what is the problem, when addressing theft? The Illicit Trade and Advisory Panel was perfectly clear: the real problem is where art is stolen, changes hands and leeches its way into the legitimate marketplace. That is why we recommended the existence and the creation of a database because it is the database that flags up whether an object is stolen or not. We are very sympathetic to the idea of national legislation to target the area of the market which is not really, in a true sense, the art and antiques market. These are people, as the police officer was saying this morning, who are selling things on doorsteps or out of the back of a white van. That is an area which needs to be tackled. What I think we are saying is this scatter-gun approach, which is applied to this particular Bill, is wrong, and it is perfectly possible to target the criminals on the fringes of the market, the people who are knowingly peddling stolen goods. There must be a way of tackling them without burdening the market as a whole with a whole range of obligations which we think are superfluous and indeed exposes dealers to completely different standards of releasing information and having goods seized to what is presently the case. I would like to come on to that, if I may, towards the end.

 3341. I mentioned the perception point because the stance taken by the Government, and successive governments over the years, has been very cautious and careful in trying to target and be proportionate in terms of any measures to do with the art market, because the art market makes a major contribution to London as a centre of both commerce and the arts, a point which is acknowledged by the Mayor of London's Cultural Strategy document which was published in 2004 - this is document P - it said: "It isn't just creative industries in London collectively which are so significant. Each of the individual sectors is immensely important with a majority of their activity based in London". Then it cites an example of the music industry and goes on to say: "Similarly, all the major art sales by dealers and auction houses take place in London accounting for the lion's share of the £4,200 million UK art market".

 3342. We would contend that the current regulations surrounding the market in cultural goods are already adequate. The control of the cultural goods sector represented by the federation is, we feel, adequately provided for and the Government has frequently acknowledged the importance of the art market in its wish not to damage it by overregulation. The Arts Minister, Estelle Morris, gave oral evidence to the House of Commons Culture, Media and Sport Select Committee on 8 March 2005, which you will find is document Q in your documents. She stated: "I would not want to go into regulating the market; I do not think that it is right. Just for the record, the Government has no intention of starting to regulate the market". This is consistent with a risk­based, proportionate approach to money laundering regulations which is contained in document R of the documents that I have given you. There is really no need to plough through the whole chapter, but I cited, as an example, the fact the approach to money laundering has been a very balanced and targeted one and based on the level of risk within various parts of the market. We contend, as you know, from our petition that, in terms of the paper trail to assist in the investigation of possible criminal activity, VAT already provides an adequate means of recording transactions in the legitimate art and antiques market. This was acknowledged by UNESCO when the Illicit Trade Advisory Panel consulted UNESCO in connection with the recommendation that the United Kingdom should accede to the 1970 UNESCO Convention on the means of prohibiting and preventing illicit import and export and transfer of ownership of cultural goods. Document S is the UNESCO Convention and Article 10 obliges dealers to maintain a register of cultural goods, as appropriate. During the Panel's discussion we consulted Lyndel Prott of UNESCO in order to try and establish whether the United Kingdom requirements to keep records under existing VAT regulations were sufficient to meet the obligations under Article 10, and she confirmed it would be acceptable. As a result, the Panel took the view that they were satisfied with the current requirements for dealers to register for VAT and keep records of their transaction met the obligations under Article 10 of UNESCO. As a result of which the Government announced its decision to accede to the UNESCO Convention, and a press release announcing that is included amongst the papers, document T. It concluded that it could do so without the need for further legislation. Following that, the DCMS put out (a very small purple coloured pamphlet amongst your papers), the DCMS published a helpful guide on the UNESCO Convention, entitled "Guidance for Dealers and Auctioneers in Cultural Property". I draw your attention to this because, apart from anything else, the title does specifically identify the market in cultural property. We would suggest what is acceptable in terms of the UNESCO Convention should also be acceptable in the context of the present Bill and there is also the point that some of the information that the Promoters of the Bill seek is already obtainable from other sources, for example the requirement to register names and addresses of a private dealer or register the principal address of a company duplicates information, I am told, which the borough already holds in non­domestic rating.

 3343. BARONESS O'CATHAIN: This is generally known, I think, on the little purple document U on page five, it is the 1970 UNESCO Convention on page five, see the middle paragraph there: "The need to keep adequate records".

 3344. MR BROWNE: Yes.

 3345. BARONESS O'CATHAIN: Now if you maintain "registers of cultural property recording the origin of each item of cultural property, names and address of the supplier, and a description and price of each item sold". Is that not ad idem with the requirement?

 3346. MR BROWNE: That is precisely what I am saying. We are already keeping these records anyway.

 3347. BARONESS O'CATHAIN: Then why are you worried about it?

 3348. MR BROWNE: There are two reasons: one is because records and goods which are currently open to seizure or open to inspection only with a warrant, would in future be open to inspection and seizure by any authorised council officer without a warrant. The fact is, detailed records are indeed being kept, and I am in no doubt about that at all. If you go into a dealer's shop and you buy an £800 English watercolour, you might not necessarily want to give your name and address to the person from whom you bought it. At the moment there is no obligation. Under the terms of this Bill it would be a criminal offence if you did not, he could not sell it to you if you said, "Sorry, I do not want to". If you go into a shop and you buy a smart evening dress or something, you do not have to give your name to the shop. In the same way if you go in and buy a piece of cultural property you do not have to give your name and address. A lot of private people for perfectly reasonable reasons might choose not to. The problem is that under the terms of this legislation it will be a criminal offence if the dealer does not record that.

 3349. BARONESS O'CATHAIN: I understand where you are coming from. You say that if somebody came in and if the figure was £8,000 in cash you would have a problem with money laundering. Where is the break-off point?

 3350. MR BROWNE: There is not necessarily a break-off point. I am really looking at it from the point of view of the consumer.

 3351. BARONESS O'CATHAIN: I am afraid we have to accept that because of the nature of the world in which we are living in now all of us are aware of money laundering. It is a great intrusion of our privacy but we have to do it.

 3352. LORD FAULKNER OF WORCESTER: We heard evidence this morning from the superintendent who talked about people who stole items, put them into auction and then bought them back in order to destroy the paper trail. Presumably you are assisting with that if you are not insisting on names and addresses.

 3353. CHAIRMAN: Shall we let Mr Browne get to the end of what he wants to say about this and then we will ask questions.

 3354. MR BROWNE: Could I address that point because what the officer said was the thief could put it through auction - I have a note of exactly what he said - to legitimise it. That is not what happens because under English law you do not gain better title than you have got. Once something is stolen, it is stolen, you do not gain title to it. The idea that you can put it through auction and somehow create a new title is not the case.

 3355. CHAIRMAN: I think to be fair, Mr Browne, and Mr Clarkson will correct us no doubt, I believe what the superintendent was saying was not that new title was created but that a plausible means of selling on was created. Would that be correct?

 3356. MR BROWNE: But that does not affect our members because our members already keep these records.

 3357. CHAIRMAN: That is understood.

 3358. MR BROWNE: There is a distinction here. What we are saying is the distinction throughout is if you are a VAT registered auction house or dealer with permanent premises you have already got all of this information. As I will come on to, great steps are taken to ensure this.

 3359. CHAIRMAN: Mr Browne, I do not wish to hurry you but I think it may be the case that what you are tending towards is the issue of the ability to inspect and, indeed, enter premises.

 3360. MR BROWNE: That is one of the main things, yes.

 3361. CHAIRMAN: You are telling us the information is all there, therefore the issue is not the creation of information banks but the way in which they can be used. Is that correct?

 3362. MR BROWNE: I have not got a great deal more to say. If I may, could I come on to that because it may clarify some of these points. I was going to make the point which I touched on a moment ago that the legitimate market has absolutely no interest whatsoever in facilitating the sale of stolen property. It makes enormous efforts to detect stolen property. All the major art fairs and the major auction houses consult databases for stolen art. Unfortunately, as I said earlier, the Government has decided not to put in resources to create a publicly available one. The principal one that is used by our members is the Art Loss Register which is the leading database of stolen art which was, in fact, originally set up with the involvement of the art market itself to search and to try and identify objects that might have been stolen in the past. If stolen art is identified then obviously it is rigorously investigated and if the object proves definitely to have been stolen then law enforcement authorities are brought in to investigate. I do not believe the proposed registration adds anything to what is already there.

 3363. I do come back to the point that while the requirements for registration proposed in this Bill may have an impact on occasional sales whose participants are not registered for VAT and who do not operate from established fixed premises, applying it to businesses which are registered for VAT and are operating from fixed premises is an unnecessary and disproportionate burden.

 3364. I now want to come on to the point you were making, if I may. You may think that we are protesting too much on this. I do not think we are making a mountain out of a molehill in our opposition to Part 4. We believe that the substance of it, together with the piecemeal approach to which I have already referred, will cause considerable difficulty for our members.

 3365. It might be helpful just to quickly review the obligations on dealers and auction houses contained in this Bill because I think they are significant and they are burdensome. The obligations comprise, as Mr Clarkson was saying this morning: "registering the name and address of the dealer or, in the case of a company or partnership, the registered or principal office thereof and the names and private addresses of the directors, partners or other persons directly or indirectly responsible for the management thereof; registering the address(es) where the business is carried on" and any alteration in any of these details has to be notified within 14 days. The registration is renewed every three years. There is an obligation to maintain "for two years records of every transaction (subject to low monetary limits) under which the dealer acquires an interest in, or takes charge of", and I think that is a point of ambiguity for us because very often somebody might bring in a picture to a saleroom in order for it to be investigated in terms of its value and its attribution and it may go away again, the owner may decide not to sell it. In which case it is difficult to see how you can fulfil the obligations to include the date of transaction because there will not have been one. It does not fulfil the exemption for returning things of nil value to which Mr Clarkson referred this morning.

 3366. There is the obligation to produce records on demand, and this is the point that you quite rightly mentioned. The Bill enables "an authorised officer", which is defined in clause 2, but it does not stipulate the seniority of that officer or how he is authorised, or the police: "at all reasonable hours to: (a) inspect any goods and records and enter any premises; (b) to require production of records from anyone 'carrying on a trade or business' or any employee; and (c) to seize and detain any records or goods for the purpose of ascertaining whether an offence has been committed, or for the purpose of proceedings for an offence." This is in clause 95.

 3367. As we touched on this morning, a warrant is only required to do all this if the premises are a dwelling. I want to concentrate for a little bit, if I may, on this last point since I believe it encapsulates one of the key features of this Bill: the creation of new powers of entry, search and seizure.

 3368. I said at the beginning that I am not a lawyer myself but I did consult a lawyer about the current legislation in order to try and put it in the perspective of other legislation. My understanding is that in most cases a policeman would require a warrant in order to enter and inspect premises. To get a warrant he makes an application to a magistrates' court with a sworn statement setting out the reasons for the warrant. A judicial decision would then be taken as to whether grounds for granting a warrant had been made. Such grounds might be a reasonable suspicion for believing that an offence had been committed, or that stolen goods were on the premises. That is the position at the moment.

 3369. The usual means of securing the kind of information that is sought in this Bill is by notice in writing, served upon the person who is required to produce the information. For example, the provision of information about financial services under section 165 of the Financial Services and Management Act 2000 is one example, section 2 of the Criminal Justice Act 1987 follows this formula, information relating to tax under section 20 of the Taxes Management Act 1970 and information to Customs under schedule 11 of the VAT Act or Customs and Excise under the Customs and Excise Management Act 1979. A failure to comply with such a notice in these instances has two consequences. One is that you are liable for a criminal offence and the second is that the court could then issue a warrant to enter and search for the records. Further, if an authority is worried that by giving this notice it might lead to the destruction or fabrication of evidence then a warrant can be issued without providing a notice first.

 3370. It is worth pointing out that in connection with the Financial Services Authority, Parliament laid down very strict conditions under which a justice of the peace can issue a warrant under the Financial Services and Management Act 2000 and these are set out in 176, which is document B in your bundle.

 3371. I have to say, Mr Clarkson said this morning that these proposals are not radical but having heard all this, and I am a layman, I think they are rather radical because, in the Financial Services Management Act there are all those conditions laid down before an officer of the Financial Services Authority can have access. No such conditions at all apply to this Bill. The Bill enables a council officer of unspecified rank or responsibility or a policeman to enter premises, inspect any goods and records and to "seize and detain any goods which he has reason to believe may be required as evidence in proceedings for an offence under this part of the Act", which is clause 95(d). In contrast to the existing legislation that I have mentioned, no thought has been given as to whether copies of records or photographs of goods will suffice, and it appears that goods, if seized, could in fact be seized indefinitely.

 3372. CHAIRMAN: Mr Browne, you heard Mr Wallace's evidence earlier.

 3373. MR BROWNE: Yes.

 3374. CHAIRMAN: He told us that the powers that are in the proposed Bill are in effect identical to powers that he and others like him have under a number of other articles of legislation. Do you have anything to say about that?

 3375. MR BROWNE: I do. I think that Trading Standards legislation is different in the respect that clearly there must be elements where public safety is so pressing that someone has got to go in and seize something immediately. I have to say that I am not familiar with Trading Standards legislation but he is concerned with a completely different problem from what we are concerned with. This is the essence of the whole thing. The Trading Standards' preoccupations I completely sympathise with, but they are totally different from the kinds of matters that we are considering. In the matters that we are considering, coming back to this perception point, there is a perception - people know that their confidential business is accessible to a policeman with a warrant or a VAT inspector or a tax inspector. That is fair enough, but there are procedures that have to be gone through and levels of evidence that have to be produced, or suspicion that has to be produced to get a warrant from a magistrate. This is completely different. I sympathise with the Trading Standards point but this has all been lumped together so the same power that for him may be absolutely right will completely revolutionise access to records within our line of business.

 3376. CHAIRMAN: Just so the Committee is clear, would I be right in thinking that your submission is that the nature of the business that your members are engaged in, whilst superficially similar to the nature of the business of other second hand dealers, has some material differences?

 3377. MR BROWNE: Yes.

 3378. CHAIRMAN: Are you submitting that the requirement for additional layers of confidentiality is part of that difference?

 3379. MR BROWNE: Yes, I am. It is also a question of what is being targeted. There is the Trading Standards issue, which is completely separate, and then in terms of theft you need to look at where the problem is arising, what is being stolen, is it cultural goods? Yes, cultural goods are stolen but what is the best remedy for dealing with this. Do you need to supplement existing legislation or do you really need to target the problems that Mr Murphy was referring to in terms of people stealing something, getting rid of it quickly and it goes through a chain. That is not a problem for the legitimate art market but that is where the problem is. The trail does go cold and by the time some perfectly honest person turns up with something, they may have bought it in totally good faith but it turns up and, it does sometimes happen, it is screened through the Art Loss database and it emerges it was stolen three years ago in Wales or something. The real problem is how you target that side of the market. We can see that a system of registration for people who are not operating in fixed premises with VAT records and all the rest may well have some validity, we do not disagree with that. I do not think we disagree at all with the aims as long as the aims are very carefully targeted and specified. That is the point I am trying to make, probably not very well.

 3380. I just wanted to continue a little on this point of the existing legislation. I am also told that where a power of entry has been given it has been rare in the extreme to draw a distinction between domestic and business premises. For example, I am told that powers of entry can be given to disconnect the fuel supplies, to turn off the gas or something, and that does not make a distinction between business and domestic premises, but the powers of entry do not come with the raft of additional powers that this Bill has, in other words that you are allowed to enter specifically for the purposes of doing this.

 3381. That is why, in our opinion, these are exceptional new powers that surely should only be created after proper assessment has been made of the need for them and what they are targeted at doing, and then surely it should only happen at a national level.

 3382. There are some other specific points to do with some of the details in the legislation. I do not know whether you really have the energy for those.

 3383. CHAIRMAN: That is very tactful.

 3384. MR BROWNE: I know that the post-lunch slot is not always easy.

 3385. BARONESS O'CATHAIN: You have done very well.

 3386. CHAIRMAN: If you were able to be selective about those that you think genuinely add value to your submission then we would be grateful.

 3387. MR BROWNE: Thank you. I think they do a little bit. As is so often the case, the problems are very often in the detail. Even in connection with the obligation to register, the phrase "other persons directly or indirectly responsible for the management [of the business]" is quite unspecified. Plainly it applies to the company secretary but there is no clear indication as to whether this would apply to the office manager, financial controller, auditor or the tax adviser. Do they have to register? Obviously it is important to note that in this context the offence under clause 91(1) (carrying on the business without registration) could technically apply in respect of these individuals who are directly or indirectly responsible for the management. It is not clear.

 3388. There is also, as I have mentioned, a requirement to notify any alteration of particulars under registration to the borough within 14 days and in the context of large organisations, particularly having regard to my reference about all the directors having their names and private addresses, it does seem that obligation is quite burdensome.

 3389. Part 4 has the capacity to create great uncertainty within London itself, quite apart from the difficulties that it will cause for dealers based outside London when they want to take part in a fair.

 3390. I am coming to the end, you will be pleased to hear. I do want to make the point which was made this morning that as far as uncertainty is concerned, the London Bill will have the added uncertainty because there is no guarantee, as we have heard from Mr Wallace this morning, that all London boroughs will implement Part 4 even if this Bill is enacted. As there will no doubt be resource implications for some boroughs with a large concentration of art and antiques dealers they will need to consider those. So dealers may therefore be faced with a need to register in some boroughs but not in others, and furthermore not all boroughs may implement at the same time.

 3391. We think there is other scope for confusion here in that clause 92(g) exempts dealers in second hand books. But members of the Antiquarian Booksellers Association, one of our organisations, often deal in prints as well as books. Are they to be required to register and keep records of sales of prints, but not of books? This does not seem to make much sense. Contemporary art dealers also sell the new work of their artists but they will also deal in the secondary market for the work of those artists. Are they to register and keep different records in respect of one rather than the other?

 3392. Finally - I am sure a word you are all longing to hear - it is reasonable to ask the question can it be an effective measure against criminals if a criminal can simply cross a county or borough boundary in order to avoid the regulations and the need for registration. This question seems to be implicit in the Home Office's suggested amendment to clause 90(8) which seeks to extend the record keeping to purchases made outside the borough. If this system of registration is indeed a panacea for the problems of art theft and of second hand goods, surely this should be assessed at a national level.

 3393. If I may sum up. Have I gone on too long?

 3394. CHAIRMAN: I am sure you will be very brief.

 3395. MR BROWNE: You are being very understanding. I want to firstly emphasise that we have always supported legislation that targets criminal activity and applies a proportionate burden on the art market. If the concern, as I said, is to deal with fly-by-night dealers using squat sales or occasional sales to dispose of stolen items then surely legislation could be devised to bear down on them without the need of burdening thousands of legitimate businesses with additional and superfluous red tape. We would not be petitioning against this Bill if we thought that it did this.

 3396. While advocates of the system of registration may suggest that the addition of further record keeping requirements and the need to register is a trivial duty, we would equally suggest that any additional bureaucratic requirements on businesses, however trivial, should be justified in terms of making a material contribution towards solving the problems of art theft. We believe that no such case has been made.

 3397. In recent years, with the advent of import VAT, recent changes to import VAT as a result of the European Court of Justice, the imposition of the Artists Resale Levy, which was debated in this House in January, and the extension of the EU export licensing system, there is an increasing perception that Europe in general, and now the UK in particular, is becoming an increasingly more complicated place to do business. Perception, as I said before, is an important factor for the sellers and buyers from throughout the world that we have to sell our services to. They do not have to come here and the market, like the things we sell, is mobile. London is a major international art market centre, the only global player in Europe, which must attract and compete for business internationally if it is to maintain its position. Even an alleged trivial addition to the bureaucratic requirements of doing business here can only add to this perception.

 3398. With the Home Office about to embark on an assessment of dealer registration, it is surely premature to rush forward with another local law, particularly one covering London, where the concentration of art and antiques dealers is higher than anywhere else in the United Kingdom.

 3399. If it really is demonstrated that a new requirement to register all businesses, to keep additional records and to make them available to council officers without a warrant will help defeat art crime then, of course, we would look very seriously at this. As we have always done, we would approach the practicalities in a constructive manner, but this needs to be examined on a national basis, not imposed via local Bills.


 
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