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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