ANTITUSSIVE

(Filed: 19/07/2003) Tel.uk

As the Heritage Lottery Fund decides whether to pay £20 million to save Raphael's Madonna of the Pinks for the nation, Peter Mandler and Lottery Fund chairman Liz Forgan explain what can be done about the new 'art drain'

Any day now the Heritage Lottery Fund will announce its decision on a grant to the National Gallery in the region of £20 million in order to buy Raphael's Madonna of the Pinks. The choices are stark.

Under threat: Raphael's Madonna of the Pinks

Either this ransom is paid from public funds to the trustees of the Duke of Northumberland, or it gets on a jet plane to reside for ever at the Getty Museum in Los Angeles. Either way, the Duke wins what he considers to be his just deserts: the full market value for the painting. And why shouldn't he?

In a robust self-defence in The Daily Telegraph in January, the Duke listed his many voluntary contributions to the public weal, but insisted that in the end he had a right - and his trustees a legal duty - to dispose of his private property on the open market just as he wished.

We seem in these matters to have reverted to "Victorian values" - it's my property and I'll do what I like with it. In this case, the Duke argues that he will use the money earned to protect other parts of the "national heritage" (his houses and estates at Syon and Alnwick), but it's his decision whether and how to do so.

The idea of "national heritage" as something in which the public has a real stake, and not just a peek loaned to it by noblesse oblige, has gone by the board. Yet not that long ago the dukes were on the other side, begging the nation to embrace their houses and pictures as "national heritage". A little history is in order to remind us why they thought that then, why they've changed their minds since, and what we ought to do about it now.

Until the end of the 19th century, only a few radicals dared to suggest that the aristocracy's possessions were anything but their private property. When Americans began to buy up the choicest works of art around 1900, and some little protests were kicked up in aesthetic circles about the "art drain", the dukes were outraged that anyone would dare even to discuss their personal transactions.

"Mind your own business," they said, and the public more or less accepted this state of affairs. The only "control" on export was the willingness of the public to stump up the full market price, and charitable bodies such as the National Art Collections Fund and the National Trust tried - often unsuccessfully - to raise funds for the purpose.

All changed over the course of the 20th century, for one main reason: tax. To pay for the world wars and the welfare state, governments jacked up the rate of inheritance tax. Among those hardest hit were aristocrats with a lot of capital (mostly in the form of land and art) and little income. Art lovers saw their chance.

Shouldn't the most mobile forms of capital - pictures especially - be regarded as "national heritage" and therefore exempted from inheritance tax if unsold, to keep them in the country? Aristocrats were slow to respond to this argument. The tax exemption would have to be paid back when the asset was sold, so what was the point of having it?

Gradually, as the rates for inheritance tax (then known as estate duty) crept up and up, to a top rate of 75 per cent by 1946, the aristocrats came to embrace the idea, at least as a survival strategy. They stopped saying "mind your own business" and learned to speak the new language of "national heritage".

"When a man's house is scheduled as a national monument, he ceases to be a householder in the ordinary sense of the word," argued the Marquess of Salisbury in 1953, seeking more tax exemptions.

From the 1950s to the 1980s, a formidable body of such exemptions was built up for property defined as national heritage. These exemptions pleased the owners, who got relief from very high tax rates, and they pleased the public, who got a stake in the "national heritage" and secured it against export.

Since the 1980s, of course, all tax rates have come down, and the dukes have changed their tune. It is once again worth their while to sell, so they want to sell. The Duke of Northumberland wants to go back to being "an ordinary householder", who can do what he likes with his private property.

That is fair enough. It is dukes doing what they do best - protecting the long-term interest of their estates - just as it was in their interest to play the "national heritage" card when taxes were high. But in the meantime, the rest of us - the nation whose heritage it is - have taken our eyes off the ball.

When in the 1950s government briefly considered placing controls on the export of works of art, it was thought that the tax system was doing the job and no further controls were needed. The "export licence" scheme only set up an early warning system, giving the government notice when owners proposed to sell for export their important works of art.

But sales of this kind were less likely to arise so long as high taxes meant that owners kept very little of the proceeds. When owners did sell, they often sold to the national collections, thanks to a largely informal system whereby owners were let off some of the tax if they sold to national collections instead of to foreigners. This bribe, sweetly dubbed the "douceur", meant that selling to national collections at a discount was the best way to realise capital.

With tax rates lowered, the system no longer works. Owners can pay all the inheritance and capital gains tax owing and still reap a substantial sum from a foreign buyer; in the case of the Raphael, the Duke of Northumberland may get £27 million after tax. National collections can't compete at that level, and at lower rates of tax the "douceur" is too low to give them much leverage.

That is why we are seeing today a seemingly uncontrollable rash of alarms over the export of works of art, the most recent being Joseph Wright's portrait of Richard Arkwright junior and Joshua Reynolds's Portrait of Omai. The owners have noticed that the rules of the game have changed, but the public hasn't.

What might be done? If we want to keep the free market, then the Lottery Fund has to pick up the slack and give the national collections the resources to compete. Otherwise there may never be any substantial additions to the national collections ever again.

Alternatively, or additionally, government needs to give the "national heritage" more attention. In the current climate, it's unlikely that tax rates will rise to act as a deterrent to export, although more could be done to make the "douceur" effective even at lower tax rates. So government ought to revisit the whole question of defining and preserving the "national heritage".

What is it? What are the public's rights and responsibilities in relation to it? Are private owners of the heritage just "ordinary" property owners, or do they have responsibilities too? What do other countries do?

If we don't now consider all of these questions, which the high tax regime allowed us to ignore for most of the last century, then we must gird ourselves for another, final "art drain".

*** Peter Mandler is university lecturer and fellow in history at Gonville and Caius College, Cambridge. He is the author of 'The Fall and Rise of the Stately Home'

# posted by Resty Odon @ 9:34 AM