'Donations' in lieu of tax: a stupid way to fund the arts

Picture: University of Cambridge

Margaret Thatcher's archives were recently transferred to the nation in lieu of tax, under a scheme that's seen many important artworks and historic documents transferred to public ownership. We even got her handbag (above). The Thatcher archives have been controversial, but for the wrong reasons. There's no question of their importance, whatever you think of Margaret Thatcher. But the scheme itself is absurd. I've done an interview with The One Show on BBC about the acceptance in lieu scheme, which should be broadcast on Friday. Acceptance in lieu almost universally popular because it seems to give free pictures to museums. The official website explains its advangages:  "The primary benefit for a host/acquiring museum, gallery or library is that it receives an important object at no cost".

 

But this is nonsense. These are not free objects. They are objects bought out of foregone taxes. If the tax were paid to the Treasury and then given to the museum, it could spend the money on any picture it liked. What are the chances that of all the pictures available in the world, they'd want the very one handed over in lieu of tax?

 

The beneficiaries are not museums, but the wealthy people with important pictures on their walls and archives in their attics. I don't for a moment blame them for using the scheme - I would in their shoes. They aren't cheating the system; they're using it exactly as it was intended. Our ire should be directed at the Treasury. This is just one of many examples of misleading policies that benefit a tiny number at the expense of the majority. They are pretending that it isn't really arts funding, because the transfer takes place instead of gathering tax and distributing it.

 

The iniquity stings twice. First, it stings that the very wealthy can enjoy such a splendid privilege. Can you imagine the reaction if you offered to pay your council tax by spending a few hours doing some gardening in the local park, and offering your labour at £50 an hour? I'm going to hazard a guess that they won't convene an expert panel to assess the quality of your work and value of your labour. But if you have an important picture you not only get to save on transaction fees from selling it on the open market, you get a tax rebate too - you save a quarter of the tax that would have been due on the object. The other side, of course, is that taxpayers are paying extra for the privilege of acquiring something via the acceptance in lieu scheme. It's actually a more expensive way to buy stuff. And the people transferring objects are often treated as philanthropists, and credited by the museums as donors. They are not donors; they are simply taxpayers. And they're using a loophole that means they are paying relatively less tax than the rest of us. We are paying more than they are.

 

But the scheme also stings because we keep getting more of the kind of pictures that happen to have been popular with British collectors - unsurprisingly, they're the pictures that are usually quite well represented in our national collections, too. We've just got a cache of 44 Frank Auerbachs, which are fine pictures, but do we need so very many of them? We have a total of 54 Auberbach oils alone in British public collections, but not a single picture by the American abstract artist Richard Diebenkorn. And where are the early German pictures, the Scandinavian art, seventeenth and eighteenth century French paintings, nineteenth century German art, and American art, all poorly represented in both public and private collections in the UK? We're missing out on so much because our acquisitions are skewed towards 'saving' more of the same.

 

The cultural sector is extravagantly grateful for acceptance in lieu. But it's a bit like getting a pay rise, but then being told that it will be paid in the form of a monthly delivery of groceries chosen by your employer. Getting a free grocery delivery is better than not getting one. But if the cost is the same to my employer, I'd rather have the cash thanks all the same. And can you image a public company choosing to pay in groceries, but then deciding to pay the supermarket a bit more than their retail prices? That's what the government is doing when it buys pictures under the acceptance in lieu scheme. Shareholders would demand the board be sacked if it were a public company; as taxpayers we should be holding the Treasury to account. To be clear, I'm not making a partisan point here. Acceptance in lieu enjoys cross-party support, and no party has a monopoly on distorting tax schemes. But they should still be held accountable for this stupidity.

It's even more stupid in the context of funding cuts that mean we can't get to see the stuff we're acquiring because museums can't afford to keep the doors open. Money is available for acquisitions, but not for running costs. The British Museum has acquired some wonderful drawings under the acceptance in lieu scheme. But it's just slashed the opening hours at the print room, so it's now harder to see them. And we're acquiring archives, but shutting libraries. It's perverse to keep buying things when we can't afford to display them. 

 

Of course the risk for the cultural sector is that the acceptance in lieu scheme gets scrapped without any compensating payment. But we are citizen as well as art enthusiasts, and we have a duty to play fair. We should seek to win the argument for funding on its own terms, not on the basis of secret subventions. And those secret subventions impose a real cost. It is more expensive to acquire via acceptance in lieu, because of the extra tax rebate. And too often it means we acquire the wrong things; museums need to get more creative with their acquisitions, and the Treasury should be a little less creative in its accounting.