Britain is the art capital of Europe – with an art market worth £8.5 billion last year.  But new rules from Brussels could weaken our competitive edge, playing into the hands of international rivals with little benefit for artists.

 

Directive 2001/84/EC has a bland name, but it could have a big impact.  Partly in force already, stage one entitles artists to claim a royalty whenever their artwork is resold.  The second stage, which is not yet in force in the UK, entitles artists’ heirs to receive a royalty for seventy years after the artist’s death.  With the Government currently deciding whether to implement the second phase in 2010 or 2012, now is a good time to think through the arguments.

 

Advocates have argued that the artist’s resale right aligns royalties for visual artists with those already enjoyed by composers and playwrights.  Royalties are also capped, and private sales are unaffected, which may reduce possible frustrations.  In principle, then, the directive presents an opportunity to enable artists to share in the value of their work when it is resold.  In practice, however, there are concerns that the directive will clog up the UK art market, ultimately threatening London’s position as a good place to do business.

 

The art market has continued to grow since the implementation of the directive in 2006, but the long-term impact remains unclear, not least because the recent ‘boom’ in contemporary art may subside.

 

When the directive was first agreed, the European Commission committed to negotiating the resale right into the Berne Convention.  This would ensure that regulations in Britain also had force in the US and Switzerland, levelling the international playing field.  But as the Government stated in April, little has been done to achieve progress on this crucial point.  As the UK has a 72% share of all art imported into the EU, international competitiveness is especially important.  The lack of progress on international negotiations must therefore be a factor when ministers consider the next phase of implementation.  Although the resale right could have resulted in a more even internal EU art market, France Germany and Italy have all seen a decline in their world share of the contemporary art market, while Britain has been eclipsed by China as the world’s second largest market for contemporary art.

 

Beyond international concerns, stage two will also apply retrospectively, covering the works of dead as well as living artists.  This could quadruple the number of sales subject to royalty payments.  Figures supplied to me by the Design and Artists Copyright Society (the body that collects the royalties), suggest that royalties collected for artists in 2007 accounted for 0.04 per cent of the total value of the art and antiques market in the UK.  But royalties would have accounted for 0.2 per cent if they had been collected for deceased artists as well.  Although both figures represent a small slice of the total market for art and antiques, it seems that phase two will represent a 400 per cent increase in the money taken through royalty payments.

 

There are sound arguments in favour of a royalty for artists, but there may be unanswered questions over the impact of full implementation of the directive in the UK.  Along with my Conservative colleagues, I have called on the Government to exercise its power to extend the UK’s derogation for deceased artists to 2012.  As Jeremy Hunt, Shadow Secretary of State at DCMS, has said, we must also consider the introduction of a self-registration system for living artists in order to reduce the regulatory impact on the art market in the UK.

 

As a leading member of the European Union, we should be fighting for a free and flexible community of nations able to compete in a tough global economy, not ‘one-size-fits-all’ regulations that could unnecessarily weaken national strengths.  This was the case I made as regional chairman for Business for Sterling ten years ago when we demonstrated that only the Bank of England could choose an interest rate to match the specific needs of our economy.  There are similar issues with the artist’s resale right, where regulations designed to support art in general across the EU may conflict with the UK’s particular position as a centre for global art exchange.

 

A new royalty right promises a bright future for artistic talent.  But new regulations can also have unintended consequences for our cutting-edge art scene which we cannot ignore.  The UK is privileged to have a world-leading art market.  It is our responsibility to ensure that it’s not undermined by ill thought through European directives.

 

Adam Afriyie is the shadow minister for science and innovation.  Elected to Parliament in 2005, he was chairman of the Conservatives’ deregulation working group.  As well as a politician, Adam is a successful entrepreneur and a former regional chairman of Business for Sterling.