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Blog: Give us a (tax) break!

Photograph: Chancellor's BriefcaseCollections Trust CEO Nick Poole looks at the implications of the 2012 Budget for museums, archives and libraries and explores the possibility of advocating measures which promote the long-term interests of cultural heritage through philanthropy, corporate and private giving.

Announcing his 2012 Budget yesterday, Chancellor George Osborne said:

"Mr Deputy Speaker, this is how Britain will earn its way in the world: with far reaching tax reform. With a simpler tax system, where ordinary taxpayers understand what they are being asked to pay. With a tax system that is more competitive for business than any other major economy in the world.

A tax system where millions of the lowest paid are lifted out of tax altogether, while the tax revenues we get from the wealthiest increase. But reforming tax is only part of the story.

We will earn our way in the world by saying to all businesses - large and small: We will provide you with the modern infrastructure; new growth-friendly planning rules and employment laws; the kinds of schools and universities and colleges our future workforce needs."

Tax is Government's primary instrument for raising revenues. Along with cuts to expenditure, the structure of taxation will define the extent to which the Government needs to borrow its way out of recession. The first round of cuts to Local Authority and National budgets were intended to slow the rate of borrowing to address the structural deficit in the economy. They were also intended to be symbolic of a Government determined to put its own house in order before asking the nation's taxpayers to do the same.

The Chancellor referred to this Budget as 'unashamedly a budget for business'. The Government's aim, according to the speech, is not to return to the old boom-and-bust growth cycle of previous administrations but to promote a benign climate in which UK business can flourish and which attracts rather than repels overseas investment.

It is striking that the Arts and Culture were almost completely absent from the Budget. The most immediate impact for our sector is likely to be that the cap on tax relief for private giving will deter corporate and private giving, as philanthropy confers less of a return on its investment. This is an irony in light of the Government's vaunted commitment to a culture based on philanthropic giving, and I am sure that Jeremy Hunt and Ed Vaizey will have had some tense discussions with the Treasury as this Budget began to take shape. For some, particularly those engaged in capital projects, the removal of the zero VAT rating on alterations to listed buildings may also come as a bitter pill.

But behind these immediate impacts is a deeper issue. We know that culture and the arts have a profoundly important impact on the economy. Our collections are celebrated worldwide, and this fact powers a tourism industry that accounted for £115.4bn in inward investment (c. 10% of GDP) as recently as 2009 (source: 'The Economic Contribution of the Visitor Economy', Deloitte, 2010). Not only this, but our culture gives us identity, invention and education. It makes the UK what it is, and it helps define us on the world stage as an attractive option for investment. People want to live here, be here and build businesses here not just because of London's Square Mile, but because of the global brand that our culture has helped us to build.

At the risk of over-simplifying this Government's narrative, there is a strong sense that business is good, public dependency is bad. Enterprise needs to grow, in return for which the state needs to shrink. Small, agile startup businesses will help us achieve growth. Last-generation, lumbering public services will drain the economy of its vitality and its ability to compete in the modern world. Of course, history shows that this cyclical expansion and contraction of the state is as inevitable as the oscillation between left- and right-wing - it is only very rarely that a nation achieves an equilibirum between nanny and nightwatchman.

For the time being, then, the challenge which confronts our sector (and in this I would put museums, archives and libraries into the same category) is to move ourselves in the great Treasury balance sheet away from the 'liability' side and onto the 'asset' side, and to offer positive, constructive ideas about how we can contribute to this new economic vision.

In this, I think there are two important stories we need to be able to tell.

The first is a story about economic regeneration - we know as a community that museums, libraries and archives give local communities focus and identity. We support the educational offer that is always the foundation stone of a confident, skilled workforce. We help local businesses, make places more attractive to investment and increase land values. Through the provision of opportunities for volunteering, so often the unsung hero of our industry, we help people gain skills, get jobs, build digital literacy and meet the world with greater confidence and aspiration. No Chancellor should be allowed to forget that culture creates and powers business. Reports such as that by the NMDC, the ALMA UK Economic Impact toolkit and the report into Liverpool Museum's impact on the local economy all point to a significant body of hard evidence of why culture is good for business.

The second is a story about how we can embrace the idea of philanthropy, and the structure of taxation to create an environment that is not just good for business in the narrow sense, but to turn Britain into a genuinely competitive world economy.

First, let's not fool ourselves that philanthropy is simply a question of altruism. Yes, people want to give something back to the society that helped shape their identity and their success, but goodwill alone is not sufficient. It has to be supported by a clear return on investment based on preferential tax relief - philanthropy (in the sense of both private and corporate giving) has to be good for business as well as good for the soul.

In her excellent Guardian blog post Charlotte Higgins outlines a number of tax breaks designed to promote philanthropic giving. These include:


  • Gift Aid
  • Tax relief on donations of cash, shares, assets or land to charities
  • Inheritance tax exemption


To this, I would also add the important role played by the Acceptance in Lieu scheme in offering relief on inheritance tax, capital transfer tax or estate duty for people making donations or bequests of artefacts 'to the nation'.

If we are going to encourage and support the Department for Culture, Media and Sport in making a compelling case for a preferential tax climate for philanthropy, we are more likely to succeed by connecting the interests of museums, archives and libraries with the much bigger, better-organised lobby for the wider cultural and creative industries. In this, the adoption of museums and libraries by the Arts Council may of course confer an advantage, but equally it is essential that our sector engages with organisations like Business in the Community to ensure that they are aware of the potential contribution our sector has to make.

But the needs of museums, libraries and archives and the wider arts sector are not identical. They differ in the important sense that some of our work requires long-term, structural investment often in material that is not available for public display. Experience suggests that it is precisely in this - in long-term giving without an obvious product - that philanthropy struggles.

So how might we define a set of measures to propose to the Chancellor to support our aims - and specifically measures which promote the need for long-term, stable giving over short-term project-based philanthropy? I would welcome thoughts and comments on this from the community, but my first stab at it would include:


  • An extension of partial relief on VAT and corporation tax to businesses committing to long-term, structured giving to museums, libraries, archives falling within the HMRC definition of 'culture'
  • Tax relief for individuals and companies purchasing art and antiquities at auction in return for long-term covenants to make the works available for public display, research and enjoyment
  • Relief for private individuals on income, capital gains or even inheritance tax in return for long-term structured donations and bequests to cultural institutions
  • Preferential VAT and tax relief for culture-sector bodies, particularly on capital programmes and long-term investment in strategic collections programmes
  • Ring-fencing of bank or transation charges to provide strategic development funding for museums, archives and libraries
  • Providing credits or other support to people wishing to build skills through volunteering in museums, archives and libraries


Over the coming months, I would love to have a conversation about how our sector, perhaps working with Arts & Business and the NMDC, might put together proposals for a workable structure of tax benefits and reliefs with a specific emphasis on promoting long-term structured investment over short-term programme-based philanthropy.

Investing in culture is the same as investing in roads, railways, schools and universities. It is one of the pillars of a stable, tolerant and productive economy. Not only this, but safeguarding the billions of pounds of sunk investment in culture requires a far smaller investment than, say, the costs of rolling out superfast Broadband across the country.

The specific challenge for our advocacy at this point is to ensure that philanthropy provides not just investment and relationships, but the right kind of money - specifically money which promotes the long-term interests of collections and access rather than forcing us to divert scarce resources to shore up short-term outputs at the expense of the long-term viability of the nation's vital heritage.

If Mr Osborne wants Britain to earn its way in the world, he could do a lot worse than giving British businesses a competitive edge by supporting culture as one of Britain's most famous global exports.



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