Impact of Covid-19 on DCMS sectors

Submission from Collections Trust re: a proposal for temporary protection of collections at risk when museums become insolvent

15 June 2020

About Collections Trust

Collections Trust is a charity that develops and promotes best practice in museum collections management. It is best known for Spectrum: the UK Museum Collections Management Standard, followed by all Accredited museums in the country and widely used abroad. Collections Trust is grant-funded within the Arts Council England (ACE) national portfolio as the sector support organisation for collections management and works closely with ACE and other leading museum bodies. Website: collectionstrust.org.uk.

Collections at risk when museums become insolvent

No-one yet knows how many museums will go to the wall due to Covid-19. ACE, its counterparts in the other home nations, and funding bodies such as the National Lottery Heritage Fund, are making considerable emergency funding available; while the Association of Independent Museums and others have stepped up their training and advice to help trustees and managers navigate the financial crisis that has been well documented in other submissions to the committee. Despite all best efforts, it seems inevitable that some – many? – museums will close for good. Even if they survive the current lockdown, it feels unlikely that visitor numbers – and, therefore, income – will rebuild to previous levels any time soon. With depleted reserves, lower revenues and reduced capacity, museums fear a long aftermath of closures over coming months and years.

In normal times, the museum sector has an effective framework of codes, guidance and protocols to respond to collections at risk for various reasons. Building on its Code of Ethics, the Museums Association has developed a Disposals Toolkit and associated guidance.[1] Together with ACE, it has also commissioned research into the legal and ethical issues around museums facing closure.[2] ACE convenes a UK-wide stakeholder group of funding bodies and sector organisations, committed to working together to provide guidance to museums whose collections are at risk.[3] An agreed protocol helps this group decide which organisations need to get involved in certain scenarios, and this coordinated approach has proved successful in the past.

However, previous cases have been isolated instances, usually with plenty of prior warning that the museum was heading into danger. A quick succession of sudden closures, at a time when the capacity of sector bodies to respond is already stretched, would soon overwhelm the current ‘collections at risk’ response model.

The collections of independent museums that are, typically, both companies and charities are especially at risk if the company goes into administration. This was vividly illustrated in the case of the Wedgwood collection. The key point, considered by the High Court in 2012, was whether the collection was the Wedgwood Museum’s beneficial property and so available to be sold to meet insolvency costs (including the pension debt), or whether it was held on special charitable trusts and as such unavailable for distribution upon insolvency. The court decided that no special charitable trust had been declared over the collection so it was available to be sold to meet the museum’s debts: a decision the judge considered ‘a sad conclusion for those who are concerned to preserve a collection which is, as everyone recognises, part of our cultural heritage and of immense importance.’[4]

Unless it is established that the collections are held on special trust, therefore, they become available to the receiver, who must treat them as financial assets and realise their value on behalf of creditors. In recent cases, receivers have engaged with museum sector bodies and responded to representations, with the result that some items of heritage significance have been transferred to other museums and archives.[5] Such positive engagement, however, is entirely at the discretion of the receiver – and assumes both sides have the time and capacity to cooperate. With no clear special trust protection in most cases, there is a real danger the collections of museums that become insolvent over coming months will be dispersed, with many items sold through the inexorable logic of current insolvency law.

How government might help in the short term

We ask the government to consider a swift temporary change in legislation so that, if an Accredited museum were to become insolvent, its accessioned collections could not be liquidated as financial assets for, say, a year. This would allow time for museum sector stakeholders to respond in the way they would in normal times, seeking to work with administrators and creditors in order to transfer, where possible, items of particular significance to other museums or archives, and thus retain them for public benefit.

Although the circumstances are different, current provisions allowing a temporary ban on the export of certain cultural items provide a useful precedent. There, as with our proposal, the intention is not to block the workings of the commercial market, but to provide breathing space so that the museum sector has an opportunity to respond in the public interest.

  • The proposed change would only apply to museums Accredited under the scheme administered by Arts Council England, Museums and Galleries Scotland, the Welsh Government and Northern Ireland Museums Council. The Accreditation scheme sets out nationally-agreed standards of good practice and is the benchmark of a bona fide museum run for public benefit.[6]
  • The proposed change would only apply to those items that had been added to a museum’s collection through the process of accessioning: the formal commitment of the museum’s governing body to look after the items for the public benefit over the long-term. The ethical framework by which museums operate is built around the principle that accessioned collections are cultural assets rather than financial ones; as – surely – is the trust that leads people to donate items to museums.
  • The proposed change would require administrators to give access to the physical items and all documentation about them to appropriate response teams convened by the sector lead bodies in each home nation under the existing ‘collections at risk’ protocol. These teams would be empowered to take measures needed to ensure the physical safety of protected collections and to investigate their cultural significance.
  • The proposed change would be for a fixed number of years – perhaps two or three – until the danger of multiple museum failures due to the Covid-19 pandemic had passed.

We note that a potential opportunity to effect the proposed change may exist through the government’s Corporate Insolvency and Governance Bill currently in progress. If enacted, this would enable eligible companies to obtain a moratorium giving various bits of protection from creditors and breathing space while they attempt a rescue. The initial moratorium is 20 days, though further extensions can be sought. The moratorium principle set out in the bill is welcome and we ask that further thought be given to extending it to protect the accessioned collections of Accredited museums as we suggest in this submission.

How government might help in the longer term

One widespread problem facing any administrator dealing with a museum collection is neatly summarised by the Law Commission:

Museums face significant problems dealing with objects where acquisition records are hard to come by and as a result it is impossible to know whether the item was gifted outright or loaned to the museum, or even to identify or locate the donor. This is because they were often obtained from a time when record keeping did not meet modern standards.[7]

We note that the Law Commission hopes to investigate this issue during its current programme, but that the project will start ‘as and when resources allow.’

The Law Commission wants to provide:

a clear legal framework setting out how objects are held and can be dealt with by museums. Such rules would help to reassure donors as to what can and cannot be done with their donations.[8]

We understand from officials that the project has not previously been regarded as a priority by DCMS. In view of the fact that proving title to the collections of insolvent museums is about to become very pressing indeed, we ask that the Law Commission be supported to fast-track this investigation, which could usefully consider too the tension between insolvency law and the principle of accessioned collections held for public benefit.

[1] www.museumsassociation.org/ethics/code-of-ethics

[2] https://www.museumsassociation.org/download?id=1223556

[3] https://www.artscouncil.org.uk/working-together-protect-museums-and-collections-risk

[4] HHJ Purle QC sitting as a Judge of the High Court

[5] Indeed, Wedgwood remains a good example of a collection ultimately ‘saved for the nation’ through a fundraising campaign

[6] https://www.artscouncil.org.uk/supporting-arts-museums-and-libraries/uk-museum-accreditation-scheme

[7] https://www.lawcom.gov.uk/project/museum-collections/

[8] Ibid