UK Govt urged to use temporary powers

Geraldine Kendall Adams, Government urged to use temporary powers to protect collections at risk, Museums Association, 8 July 2020

Sector bodies say swift action is needed to ensure the sale of assets can be delayed.

The UK Government is being urged to use temporary legal powers created last month to protect the collections of any independent museums that go into administration during the Covid-19 crisis.

Although this week’s funding announcement offered a lifeline to the museum sector, many institutions remain at risk of insolvency. There is concern that if a number go into administration at the same time, the cultural heritage sector will have limited capacity to intervene and save collections from being broken up and sold off.

The Museums Association (MA), Collections Trust (CT) and Association of Independent Museums (AIM) are asking the government to use new powers created in the Corporate Insolvency and Governance Act 2020, which became law on 25 June and is applicable UK-wide, to delay the sale of assets from insolvent museums in order to give sector bodies time to intervene to protect those collections, as they would in normal times.

The sector bodies have previously informed parliament about the risk to collections held by independent museums.

In a submission to the parliamentary enquiry on the impact of Covid-19 on culture sector in May, the MA wrote: “We expect some independent museums to become insolvent due to the crisis, leading to permanent closure, significant down-sizing or long and expensive efforts to re-establish organisations from zero. Closure may result in the sale of museum collections and the loss of collections hitherto held in public trust.”

The Collections Trust told the enquiry that when a museum that is a company – even a charitable one – goes into administration, the receiver must usually treat its collections as financial assets and realise their value on behalf of creditors.

In the third reading of the corporate insolvency bill last month, members of the House of Lords acknowledged these concerns. Lib Dem member Elizabeth Barker recognised that “a large part of Britain’s cultural heritage may suddenly come up in a fire sale”.

The deputy leader of the House of Lords, Frederick Howe, said the government was “actively looking for ways” to address the issue. He said: “This is active work in progress and we fully recognise the concerns that have been raised about museum collections.”

The Corporate Insolvency and Governance Act brings in a temporary relaxation of some insolvency laws to provide companies with breathing space during lockdown, as well as new restructuring tools to help companies to restructure and avoid insolvency.

It allows the secretary of state for business to bring in further regulations via statutory instrument, which could offer temporary protection to collections at risk by delaying sales. The museum stakeholders have asked the government to take urgent action on this.

They said: “Collections Trust, AIM and the MA urge the government to move swiftly on this specific point in anticipation of possible insolvencies in the coming weeks, while redoubling its efforts to minimise the number of museum closures due to Covid-19.”

The MA’s policy manager, Alistair Brown, said: “We are fighting hard to ensure that museums survive the current crisis – and this week’s funding announcement will be a big help to many in the sector.

“But we also have to consider worst-case scenarios and look at how we can protect museum collections in the long term. That’s why we’re working with other sector bodies to persuade the government to use new, temporary powers to delay the sale of assets from insolvent cultural organisations.”