The Impact of Political Shifts on the Art Market: Navigating the Labour Government's Policies

The recent landslide victory of the Labour Party in the UK's 2024 General Election marks a significant political shift after 14 years of Conservative rule. With Keir Starmer at the helm, this change brings new policies and priorities that will undoubtedly impact various sectors, including the art market. I wanted to explore the potential effects of Labour's policies on the art market and how stakeholders can navigate these changes.

One of the most immediate concerns for the art market under the new Labour government is the party's stance on taxation. Labour has indicated plans to address a ￡20 billion gap in public finances by increasing taxes on wealthy individuals, which could include rises in capital gains and inheritance taxes.

Additionally, Labour has pledged to end the non-domicile tax regime, which previously allowed wealthy UK residents to avoid taxes on international income. This policy shift has already prompted some high-net-worth individuals to consider relocating, potentially impacting the art market, which relies heavily on affluent collectors.

According to the Global Wealth Report, the UK has the fourth largest population of millionaires globally. However, due to taxation fears, 9,500 millionaires are expected to leave the UK this year. This could challenge in-person events for high-net-worth individuals (HNWIs) and collectors, affecting major art fairs and auctions which rely heavily on their patronage.

Despite concerns about taxation, Labour's commitment to supporting the arts and cultural sector is evident. Keir Starmer has emphasized the economic contribution of the creative industries, which are worth ￡125 billion to the UK economy. Labour's "access to the arts" plan aims to make the arts more accessible to young people from diverse backgrounds, addressing the current imbalance where a significant proportion of cultural stars come from private education.

Labour has also signalled its intent to review and possibly increase funding for cultural institutions and art schools, which have faced significant cuts in recent years. This could provide much-needed support for the sector, fostering the growth of artistic talent and ensuring the sustainability of cultural institutions.

Labour's approach to regulation and administration could also impact the art market. The British Art Market Federation (BAMF) is optimistic about the new government's potential to ease administrative burdens, particularly regarding the import and export of artworks. Simplifying procedures and reducing paperwork could enhance the UK's position as a global art hub, making it easier for galleries and dealers to operate.

Labour's policies also emphasize the role of public arts in community engagement and education. The party plans to integrate arts education into the national curriculum and support regional museums and galleries facing financial difficulties. This approach aligns with Labour's broader mission to "level up" opportunities across the country, ensuring that cultural benefits are not confined to London and other major cities.

While Labour's policies present several opportunities for the art market, there are also challenges to consider. The potential increase in taxes on wealthy individuals could reduce disposable income for art purchases, impacting sales in the high-end market. However, the focus on accessibility and support for the arts could foster a more inclusive and vibrant cultural ecosystem, benefiting artists, galleries, and the public.

Since the UK voted to leave the EU in 2016, logistical costs such as shipping have increased significantly, while smaller galleries have been overburdened with extra paperwork. Labour's support for the art market could potentially address these issues. Earlier this year, the Conservative party considered waiving value-added tax (VAT) on some imported artworks. Keir Starmer's support for the arts suggests that Labour might also look into alleviating logistical and financial burdens on galleries and collectors.

Labour's work policies could present significant challenges for gallery owners and directors. Stricter employment laws, while well-intentioned, may have the unintended consequence of reducing employment opportunities within the arts sector. For example, the recent layoff of 38 invigilators at White Cube in London, most of whom were artists and students, highlights the precarious nature of employment in this field. Stricter employment laws, while noble in intent, could stifle the very sector they aim to protect, curtailing opportunities and forcing layoffs in an already fragile ecosystem.

Labour's vision seeks to democratize art, making it accessible to every corner of the nation. This is not just about shifting the tax brackets or simplifying paperwork; it is about transforming the very essence of cultural engagement.

Yet, we must tread carefully. The shadow of increased taxation looms large, threatening to cast a pall over high-end art sales and the affluent collectors who fuel them.