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“We have to take desperate measures,” said accounting officer Christopher Jones. “Our salary bill alone is £29m a year and we have to make savings to make up a £5m deficit.”

The crisis is set to deepen as the Government plans to impose a Capital Charge or land tax on museums, starting in 2004. The BM site is estimated to be worth £344m and it faces a tax bill of more than £20.5m per year.

Plunging visitor numbers are largely to blame for the BM’s difficulties – foreign tourists, who form two thirds of the visitors, stayed away in the wake of Foot and Mouth and the September 11 bombing. But officials also accuse the government (which contributes almost £35m towards the annual £45m running costs) of lack of support – the BM was denied up to £8m compensation for scrapping visitor charges, and was awarded VAT exemption just after it had paid VAT on the £100m great court development.

Museum Trustees are now considering a package of savings which include selling off the BM repositories in Hackney, as well as a 12-storey store in New Oxford Street that was intended to be converted into a textile museum and shops.
The problem is not limited to the BM. David Barrie, director of the National Art Collections Fund, says museums have seen an average drop of 15 per cent in government funding since Labour came to power.

In return, the Treasury has estimated that museums across Britain could save £80m a year in storage costs and raise £670m in funds by selling off 20 per cent of specimens not on display.

For the BM, which has 50,000 objects on display and a further eight million in storage, this could mean releasing up to 160,000 items.