Bethany Clarke / Getty Images file

'Draped Seated Woman' by Henry Moore was sold to one of London's borough councils at a knock-down price in 1962 on the understanding it would be displayed in the area, which was notorious for its social deprivation and which had also been heavily bombed during the Second World War. It is currently displayed at a sculpture park in Yorkshire.

LONDON — A debt-stricken district of London is to sell a sculpture gifted to the local area by celebrated artist Henry Moore, prompting fierce criticism and raising questions over the future of other publicly owned artworks amid austerity cuts.

The mayor of Tower Hamlets — one of the poorest areas of Britain — decided late Wednesday to sell the 8-foot Henry Moore bronze statue "Draped Seated Woman" as the borough council tries to cut a deficit of $144 million.

It is thought the sale of the sculpture could raise up to $32 million for the council. Independent mayor Lutfur Rahman over-ruled the concerns of a committee of politicians to order the artwork be auctioned to the highest bidder.

Ian Leith, founder and deputy chairman of the Public Monuments and Sculpture Association, told the U.K.’s Guardian that the high-profile decision means other towns and cities might now be tempted to see artworks simply as financial assets.

"We fear that this is the beginning of local authorities wanting to realize the assets they have in their public sculptures," he told the newspaper. "But the danger is that we won't find out about these sales: There is no national audit of public art in England and no at-risk list.”

In the United States, at least four cities have declared bankruptcy as they struggle to make budget cuts.

Read more coverage of this story at ITV News

Among those criticizing the London decision was Danny Boyle, the "Slumdog Millionaire" film director and choreographer of the London 2012 Olympic opening ceremony, who is also a resident in the east London borough.

Boyle told the Daily Telegraph: "The Moore sculpture defies all prejudice in people's minds about one of London's poorest boroughs. That alone makes it priceless to every resident."

Moore, who died in 1986, sold his sculpture to the council in 1962 at a knock-down price on the understanding it would be displayed in the local area, which was notorious for its social deprivation and which had also been heavily bombed during the Second World War. It sat in a public housing project in Stepney Green until 1997 when the project was demolished and it was loaned to a sculpture park in Yorkshire.

'Not insurable'
Heather Bonfield, the council’s interim head of culture, told a meeting on Wednesday night that displaying the sculpture in public parks in the area was no longer feasible because of the risk of vandalism and metal theft, making it "not insurable", according to a report in The Wharf local newspaper.

Tower Hamlets councilor Shahed Ali told ITV News the cash raised would be used for "services for local people, services that will make as big difference to our local residents."

"We have youth population that is the largest in Europe and the money will help address those needs," he said.

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Tower Hamlets was one of the six boroughs adjacent to the Olympic Park, which transformed a derelict former industrial wasteland in east London into the epicenter of the 2012 Summer Games.

Sharon Ament, director of the Museum of London Docklands which is in the borough, proposed a plan to host the statue – but her offer was rejected.

"We are hugely disappointed," she told ITV News. "Just because we’re going through really tough times financially, it doesn’t mean to say that the cultural, artistic and spiritual needs of the population shouldn’t be met."

Local member of parliament, Rushanara Ali, told the East London Advertiser: "The sculpture belongs to the people of the East End and should remain in public ownership and be available for everyone to enjoy as Henry Moore intended it.

"This is a betrayal of the East End’s working class heritage. The sale will only make a small contribution to the council’s budget."

In Sunday’s Observer newspaper, commentator and local resident Rowan Moore wrote: "'Draped Seated Woman' fulfills an ideal that nothing was too good for ordinary people, an ideal that modern local politicians are in danger of losing. To sell the sculpture as if it were a piece of real estate would … betray Moore’s generosity. It would raise the question why anyone should ever want to offer anything to a local authority again."

Local journalist and blogger Ted Jeory told NBC News the decision to sell the statue in order to keep funding for current local projects was a "vote-buying program" by Mayor Rahman, who is up for re-election in 18 months. "This is not about government cuts, it’s about his love of power," he said.

ITV News is the U.K. partner of NBC News.

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