Clause 2.—(ENTERTAINMENTS DUTY.)

HC Deb 05 June 1951 vol 488 cc907-67

The Chairman

The first three Amendments in page 2, to lines 25, 26 and 30, are out of order. In regard to the last Amendment, in page 2, line 35, at the end, to add a new subsection, I have advised the hon. and gallant Member for North Fylde (Captain Stanley) that it would be more appropriate as a new Clause. I have received a manuscript Amendment, which I propose to call. Mr. Charles Williams.

Mr. Charles Williams (Torquay)

I beg to move, as a manuscript Amendment, in page 2, line 33, to leave out "August," and to substitute "October."

I thank you, Major Milner, for calling this manuscript Amendment. I regret that it was not on the Order Paper. Through certain circumstances, I thought it advisable that we should have a discussion here on the comparatively narrow point as to whether August or October was the right time to begin this form of duty. I have a very strong case for thinking that October would be by far the better time. I feel that the Treasury may not have been into the matter and may not have had any conferences, although I hope that on these matters the Chancellor himself may be holding personal conferences.

I represent a great seaside resort. From the point of view of seaside resorts it is obvious that a great change of this kind in the middle of the holiday season must be very difficult and very bad. For that reason I would prefer the change to occur in October. This affects not only Torbay but a vast number of other areas including Falmouth, Scarborough, and particularly Scotland. I put the date rather later than I might otherwise have done, because I considered places in the North country as well. This will include some seaside resorts not so very far from your own constituency, Major Milner. I felt bound to represent them in this Committee because, after all, I represent the most important of all the seaside places. [HON. MEMBERS: "Oh."] I am glad to find that is so widely admitted.

There is another point which ought to be considered. We should also have regard to the winter seasons for cinemas and other entertainments of that kind. I know that we have to choose some date, but I should have thought that from the point of view of programmes of that sort October would be a far better time for this than August. [Interruption.] I am doing something for hon. Members opposite. If I can get this extension they can go back to their industrial areas and say, "Thank goodness! We have been able to get this extension through the hon. Member for Torquay." I should imagine that they will support me on this occasion. It is very rare that I appear to have such wholehearted support from hon. Members opposite.

I put down the Amendment because I consider the August date to be a thoroughly bad one. It has never been explained why this should begin in August. I hope the Treasury will tell us why August has been chosen. Is there any reason for it, or has the Chancellor taken a blind dash at it and put in August because it has appeared in some other Bill? If it has appeared in another Bill, I realise that this hide-bound Government must always follow precedents especially if they are bad ones. We are entitled to know why the date was chosen. I hope the Government will tell us whether they have taken the least trouble to find out if this is the most inconvenient or the most convenient date for the change. I believe it to be one of the worst dates.

I see that the noble Lord the Member for Horsham (Earl Winterton) is taking an interest in this matter. He has much more knowledge about this subject than I have. Some of my hon. Friends have a much greater detailed knowledge of the cinema industry than I have, though not so much knowledge of its effect on the ordinary people of the country and particularly the poorer people. The Government have not made many concessions today, but I ask them to make this one because it will entitle them to claim that, at any rate, they have met one of the most reasonable Amendments ever proposed in the House of Commons.

Mr. Jay

I listened carefully to the hon. Member for Torquay (Mr. C. Williams), but he has not convinced me that there is any good case for postpon- ing this tax increase until October. The reason why we have included the date of August in the Bill is simply that it is the earliest date at which the tax can come into force after the passing of this Bill into law. If we were to postpone application for two months, we would lose £1¼ million of revenue, which is a not altogether trifling sum even in this Budget. Incidentally, there would be a loss of revenue to British film production owing to the working of the levy of which the hon. Gentleman knows.

I cannot think that the application of this duty—which is, after all, without going into the main issue, only an increase of 2d. on the admission prices—will have so severe an effect as to cause serious damage to the enjoyment which people will be having in the very agreeable and thriving constituency of the hon. Gentleman.

Lieut.-Commander Braithwaite

There is one administrative point on which I would like elucidation. The Financial Secretary has just told the Committee that 5th August was the first convenient date or the first possible date when this could come into operation.

Mr. Glenvil Hall (Colne Valley)

Following the passing of the Bill.

Lieut.-Commander Braithwaite

I am glad to be reinforced by the right hon. Gentleman the late Financial Secretary, whose absence from the Treasury Bench we deplore on this occasion. Why choose the Sunday which falls in the middle of Bank Holiday week-end as the moment for this to come into operation? Surely it will cause difficulty, not only in the constituency of my hon. Friend the Member for Torquay (Mr. C. Williams) important as that is, but in any seaside or holiday resort where the visitors on the Saturday pay one price at the box office and find themselves on the Sunday which falls right in the middle of the holiday week-end suddenly confronted with this increased charge. Will it not also be difficult—does the hon. Gentleman the Member for Leicester, North-West (Mr. Janner), wish to intervene?

Mr. Janner (Leicester, North-West)

I would only point out to the hon. and gallant Gentleman that if they go on the Saturday, they are not likely to go on the Sunday as well.

Lieut.-Commander Braithwaite

That is indeed a poor tribute to the increased standard of living of the workers so often rejoiced in by the benches opposite. However, as the hon. Gentleman is quite a recent convert from Liberalism, he has evidently not been adequately briefed on this occasion. Is it not the case that this is a rather inconvenient administrative arrangement, not only for those who go to see the films, but also for the box offices and for the staff of the cinemas, not only in this area but in many others? Whatever the merits of October may be, and despite the fact that, as the hon. Gentleman has told us, he would sacrifice £1¼ million if he waited for another three months, why has the Sabbath Day been chosen for this particular profanation?

Mr. O'Brien (Nottingham, North-West)

Would it not be better, Major Milner, for the Committee to be advised that this point should be considered on the Third Reading? It is not for us to bury the body before the body is a corpse.

Mr. C. Williams

May I ask the Financial Secretary a question? He said that the postponement would involve a sacrifice of revenue, but I ask him to look at the matter from this point of view. He is introducing the increase in the middle of the August Bank Holiday. Would he be prepared to make a slight concession and to defer it until, say, September?

8.30 p.m.

Mr. Howard Johnson (Brighton, Kemptown)

I support my hon. Friend the Member for Torquay (Mr. C. Williams) in his plea for the postponement of the increase in the tax until October. The Financial Secretary to the Treasury referred to Torquay as being a very thriving and prosperous holiday resort, but it is important to remember that all holiday resorts today are not so thriving and prosperous.

I therefore make a very short appeal to the Government. With one stroke they could do two things. They could, even in a country where the cost of living is ever rising, let the workers have an August holiday without having to pay an increased admission price to cinemas. By the same stroke they could help the holiday industry by keeping cinema prices at their present high level, without making that level even worse than it is, until the end of the holiday season. The postponement of the date from August until October would therefore, at one stroke, have two very beneficial effects, and I ask the Government to agree to do at least that.

Colonel Crosthwaite-Eyre (New Forest)

I should not have spoken unless the Financial Secretary himself had brought the question of cinemas into the Amendment. The hon. Gentleman will realise that under the existing Eady plan the Government gave an undertaking for a year, to end in September of this year, about prices. They have broken that promise in the Budget. I should have thought it would have been a very generous and, indeed, an equitable thing to have accepted the Amendment, so that no matter what might be the result of our later discussions, at least they should not start with a challenge of bad faith to the Government for having broken a promise.

I remind the Financial Secretary particularly about the promise he gave on the cheaper seats. He said that there would be no increase of tax on seats of 6d.; that was an integral and vital part of the Eady Plan. Under the Budget, however, he has levied a penny tax. If he were to make a postponement until October, we should in a short time be able to argue all the merits of whether the tax is right and so on, and at least the Financial Secretary would not stand charged, as he does now, with having broken an undertaking which the Treasury had given. For those reasons, if for no other, I hope that the hon. Gentleman will accept the Amendment in order to show that the Treasury enter into their agreements in good faith and not in bad faith.

Mr. R. S. Hudson (Southport)

I hope that the Financial Secretary will find it possible to deal with the argument which has been adduced from this side, because I gather that one, at any rate, of the causes for a certain amount of ill feeling in the cinema industry is their belief that when the four associations agreed to the Eady Plan, although the Government were not a party to it they nevertheless embodied the change in legislation. Certainly the four associations who negotiated the Eady Plan were under the genuine and quite reasonable assumption that when the tax alteration was made, it should stand for the 12 months from September, 1950, to September, 1951.

I cannot say from personal knowledge whether that is well founded, but certainly we on this side have received representations on this point, although it is not a very large one. If the Financial Secretary could see his way to adopting the suggestion of the postponement until October, he would, I think, obviate one of the causes of irritation under which the cinema industry are quite genuinely labouring.

Mr. Jay

I am asked first why we selected the date of Sunday, 5th August. There is nothing sinister in that; we wish the tax to come into force on the first possible date after the Bill has become law, and if hon. Members look at their diaries they will see that 5th August, the Sunday of the Bank Holiday weekend, is that date. According to the best information at our disposal, that would be the first date after which the Bill would become law.

The hon. and gallant Member for the New Forest (Colonel Crosthwaite-Eyre) raised a new point—to the effect that the enforcement of the change in duty in August might be a breach of the pledge given a year ago—

Mr. Hudson

An understanding.

Mr. Jay

An understanding. I understood that the intention was that the Eady Plan should run for one year, and therefore it was naturally liable to revision in this Bill. If, however, it can be shown that any binding undertaking was given by the Government which would be broken by the enforcement of this increase on 5th August, certainly I will investigate that before the Report stage to see whether we should make any adjustment, as, clearly, if we gave a binding undertaking we must adhere to it.

Mr. Hudson

I am much obliged to the hon. Gentleman. He will see if he looks at HANSARD tomorrow that I was particularly careful to avoid saying that the Government had given a binding undertaking. What I said was that the Government were parties to the discussion which resulted in the Eady Plan and the four associations were left definitely under the impression, as the hon. Gentleman himself said, that this scheme would run for a year. It was brought in in September and clearly, on his own definition, it has not run for a year if it is brought to an end in August, at the end of 11 months. I feel that there is a point that needs looking into, and I think that the hon. Gentleman will realise that it is a pity to leave people with a sense of having been done down. This would not make a great deal of difference, but it would ease the way for further negotiations. I hope that it will be carried out.

Earl Winterton (Horsham)

I did not actually take part in the discussions on the Eady Plan, but I was very privy to them, if one may use such a clumsy term. Quite obviously, if a distinguished representative of the Treasury, acting on behalf of the Chancellor of the Exchequer, acts on a matter of this kind where a big question of taxation is concerned—and no official of the Treasury could act without the full cognisance of his chief—and if at that final meeting there was an understanding on both sides that the tax should run for a year, I submit through you, Major Milner, to the Committee, that that was binding on the Government, if there was an undertaking by both sides agreed to at that meeting.

I am glad that the hon. Gentleman has decided to look into it. I should like him to go so far as to say that he agrees with the construction I have put on the matter, that if there is discussion between a high official of the Treasury and an industry on a matter concerning a considerable sum of taxation and there is agreement at the end that a certain process shall run for a year, that is binding on the Government.

Mr C. Williams

I am not sure where we actually stand on this matter now, but I realise there has been a certain move towards my direction, thanks to the intervention of my hon. and gallant Friend the Member for the New Forest (Colonel Crosthwaite-Eyre). The Financial Secretary to the Treasury has said that the reason he cannot accept my Amendment is because this is the earliest date on which the taxation can be imposed. In other words, the whole question is how quickly can the burden be put on and not how convenient it is to the general public. The choice of the hon. Gentleman has been such that he thinks that the right day is the Sunday in the middle of the August Bank Holiday.

I have heard of Christmas presents and New Year presents and all sorts of other presents, but I have never heard of anyone like this Government, who say, and I hope it will be widely known, that the best way of celebrating Bank Holiday is deliberately to throw this burden on the poorest people of this country. That is an astonishing thing for a Government which is always using the word "labour." It is a shocking thing. I deliberately gave the Government a way of getting out of the situation. They could have accepted my Amendment of "September." It is obvious, since they have not done so, that they have chosen the date deliberately to inflict this burden at the worst possible time. But having made my position clear, and having shown up the Government, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. R. S. Hudson

We had, at the beginning of today's Sitting, a discussion with you, Major Milner, as to the way the debate was to be conducted. We realise that we cannot challenge your Ruling, but I hope you will not think it rude of me if for purposes of record I register our emphatic protest against a Ruling that no Amendment shall be called on this Clause, as was the case on the first Clause.

The Chairman

If I understand the right hon. Gentleman correctly, he is registering a protest against no Amendment being called. The reason, as I made clear, is that all three Amendments are clearly out of order. That being so, I have no alternative but to rule them out of order.

Mr. Hudson

I understood you to say earlier today, Major Milner, that what applied to Clause I applied to Clause 2.

The Chairman

In relation to the first Amendment only, which, like the first Amendment on Clause 1, is out of order, and for the same reasons. But equally the Amendments or the effective Amendment of the hon. and gallant Member for the New Forest (Colonel Crosthwaite-Eyre) is also out of order for other reasons. Further, I have suggested, and it has been agreed that the last Amendment, in the name of the hon. and gallant Member for North Fylde (Captain Stanley), should be put down as a new Clause. Accordingly, I hope that the right hon. Gentleman will not feel that I have taken any steps on this Clause which justify a protest.

Mr. Hudson

I did not appreciate that Major Milner. I thought that what you said about Clause I applied equally to Clause 2.

As we are now speaking on the Motion "That the Clause stand part of the Bill," the bulk of the observations which I have to offer to the Committee deal with the question of the application of the increased Entertainments Duty to the cinema industry. It will be admitted on all sides of the Committee that we are dealing here with an industry that is definitely sick. It has for many years past been the subject of a great deal of consideration by successive Governments, not only the Conservative Government before the war but also by the Government during the war and the Government since the war. Also, we have had the advantage quite recently of reading the recommendations of the Plant Committee. Equally, the Government, not very long ago, set up the National Film Finance Corporation to try to help to maintain the productive side of the industry; and we have had also the advantage of reading the recent report by the late chairman of the Film Finance Corporation, to which I shall refer later.

8.45 p.m.

Hitherto in this industry the main concern of the country has been with the British film producers. Now it is not only the film producers who evidently are in difficulties, but also the exhibitors, the distributors of films and the owners of cinemas up and down the country. In his Budget speech the Chancellor said that the tax on cinemas had not been increased for eight years. That may very well be true, but the difference, as I see it, between the cinema industry and other productive industries who superficially anyway during the last few years have benefited from inflation, is that the cinema industry after the temporary post-war boomlet, is now suffering increasingly and progressively from the pressure on the cinema-going public of the steadily rising cost of living.

I do not think that the Government will deny that, because they themselves have produced figures of tax receipts showing, for example, that in 1946 tax receipts were £41,430,000 and in successive years since then have steadily fallen until in the year ending March, 1951, receipts had dropped to £36,430,000—a drop over the five years of £5 million. Every million reduction in tax receipts involves a reduction in the gross box office takings of some £2,700,000.

As regards the effect on exhibitors, we have had before us and I imagine all hon. Members have a copy of it, a document giving a summary of a sample inquiry made, I gather, at the request of the Treasury, into the returns from five different groups of cinemas in the country whose takings range from £7,500 a year to over £20,000. So far as I know, the broad accuracy of those figures has not been challenged, and therefore I think we can legitimately draw a certain number of conclusions from their study.

If hon. Members will refer to the second and third classes they will find that although all the classes of cinemas have shown a steadily decreasing net taking figure, two of the classes have this year shown an actual loss. Hon. Members will also see that the sums allowed for depreciation in each of the years and in each of the groups of cinemas are obviously totally insufficient to keep their halls, their seats, their projection apparatus, lavatories, amenities, and so forth, up to the standard that the daily use of a cinema obviously requires. I do not wish to weary the Committee with figures but if we take the fifth group of 39 cinemas with gross takings of between £15,000 and £20,000 per year, we see that the amount allowed for depreciation in the whole group was only £6,975; which, if my arithmetic is correct, means an average figure on depreciation of £175 per year.

I do not think anyone can believe that a figure as small as that is really adequate to maintain cinemas at the standard, both of safety and of comfort that the public can legitimately demand, quite apart from providing adequate sums, for example, for the new Home Office requirement of complete rewiring over the next three years to comply with the revised safety regulations.

While gross and net takings have been steadily falling the admission prices of cinemas have been strictly controlled. I submit to the Government that, in this respect again, there is a substantial difference between the cinema industry and other industries which are subject to price control. In the majority of other industries, where it can be shown that there has been a substantial increase in costs of, say, distribution the Board of Trade or the Ministry of Food, as the case may be, after making the necessary costing investigations, have agreed, on the whole, to reasonable increases in prices and very often to reasonable increases in margins. Indeed, that is the basis of the innumerable orders which have been submitted to the House of Commons and which, occasionally, have been the subject of a certain amount of controversy recently between the two sides.

In the case of the cinema industry alone, that has never been so. This industry, which is very strictly price controlled as far as the cost of admission is concerned, is now faced with the new additional burden of helping to find for the Chancellor an additional £10 million a year. It is true that the Chancellor professes to forgo, for the benefit of the industry, a sum of ½d. per admission through an arrangement of the same kind as the so-called Eady plan of last year. The proceeds of that plan, however, were devoted not to the exhibitors but to the producers and the makers of British films.

Sir Michael Balcon, who is the well-known honorary adviser to the British Film Corporation, has gone on record as saying that the Eady plan will make a difference but will not close the gap between the costs of production and the proceeds of renting the films. The recently published Report of the Film Finance Corporation bears this out. In that Report there is a statement by the chairman to the effect that the Corporation have not succeeded in closing the gap, and that the money provided by the House of Commons is running out. I have no doubt that in the comparatively near future the Government will ask for further funds to keep the productive side of the industry in operation.

The Film Finance Corporation also say frankly that although they have sponsored a number of films which have proved successful, nevertheless the profits made by these successful films are not sufficient to make good the losses incurred by the unsuccessful films. Therefore, we are faced with an industry on which both sides—the producers and, for want of a better word, the distributors or exhibitors—are doing badly. Again I draw the contrast between this industry where both sides are doing badly, and other productive industries who have been making substantial profits even though those profits may have been in terms of the steadily depreciated pounds that we now enjoy.

I do not think that it is denied that the costs of this industry are steadily rising. I think that hon. Members have been given details of the increased costs of furniture, projection equipment, and so forth, and I need not bother further about that. They are also faced with increased demands for wages, and I am bound to say, from what I have been able to ascertain of the rates of wages, that they seem to me to be very understandable demands, which are made to enable the recipients of these wages to meet the steadily rising cost of living.

Therefore, we have this industry faced with these new demands, among them a demand by the Chancellor of the Exchequer for a substantial new contribution in the way of Entertainments Duty. In his Budget speech, the Chancellor said airily that it was usual for the trades concerned to criticise any taxes which they collected for the Exchequer. No doubt that is true, but the Chancellor very conveniently ignored—I am not blaming him, because I might even have been tempted myself if I had been in his place—the fact that a committee appointed by the late President of the Board of Trade had, after very careful and full investigation, reported as recently as November, 1949, that the Entertainments Duty at the then existing rates was too great a burden on the industry. If, at the then existing rates, it was too great a burden on the industry, how much truer will that be of the new duty at the higher rate?

If the Committee will allow me, I would like to quote one short extract from the Plant Committee's Report. They were referring to the Entertainments Duty, and, on page 28. in paragraph 66, they said this: As we have already indicated, we are satisfied from our study of the relation between the revenue and the operating costs of the cinematograph industry that the Government should now bring urgently under review the whole question of the burden of Entertainments Duty which the industry can sustain if it is to operate"— and these are valid words— in the future on the scale which the Government would wish to see maintained. It is not only the Government but both sides of this Committee which would wish to see it maintained. The Report goes on: Such a review should include a re-assessment, in close consultation with the trade, of the rates of duty to be levied on each price of admission. We are advised that discussions of Entertainments Duty with the trade have hitherto proceeded on the express understanding that the Government did not wish prices of admission to be increased except for very good reasons. That bears out what I said earlier that this was an industry subject to a special type of price control. On the other hand, costs have risen substantially throughout the industry. In our view, the financial situation of the industry requires that, in adjusting admission prices and rates of Entertainments Duty, any such understanding should henceforth give way to the over-riding consideration that in the national interest the industry urgently needs much more revenue. That was reported in November, 1949, and, I think, puts the dilemma in which we are all placed in a very fair, and, at the same time, very complete way.

I am not overlooking the need of the Chancellor to raise more revenue in order to meet the large re-armament expenditure. No one on this side of the Committee doubts the need for more revenue. Nor am I overlooking the desirability of syphoning off by taxation a large portion of additional money which is entering into circulation, or is liable to enter into circulation, during the next year or so, as a result of that re-armament expenditure by the Government. I think we all agree on that, but, on the other hand, we are faced with a situation in which the Government are to raise money by taxation for replenishing the funds of the Film Finance Corporation so that that Corporation can help an industry which, in the meantime, is being further weakened by the additional taxation which the Government are seeking to impose upon it. A situation like that does not seem to me to make sense.

9.0 p.m.

This is not a party matter, for all sides agree that the British film industry cannot, for reasons of public interest, be allowed to die. In these circumstances, there is surely an overwhelming case for a re-examination of the whole purpose and incidence of the Entertainments Duty. I have not said anything about the grievance which the industry feel at what they regard as unfair discrimination compared with other forms of entertainment, because I believe they have a perfectly sound case for a re-examination of the Entertainments Duty as it applies to the cinema industry on its merits.

In passing, it is well to remember that newspapers, for example, are proposing to raise their prices by 30 to 50 per cent. They are going to keep the proceeds, and are going to do so without permission. In the case of the football industry, I am told that there is a proposal, which they are looking forward to adopting, for increasing the admission from 1s. 3d. to 1s. 6d. Again, they are going to keep the proceeds, and, once again, they do not ask for permission. It is relevant to remember that out of that 1s. 6d., they only pay 1d. in tax, whereas the cinema, on an admission of 1s. 6d., pays no less than 8½d. in tax.

Finally, as I have said before, the cinema industry is subject to rigid price control, and, unlike many other industries, it has up to now been denied the right of automatic price review. As an Opposition, we have not, quite frankly, any detailed information which would enable us to put forward a viable alternative to the present Schedule in the Bill, and I venture to think that it is not the job of an Opposition to do so. But what we are perfectly convinced about is that, given good will on both sides, it should not prove impossible to reach an equitable settlement which would, at one and the same time, provide the Chancellor of the Exchequer with all, or nearly all, the additional revenue he wants and would relieve all sides of the industry from the fears they undoubtedly and quite genuinely entertain at present concerning the ill effects which, in their view, are bound to follow the present proposals as they stand.

Mr. O'Brien

The Committee is already aware of my special interest in the enter- tainment industry. I represent the impoverished side of that industry—the workers. My approach to this question is very simple and direct. It is that if there is any spare money floating around in the film industry, or particularly in the cinema industry that money should find its way into the pockets of the cinema workers, and not into the Treasury.

I very much appreciate the statement made by the right hon. Member for Southport (Mr. R. S. Hudson). As far as I can see, he has approached this matter on a non-party basis, and I find myself—knowing something of the subject—in general agreement with what he has said. First of all, I cannot understand, and the majority of trade unionists in the film and cinema industry cannot understand, why this tax was imposed at all.

I, like many others, appreciate the problems of the Chancellor of the Exchequer. We know something about his difficulties and in my membership of the General Council of the Trades Union Congress I understand more fully and appreciate in a wider capacity something of the nature of the burden he has to carry. I say that so that my right hon. Friend may not be tempted to believe I am approaching this particular question merely from a selfish or partisan motive.

The £10 million which it is proposed to raise by additional Entertainments Duty on cinemas tempts me to believe the Treasury must have approached the matter in the same clumsy way as it approached the imposition of the Dalton duties a few years ago. When the Dalton duties were imposed, they sounded the death knell of the film industries in this country. Up to that moment the industry as a whole was prospering and progressing. There was hardly a grievance from the producers, exhibitors and distributors, and certainly not from the trade union element on the production side of any section. From that day onwards things deteriorated, depressed and degenerated financially to such an extent that the British film production side of the industry is becoming an object of pity and ridicule throughout the world.

I attribute that to one thing only and that was the mistake in policy on the part of the Government at that time. I hope, therefore, that the Chancellor of the Exchequer, who is equipped not only with knowledge as a Chancellor but with an inside knowledge of the economic affairs of the British film industry will, with that twin knowledge, have regard to the particular position of the industry as it is today rather than merely saying bluntly, "I want to raise £10 million. I will plonk it on the cinemas and get it that way."

There is much loose talk about the so-called prosperity of the cinema industry. I hold the view that the exhibiting side of the industry is more able to meet its obligations with regard to taxation and in other ways than is the production side. I know that exhibitors are, on the whole, not by any means yet on the doorstep of Carey Street. What one must realise—and I am not here arguing the case for exhibitors but for the industry and, in particular, for the lower paid people in it—is that when one reads the balance sheets of the large and independent exhibitor circuits one is tempted to jump to the superficial conclusion that here is an Eldorado. I think my right hon. Friend and his Department may have fallen for that same bait.

If the exhibitors of this country were required to carry out the conditions imposed by local licensing authorities all over the country with regard to all kinds of rehabilitation measures to which since the war a blind eye has been cast, much of the profits shown on the balance sheets of the companies would be obliterated. One feels like having a bath when one comes out of some cinemas, largely due to the fact that no capital expenditure is permitted on re-equipment. If cinemas had to be re-equipped I do not know whether there would be any profit at all. I am speaking quite honestly and objectively in this matter and I approach it on a non-party basis.

When many of my hon. Friends talk about the treasures and the prosperity of the industry they do not realise that the money which was made during the war and the apparent partial prosperity of the cinemas since the war is not because the exhibitor has profiteered at the expense of the public; it is due entirely to increased takings, through tax. I do not want to detain the Committee at any great length, but let me give some facts. In 1939 the 1s. admission left the exhibitor with 10d. The 1s. 3d. admission left him with 1s. 0½d. The 1s. 6d. admission left him with 1s. 3d. The 1s. 9d. admission left him with 1s. 5d. The 2s. admission left him with 1s. 8d.

The position today—and I am using the figures briefly, and they are known to my right hon. Friend—are as follows. Out of the 1s. 3d. admission into the cinemas the exhibitor is left with 10½d. Threepence is charged to the public and a farthing is left to the exhibitor. Out of the 1s. 6d. admission today the exhibitor is left with 11½d. Out of the 1s. 10d. admission the exhibitor is left with 1s. 1d. Out of the 2s. 1d. admission the exhibitor is left with 1s. 2½d. I am not dealing with the allocation of the levy at all—that is, the half-penny which is floating around. Out of the 2s. 4d. admission charge the exhibitor is left with 1s. 5d. Out of the 2s. 10d. admission he is left with 1s. 8¼d. and out of the 3s. he is left with 1s. 9½d.

If we compare the net takings of the exhibitor in 1939 with the net takings per seat by the exhibitor today we shall see that there has been hardly a change in net prices of admission to the exhibitor in 11 years which have passed. Altogether, 98 per cent. of the increase in prices of admission to cinemas has gone to the Treasury. These are undisputable facts.

It is very difficult to get the layman to understand how it is that this 10 years of so-called prosperity came to the exhibitor. We all know about the war years, about the readjustment of population, about the millions of our troops and of our friends from America and other countries; all that went to create a demand for relaxation and leisure. We all know of the tributes which were paid by the right hon. Member for Woodford (Mr. Churchill) when he was Prime Minister, by our present Prime Minister, by leading members of both parties during the war and since, to the work done by the cinemas of this country in maintaining the morale of our troops and of our workers, especially our armaments workers.

The prosperity of the industry is largely due to that increased patronage, but in the event of some unforseen or unpredictable reaction on the part of the public to their habits of recreation, and in the event of the cinema-going public of this country decreasing—which can easily happen if good films are not shown to the public; in the event of the patronage falling to the standard of 1939, the film industry of this country would go bankrupt overnight—and that is a fact which I think my right hon. Friend should realise.

I make these statements because I know they are true. I have to listen to them every month in my capacity as a trade union leader trying to represent my own members in the industry. We are very alert against being led up the garden path. The exhibitors as an organised body in the industry are our mortal foes. We have a wage claim—a justifiable wage claim—before the cinemas industry.

We are asking for wage increases for our cinema technicians and our cinema staffs—the young ladies who are so kind and courteous to the workers and the public generally in serving them, in showing them to their seats, and in generally maintaining safety in the cinemas, and making our social life, especially the social life of the humbler workers, pleasant and kindly. It may interest the Committee to know that the average wage paid to the female labour force in the industry is less than £3 per week for a full-time week. The overall average wage—this is established by the Board of Trade's statistics—is less than £4 5s. per week for cinema workers. The average wage rate for 70 per cent. of cinema workers of all grades is less than £3 15s. per week.

9.15 p.m.

Therefore, there is a case. One may be asked, what has the union been doing? The union has been working hard. In the cinemas, as distinct from the production side and from the live theatre, there has been no trade union tradition at all—until about ten years ago. It was difficult to organise that industry. I personally have devoted 30 years of my life to that task, and I think I have done what I can to try to raise the standards of the lower placed employees in the cinemas and on the production side. Nevertheless, it is true that in ten years we had to do a great deal of work, including the war years with all their industrial problems—the absence of labour force and the difficulty of getting staffs, and so on. It is perfectly true we had to do in ten years what other unions have done in 60 or 70. With the absence of a trade union tradition in the industry that leeway could not be made up at all in ten years.

As a fair-minded and practical trade union leader, I have to say that the exhibitors are not fully responsible for the bad conditions which exist today. It is largely a joint responsibility. My hon. Friends on this side of the Committee who are trade unionists will understand what I say. The inability and unwillingness of cinema staffs 25 and 50 years ago to join a trade union to have their conditions improved and protected are partly responsible, with the exhibitors, for conditions as they now exist. However, that belongs to the past.

I look upon these average wage rates that I have quoted, and quoted with accuracy, and I find that the Government—a Labour Government whose interest in the workers is beyond question—in the administrative sense of Treasury economics, are embarked on a taxation policy for the cinema industry that has knocked the wages scheme of my organisation for six. I had the great pleasure of meeting the Financial Secretary the other day with representatives of my executive, and I had the greatest courtesy from him, and great understanding of the Treasury view point. I do not want to suggest for one moment that taxation policy can be wrapped up with a system of collective bargaining. It is the duty of each union to see that its workers conditions are protected. It is not necessarily the duty of the Treasury. On the other hand, I cannot divorce my mind from the principle that a Labour Chancellor of the Exchequer should have regard to the economic conditions in an industry on which he proposes additional taxation.

One last point with regard to the effects on the production side of the industry of this taxation. We welcome in the industry what has been termed the Eady plan. It is not in order, I understand, to refer to the Civil Service, but I do wish to show sympathy with and offer congratulation to Sir Wilfrid Eady for the patience he has shown. He has had to engage in the most difficult negotiations. We in the entertainment industry—in the film industry—are a house divided. Even on the trade union side of the industry we are a house divided, unfortunately. It is to his great accomplishment and patience that already he has been able to devise some kind of plan that has assisted the exhibitors' interests and, in the main, the production interests.

Negotiations, I understand, are continuing. I hope that whoever replies to this debate will give an indication that these negotiations are continuing, and that they will solve this very vexed problem of a deadlock between the Cinema Exhibitors' Association and my right hon. Friend's Department. I hope the Chancellor of the Exchequer will not misunderstand me because of what I am going to say next. Producers are having a very rough time at present, and it is partly true that the resources of the Film Finance Corporation are diminishing. Those of us who are also concerned with production are somewhat terrified at the immediate prospects. There is money coming from nowhere, and the only source we can look to at the moment is whatever the Eady plan may bring about in the future.

If my right hon. Friend imposes this tax it does not necessarily follow that the public are going to pay for it. It is stated somewhat erroneously that the public pay the tax, and while that generally may be true the man who is accustomed to pay 1s. 9d. will not necessarily pay 1s. 11d. in the future; in future, he may go to the 1s. 3d. seats. The family, which has been going to the 2s. 9d. seats, may make up their mind to go to the 1s. 10d. seats, and the overall effect of that is not only diminished takings to the cinema but diminished returns to the Treasury, which, in turn, will diminish the amount of the Eady pool and the amount which goes back to the producers, so that the last state will be worse than the first.

I end as I began. If there is any surplus money, if there is any money which can be earned over a certain reasonable expenditure, that money ought to find its way into the pockets of the lower paid workers of the industry whom the producers employ. My own organisation represents over 80 per cent. of the entire labour force in film production. We represent not distribution but the overwhelming mass of the workers in production. That overwhelming mass in production are also the lower paid workers, and if producers want to get more money from exhibitors—and many distinguished people have been talking about money going into the wrong pockets, a subject on which I shall have something to say in another place—then the producer should, first of all, see that more money goes into right pockets, and the right pockets are those of the employees that they employ. These exhibitors ought also to study in certain trade unions an inflationary wage system, which ought not to be encouraged.

I offer these comments in the hope that something can be done about the negotiations, which I understand are not entirely broken off. I hope I shall have the sympathy of the Committee for the suggestion that we as an organisation are right in trying to obtain proper wage scales in the cinema industry, and I hope my right hon. Friend will not forget that in his admitted difficulties.

The Deputy-Chairman

Mr. Jennings.

Mr. Ivor Owen Thomas (The Wrekin)

On a point of order. Is it possible at this stage for me to make a suggestion which might clarify the issue for subsequent participants in this discussion? It is that the Chancellor of the Exchequer might throw some light upon the present negotiations which, according to the statement just made by my hon. Friend the Member for Nottingham, North-West (Mr. O'Brien), are taking place in regard to the relationship between the Treasury and the industry.

The Deputy-Chairman

That is not a point of order.

Mr. Thomas

May I make that suggestion?

Mr. Jennings

I rise to support the position of the cinema exhibitor which I have followed pretty closely for some years. I appreciate the fair way in which the hon. Member for Nottingham, North-West (Mr. O'Brien), has put the case. He has been perfectly fair about the buildup over the last 10 years or more. This industry, from the exhibiting angle, has now reached saturation point. Any further increase in Entertainments Duty will have the effect of reducing considerably the working capacity of the exhibitors themselves.

For example, the costs of running a cinema today are out of all proportion to what they were some years ago. Seats which cost about £1 to replace a year or so ago now cost something like £5. The same is true in regard to replacing the strips of carpet which comply with local government conditions. The heavy burden of Entertainments Duty has added to the costs carried by the cinema exhibitor.

Some time ago the live show was given a concession. I believe that live shows are doing very well today, although I do not know for certain. They are doing much better than before they had the concession. A shilling seat in a cinema carries a duty of 3½d., while in a music hall the shilling seat is free. On the 1s. 9d. cinema seat the duty is 8d., as compared with 2d. in a music hall. The cinema exhibitor is grossly over-taxed, and discrimination has been unfairly shown against him in comparison with the live show. The position has been reversed, and now the cinematograph exhibitor has a case for sympathetic consideration from the Chancellor because of the ever-increasing costs he has to bear. It is accepted that cinema proceeds up and down the country have tended to fall during the last few months because of the increased Entertainments Duty.

The time has now arrived for the whole system of entertainments taxation to be gone into with the industry, to see if some better system can be found than the present one of so much offered to the Treasury and so much to the exhibitors. That system exercises an unfair control on the exhibitor which does not operate in other industries. I ask the Chancellor of the Exchequer to look into the position to find some other form of taxation which will operate on a fairer basis and allow the position to be seen more clearly. The exact position is apt to be fogged at present, and that is no good from the point of view of either the Treasury or the exhibitors; nor is it good from the point of view of the public who have to pay the Entertainments Duty.

The general opinion is that cinema exhibitors make large fortunes, but the amount of taxation taken from cinema profits is colossal compared with other industries. These profits bear the ordinary Profits Tax and Income Tax, and also the heavy Entertainments Duty, and the industry also has an ever-increasing burden in the amounts paid to the renters. I urge the Chancellor to pursue negotiations with the industry to see if a satisfactory settlement can be reached, and I trust he will bear in mind the considerations which have been put forward from both sides of the Committee.

Mr. McGovern (Glasgow, Shettleston)

I also urge that consideration be given to our exhibitors. I did not know until yesterday how poorly paid were the employees in this industry. We have already been given certain facts. Yesterday I met the managers of the cinemas in my area, and I also heard certain facts. It amazed me that in those cinemas men were being paid £4 2s. 9d., less insurance, for a 48-hour week and girls £2 13s. 3d., less insurance, for 44 hours.

9.30 p.m.

In one cinema a young woman responsible for taking over £1,000 a week in the box office was paid the "handsome" amount of £3 3s. 6d., less insurance, for a 48-hour week; and she was responsible for making up any money that might be short, something that frequently happens in box offices. The companies are very firm about demanding that such money shall be made up by employees. An operator beginning to serve his time is paid £1 14s. 6d. a week, less insurance, and has a 3s. increase every six months. That is a shocking situation compared with a large number of trades in which boys start at double that income.

The industry has had imposed upon it time and time again additional burdens in the shape of taxation. There is a limit to what the people can pay. I may appear to be here in the role of defending private enterprise, but if we recognise the right of an industry to be run by private enterprise, it is our job to see that the industry is able to fulfil its obligations to its employees and to provide decent, well equipped, clean and healthy houses of entertainment for those who visit them for an evening's or an afternoon's entertainment.

The cinema industry cannot be compared with a football match, a dog track or a speedway, to which perhaps only one member of a family may go. The cinema provides family entertainment. Three, four, or five members of a household may go to the cinema, and they all have to bear these additional burdens. Sometimes we get into the habit of saying, "It is only a few extra coppers." But let us remember that last month butter went up 6d., tea went up 4d., and milk will go up by a ½d. a pint at the end of this month. And these additions are being imposed all the time, whereas there is a limited income which can be drawn upon. One manager said that frequently he has to tell people who go to the box office that the 1s. seats are all occupied but that they can get in for 1s. 6d. He said that a year or two ago they would have paid the 1s. 6d., but now they go back into the queue because they have not the surplus cash.

I think the people in this industry are being exploited, because there is a greater amount of taxation upon it than is being imposed on almost any other form of entertainment. If it is an entertainment which people ought to be encouraged to enjoy, we should see that prices charged by the exhibitors are as low as possible. We must remember the over-crowding of homes due to the housing shortage, the dull, dilapidated types of houses in many parts, and that the only recreation of a large section of our people is an evening at the pictures. They have very little colour in life, and therefore they get out to see romance, the Mounties, the gangsters. They see every form of entertainment according to their taste, and we ought to ensure that they enjoy it as much as possible.

In passing, I have a confession to make. If I had any amount of spare time I would spend a great deal of it in the cinema, only I would choose my films. [An HON. MEMBER: "Romance?"] Yes, because I have had my days and my moments. Therefore, I say that we ought to make it as easy as possible for people to come out of themselves occasionally instead of imposing taxation that becomes almost penal. It is true, as has been said by the two previous speakers, that if the cinemas, many of which are in a bad condition, were to fulfil their obligations to re-cover seating, to put in new carpets and to clean up the buildings, many of them would be bankrupt. For instance, tapestry for re-covering seats has gone up by 430 per cent., and we all know the considerable increase that has taken place in the price of carpets.

We are keeping these cinemas in a bad state where most of our constituents spend a certain portion of their time, whereas it is our duty to provide opportunities for putting these places in a decent condition so that people can enjoy them comfortably. It appears, from figures and facts given to me, that there is too small an overhead given to the industry to improve the conditions of its employees. In some of the houses in working class areas, managers are paid £8 or £9 a week and under-managers £7. Nobody can say that these are exorbitant salaries, and the same can be said of every employee in the industry. We have an obligation, especially with a Labour Government in power, to see that the industry has the finances which enable it to pay decent salaries and to provide decent conditions for its employees and decent houses for the mass of people who patronise it.

I have been impressed by what I have read, what I have heard, and what I have seen, and I say that the increase in tax on the children's seats at the afternoon matinee is one of the worst of the whole lot. I appeal to the Chancellor, whilst knowing that he has to raise a considerable amount in taxation for re-armament purposes, to realise that each industry can bear a certain proportion of tax that is reasonable and for which it ought to be responsible. I think that the tax on the cinema industry is unreasonable and should not have been carried to the extent indicated by the Chancellor in his Budget, and I appeal for second thoughts in regard to his proposals.

Earl Winterton (Horsham)

I do not think anyone who has followed my long and humble political career would say that I am by nature effusive, certainly in the House of Commons, and I hope it will not be thought effusive on my part or patronising or impertinent if I say that in my very long experience of the Finance Bill debates in Committee I have never heard four more powerful speeches than those just delivered in asking for the reconsideration of a particular tax proposal. I think it would be very difficult for the Chancellor and the Financial Secretary not to promise to give some reconsideration to this matter. My only reason for rising is to put certain questions, because my right hon. Friend, in an admirable speech, has already deployed the case—hon. Members opposite may perhaps laugh at this, but it is not a party political matter, as is proved by the last two speeches—not only on the general question of the taxation but also on its moral aspect.

I do not think, as I have said, that the Government can fail to give this matter further consideration, but before I put my questions I want to say that the two speeches from hon. Members opposite to which we have just listened were very courageous and, probably, will not be popular with some of the hon. Members opposite. The two points which were made by both hon. Members are perfectly correct. Undoubtedly, the wages paid to people in the cinema industry are still unquestionably low. Although I have no right to pledge my colleagues who are engaged in the industry I think that if the industry was relieved of some of the burdens that the House and the Government have placed upon it, its first duty would be to improve conditions.

I took down certain words of the hon. Member for Nottingham, North-West (Mr. O'Brien), and should like to quote them. Hon. Members opposite will have difficulty in answering them. The hon. Member said that he was sorry to have to tell the Committee that the Government had embarked upon a course of taxation that had "hit wage claims for six." That is a very serious statement, coming as it does from an hon. Member who, although I may sometimes have quarrelled with him—not personally, but only because we were on opposite sides of the table—is very much respected as a trade union leader in what is, after all, a great industry.

With those preliminary remarks, I want to put my question. In discussing this cinema matter we ought to consider the genesis of the Eady plan. We have already had a short debate on one aspect of it on the last Amendment. What was the genesis of the Eady plan? A number of hon. Members in all parts of the House—including the hon. Member for Nottingham, North-West, and other hon. Members opposite, two or three hon. Members who were in the last Parliament, myself and others—from an entirely non-party point of view, again and again raised in debate the question of the taxation upon this industry. Both the hon. Member for Nottingham, North-West, and I spoke again and again on the subject in the last Parliament.

I think the hon. Member who knows the industry from A to Z will agree that as a result of these representations made outside and inside the House and the emphasis which we place on certain methods referred to by the hon. Member for Shettleston (Mr. McGovern) eventually the Eady plan was produced. In other words, it was our action inside and outside the House, the action of the industry and of those friendlily disposed towards it which was the genesis of the plan and, although the industry did not get all it wanted out of the plan, the hon. Member for Nottingham, North-West, will agree that there was an agreement to accept it at the time.

9.45 p.m.

The question I want to put most emphatically to the Government is: Why has it been upset now? I say it was inherent in that plan that it was to be allowed to run for a year: but it is only to be allowed to run for 11 months. I have never heard of a similar incident when there has been a perfectly proper agitation concerning an industry followed by negotiation—we could not find anyone more competent to represent the Treasury than Sir Wilfred Eady—and an announcement is made to the House and the industry that although it is not all we wanted the industry accepts the settlement and within a year the Chancellor has come here, and with the minimum of words, told us that the whole thing is to be upset. If the answer is, as I imagine can be the only answer, that the Treasury want more money, why do the Government continue this form of discrimination against certain forms of entertainment? Why is there discrimination against racing and the cinema, both of which trades have an export value? It is very difficult to build it up, but at long last the export of films is beginning to be successful. Why is there no raising of the tax on other forms of entertainment?

Everyone knows my connection with the industry and I do not want to appear to be unduly biased, but I think there is a good deal of British hypocrisy and humbug about the alleged immense cultural superiority of the live theatre over the cinema. Are we really to be told that a nearly nude revue, the "Folies Bergere,' has any great cultural value, or to go to listen to a brawdy Restoration or 17th Century comedy—one should not be shocked after 46 years in the House of Commons? In connection with a charity performance, I went to see "Love for Love" and I was profoundly shocked by it. There really is a great deal of nonsense talked about theatrical cultural values. There seems to me no reason for this vast discrimination.

Then there is the question of football matches. If we are to raise more money one would have thought that football might have made its contribution. We have always avoided any purely party argument on this matter, but would it be unfair to suggest that the Government, possibly in their selective attitude in regard to entertainments, are saying that one entertainment should be taxed out of existence and the other should be left alone from a political point of view as it would be unwise to offend people who attend football matches but would not matter about people who go racing? If so, the Government will be surprised at the memorial received this afternoon because, after all, 3 million people have some electoral effect. At any rate, there has not been an explanation.

There are only two other matters I wish to raise. My right hon. Friend put very definitely a question to which I hope we shall have an answer, as we have not yet had an answer. We did not get an answer in the Second Reading debate. The question is: Why have the Government repudiated and rejected the Plant Report recommendations? My right hon. Friend quoted a passage from it which was quite definite about the industry being overtaxed at that time. No one can deny that that was a very important Committee.

Another point, made by my right hon. Friend the Member for Southport has never been answered. I hope that it will be answered by the Financial Secretary, who, I understand, is to follow me. The Government agree, in principle, to give more money to the Film Finance Corporation to help the industry because they consider that the industry is in need of help, but meanwhile the Government wish to take more money out of the industry by taxation.

That is only illustrative—this is almost my last sentence; I am afraid it is political, but I cannot help making it—of the fantastic absurdity that arises in the whole life of this country when the Government interfere, as this Government do, with every aspect of national life. Directly the Government start that sort of interference, as they are doing by this selective Entertainments Duty, it is bound to pro- duce anomalies of that kind. I hope that we shall have an answer to the points which have been put, and that in view of the feeling on both sides of the Committee the Government will tell us that they will give further consideration to this matter between now and the Report stage.

Mr. Jay

It may be for the convenience of the Committee if I intervene now, because the Government have been asked to give some information about the state of the negotiations with the industry. We have had a rather constructive, and for a Finance Bill unusually non-partisan type of debate. Even the noble Lord, until almost his last sentence, rose to the level which had been set by other speakers.

Earl Winterton

That sounds rather like one of those Wykehamist compliments.

Mr. Jay

It is intended as a compliment. I think there is agreement on two points. The first is that we all wish to see a prosperous and successful British film industry. The second is that it is not unreasonable that entertainment, among other things, should make some contribution to the cost of defence this year.

The right hon. Gentleman the Member for Southport (Mr. R. S. Hudson) quoted the Plant Report, which recommended concessions in Entertainments Duty on films, and the noble Lord asked why the Government had not carried out the recommendations of the Plant Report. My first reply to that is that I understand the industry itself, though no doubt in favour of that part of the Plant Report which involved a reduction in tax, nevertheless was not so willing to accept other sections of that Report. The second is that the Report was published in November, 1949, which was some time before we embarked on the present re-armament programme. That naturally alters the circumstances of the case.

I thought that the speeches of both right hon. Gentlemen opposite neglected what is surely the basic fact in the whole of this controversy. I do not think that either the noble Lord or my hon. Friend the Member for Nottingham, North-West (Mr. O'Brien), who are both much greater experts on the cinema industry than I am, would deny the fact that the main trouble in the British cinema industry—not the sole trouble but the main one—is in the producing rather than in the exhibiting side. A mere reduction in Entertainments Duty would therefore make very little contribution towards solving that main difficulty.

It is the case that if there were such a reduction of duty only about one-tenth of what the Exchequer would relinquish—I do not think that this is disputed—would go to the British film producers. The great majority of it would go to the exhibiting side of the industry, including, of course, a number of American companies. Therefore our policy has been, and still is, to try to make an arrangement with the industry as part of an agreement over the rates of tax and the prices for seats by which a reasonable sum of money, originally derived from those who go to the cinema, should be set aside for British film production.

The first effort in that direction was what is known as the Eady plan which was referred to today. Roughly speaking by that plan, which was associated with last year's Budget, seats of 1s. 9d. and upwards were raised in price by 1d., which worked out at an average of about ½d. increase in seats overall. The Exchequer made a contribution of £300,000, and as a result of this about £1¼ was available for the producers and a further £1¼ for the exhibitors.

The noble Lord asked why the Eady plan had been abandoned. It would be quite misleading to say that the Eady plan has been abandoned. That arrangement and that levy are continuing. What we are proposing this year is, in effect, to superimpose on the first edition of the Eady plan a further edition very much on the same general lines. Our proposal in the Budget was, as the Committee will remember, that seats below 6d. should not go up in price at all; that from 6d. to 9d. they should go up by 1d.; from 10d. to 2s. 10d. by 2d. and above that by rather more. Altogether that would have yielded £10 million to the Exchequer in a full year, of which we proposed to forego about £2½ million, or ½d. per admission ticket, which would have represented £2½ million. Most of that under the Budget plan was to have gone to the British film producing industry.

After the Budget, counter proposals were put forward by the industry in negotiating with the Treasury. We found those proposals to be quite unacceptable, mainly because too much in our view would have gone to the exhibiting side of the industry and much too little to the Exchequer to meet our needs in the present budgetary situation. That plan also would have involved an increase of 3d. in the price of the main seats. Indeed, I may say that all the proposals submitted to us by the industry, both before and after the Budget, have involved increases in the price of seats. I am not quite sure whether that was realised by those members of the public who signed the memorials and so on to which the noble Lord referred.

10.0 p.m.

Since that seemed to us unacceptable, we have made a counter proposal roughly on the basis that seats up to 1s. remain at the pre-Budget price—that is to say they do not go up at all—but that the more highly priced seats go up by rather more than was originally proposed.

That was the main basis of our proposal. It has a number of advantages to all concerned. First, it safeguards the reasonable revenue which we feel we must have from this duty this year. Second, it keeps down even further than our original proposal the price of the lower priced seats. That should be a special benefit to the children and, indeed, to the old age pensioners. It should also benefit the country cinemas, many of which are small cinemas and have already benefited from the special exemption given to cinemas in rural areas in the Budget two years ago.

I can also assure the House that under these proposals, the children's matinees would remain exempt from any increase in price. As the question of small cinemas is relevant, I should also like to recall that there was an exemption from the levy under the original Eady plan for all cinemas taking less than £125 a week, which again was a further advantage to the small cinemas. Finally, I can give an assurance on this point that we will, in any case, in the course of the Bill amend the Schedule so as to exempt the 6d. seats and possibly the 7d. seats from the 1d. rise.

Mr. Edgar Granville (Eye)

The hon. Gentleman has mentioned higher priced seats. Can he define more clearly what he means in that respect?

Mr. Jay

As we are in the middle of negotiations, I do not want to go too far into all the details under discussion. The general principle was that of a small rise in the charge for the lower priced seats and a higher rise on the others.

Mr. Shepherd (Cheadle)

Will the hon. Gentleman indicate what proportion of the increased prices will go to the industry?

Mr. Jay

I was coming to that point. The third advantage of this scheme is that a substantial sum would accrue, on our proposals, to the British producing industry, which we think should be sufficient to enable them to meet their difficulties in the coming year. It is generally agreed that last year's levy under the Eady plan, and the British Film Production Fund which was set up as a result, has worked well and has been of great use in maintaining British film production.

Our proposals would also provide the exhibitors with a material increase in revenue which, in our view, would fully recognise the rises in cost which my hon. Friend the Member for Nottingham, North-West, described. It is true that the exhibiting industry has been faced with rises in cost and with some difficulties, though they were not nearly as great as the difficulties of the producing side of the industry. We should not paint too lurid a picture of the difficulties of the exhibitors at present.

The figures show that attendances have been pretty well maintained throughout 1950 compared with 1949. Indeed, total box office receipts in 1950, after payment of the tax, were actually slightly higher than they were in 1949.

Mr. Jennings

What about the costs?

Mr. Jay

I agree with the hon. Gentleman. I was coming to that point. In the first quarter of 1951—coming more up to date—receipts after tax were almost identical with those for the first quarter of 1950. It is perfectly true that costs have risen, and it is for that very reason that, on our proposals, an additional revenue would accrue to exhibitors as well as producers.

Earl Winterton

Will the hon. Gentleman allow me? This is my first interruption. He must realise that it is not only a question of costs having increased enormously, but also a question of accumulated deferred repairs, which, as was mentioned by the hon. Member for Nottingham, North-West (Mr. O'Brien), cannot be put into operation, but which represents an enormous capital expenditure.

Mr. Jay

I quite recognise that, and we are not leaving it out of account, but against that, it can be said that quite substantial profits have been made in recent years.

We regret that, in spite of the advantages as we see them to all concerned in this proposal, the industry, as I think is generally known, has at present decided not to accept it. I think that is a pity, because even on the narrow view it would have given more assistance to the industry itself than the Budget proposals, which would otherwise go through if no agreement of this kind can be reached. Negotiations, however, are still going on. We have an open mind on the details of these arrangements, and there is indeed still time before the Report stage to reach agreement, as we hope to do, on our proposals or perhaps on some refinement of them.

The real fact about the industry is that a straight cut in Entertainments Duty will not help, because nine-tenths of the money relinquished by the Government would not go to the producing side of the industry, where there is the main trouble at the present time.

The right hon. Gentleman the Member for Southport spoke in a very moderate and constructive manner on this subject, and my hon. Friend the Member for Nottingham, North-West, described some of the conditions in the industry, and gave information about some of the wage claims in which he is naturally now concerned. It would be most undesirable, as my hon. Friend would agree, for the Treasury to intervene or get involved in these wage negotiations, or indeed for me to express any opinion about them here tonight. I can assure him that we have not overlooked the various points he brought forward, which he explained to me in a meeting recently.

Therefore, it is our hope that, in the spirit in which he spoke and in which the right hon. Gentleman the Member for Southport also approached this problem these negotiations may continue. We think it is perfectly possible to reach a reasonable solution, roughly on the lines we propose, and we very much hope that the representatives of the industry will look at the matter in that light.

Mr. O'Brien

May I put two questions to my hon. Friend? I would remind him that the Plant Report was issued in 1949, but would he not agree that the Cinematograph Film Council, by the unanimous decision of those members present, did write to my right hon. Friend the President of the Board of Trade a fortnight ago representing or reiterating some points and asking that they should be submitted to the Chancellor? Secondly, during these negotiations, would my hon. Friend not agree to consider most favourably an inquiry being held immediately in the ensuing year for a completely new basis of the Entertainments Duty system?

Captain Duncan (South Angus)

I think that the speech of the Financial Secretary to the Treasury has strengthened the argument for leaving this Clause out of the Bill. He has mentioned a series of negotiations which are going on, about which he has given the Committee only one figure. It is that seats up to 1s. should be left as they are. But the corollary of that which the hon. Gentleman did not mention is, surely, that the dearer seats, those costing 1s. 9d., 2s., 2s. 4d. and so on will be proportionately higher in price. Therefore, it seems to me that if negotiations are to go on, it would be much better to leave out this Clause now and to allow the Government and the various sides of the industry a free field in which to negotiate, on the understanding that if no agreement is reached by the time we come to the Report stage, a Clause required by the Chancellor will then be inserted by him.

I have known this industry for a long time. Before the war, I followed with close attention the Cinematograph Films Act through all its stages in the House. At the end of the day that it became an Act, I was very glad to get rid of the Bill. I felt like saying, "A plague on all your houses."

I have no doubt that the Financial Secretary is saying the same to the various sides of the industry today. Since then, in Finance Bill debates and on the Film Finance Corporation. I have kept well out of the way because I know the extraordinary difficulties which arise from the various aspects of the industry. But this year I must intervene because I have received some figures from a group of cinemas in my constituency which, I must admit, astonished me. One of the cinemas in this group is in the constituency of my hon. Friend the Member for Fife, East (Mr. Stewart), but the remainder of the group are in my constituency.

I have in my hand detailed extracts from the audited accounts. They have been given to me in confidence, but I have no doubt that the group would be prepared to let me hand them over to the Chancellor for his personal examination. These figures show that since 1947—it is a private company—no directors' fees have been paid, no dividends have been declared, no depreciation has been allowed for in the accounts, and that since that date there have been accumulated losses. In 1948, there was a debit balance of £147. In 1949, there was a debit balance of £339, and 1950 a debit balance of £617. That means that for the last three years—I have not got the 1951 figures—there has been an accumulated debit balance on this group of cinemas of over £1,000. The annual turnover of the group is in the region of £18,000 to £20,000.

I visited one of the cinemas in the group. I was taken into it in the daylight when the audience was not there. It is thoroughly shabby. A certain amount has been allowed for necessary renewals and repairs, because such things as seats get broken. There has to be a certain amount of repainting and redecoration, but nothing, as I say, has been allowed for depreciation. Even so, the seats in this cinema are old-fashioned and the upholstery is beginning to deteriorate. The place needs repainting, and in its present condition is no credit to a British holiday resort.

10.15 p.m.

If we are going to attract tourists to this country we must have attractive, modern, decent, clean, up-to-date places to which to attract them when they come to our holiday resorts. Therefore, I hope these facts will impress the Treasury, which I have stated very briefly. The Financial Secretary to the Treasury talked about the producers' side being the big trouble, but on the exhibition side there is real trouble too and the industry is no longer profitable.

A case was made a few years ago for the small rural cinemas. The grounds were that the industry in those parts of the country was unprofitable, but here it is spreading to the smaller towns where gradually, as the hon. Member for Nottingham, North-West (Mr. O'Brien) said, these cinemas are gradually facing bankruptcy. They cannot make the places up-to-date, they cannot pay directors' fees, they cannot pay dividends and they cannot make ends meet. Therefore, I think there is a very strong case for asking at any rate for part of the £10 million the Chancellor wants, to give a chance to exhibitors and allow them at least to make ends meet.

In the document which has been circulated by the Cinematograph Exhibitors' Association there is a table which has been referred to already by my right hon. Friend the Member for Southport (Mr. R. S. Hudson). I do not want to go into very great detail, but this table quite definitely shows that among the smaller cinemas, earning £7,500 or less, the total profit for 13 cinemas in 1947 was £6,700 and, in 1950, £1,500. I think those figures prove that the figures I have given for my constituency circuit are borne out in other parts of the country. Therefore, I hope I have made out a case for some alleviation for the cinematograph exhibitors in this difficult problem of how to deal with the cinema industry.

Mr. Michael Foot (Plymouth, Devonport)

The hon. and gallant Member for Angus, South (Captain Duncan) seemed to claim that the whole of the exhibition side of the industry is affected by the same kind of difficulties as only affected a small part some years ago and that the whole of the exhibition side is now in very considerable difficulty. I doubt very much whether that claim could be borne out by examination at any rate of the balance sheets of the main circuits throughout the country. I must say I do not think that these statistics relating to the selected 13 cinemas quoted from the Cinematograph Exhibitors' Association's pamphlet are very convincing, because nobody knows how the cinemas were selected. Hon. Members opposite complain about Government statistics, but if any Government Department produced statistics so open to attack as these, I do not think they would be regarded with any credence at all. Therefore, I do not think it is open for hon. Members to claim that the whole of the exhibition side of the industry is in difficulties.

The noble Lord the Member for Horsham (Earl Winterton) spoke very movingly about the low wages in this industry and how shocked he was to hear what my hon. Friend the Member for Nottingham, North-East (Mr. O'Brien) had to say about those wages. The noble Lord must have heard a great deal about low wages in other quarters. He has transferred himself out of the Chamber at the moment but he might transfer some of his eloquence in the House of Commons to his board room. If there are complaints about low wages in the film industry, and in that side for which my hon. Friend the Member for Nottingham, North-West, is responsible, the noble Lord has an opportunity to make recommendations to the film companies with which he is associated.

They are some of the richest in the country and have been making heavy profits in recent years. He might recommend that they might distribute some of those profits which amounted to some £700 million or so in a recent year. [Laughter.] Sorry, £700,000. I am guilty of slight exaggeration but the figures are so enormous that anyone would be pardoned if he made a mistake. If hon. Members want the figures they can have them. The net profit for the two companies with which the noble Lord is associated, Odeon Properties Limited and Odeon Associated Theatres was £777,000 net profit, and in the report which Sir Arthur Rank made to the meeting he said that Odeon Associated Theatres, and Odeon Properties were not concerned with the results of film production and that so long as exhibition continued to be a profitable business, there should be no doubt of the company's ability to meet the obligations of its prior charges. Apparently among the prior charges the wages of the workers in that industry are not included.

Mr. W. Fletcher

What year was that?

Mr. Foot

I am perfectly prepared to state the year. It was 1948. I have not got the figures for 1949, but if those companies with which the noble Lord is associated made a loss in that year, I am quite prepared to pay the wages of both concerns out of the monumental profits made by the newspaper the "Tribune" with which I am associated. Everyone knows that the profits of those two companies were enormous, and the right hon. Gentleman cannot ride off on that kind of statement.

A very interesting statement was made by the right hon. Gentleman the Member for Southport (Mr. R. S. Hudson) when he said—and this was a very good admission and should be made clear to all those who signed the petition, about which so much has been heard in the last week—that no one on the Opposition side would deny the need for the Government to raise more revenue. There is no argument about that. I do not know if some hon. Gentlemen opposite, who came in late, heard their spokesman say that, but it has been admitted by the Opposition that there is a need to raise more revenue. I am not sure whether he was referring to the Budget as a whole or to this particular item, but it certainly was a formidable admission, because it destroyed most of the rest of their case.

Mr. R. S. Hudson

The hon. Gentleman has quoted me, but I do not see what he or any other Member could take exception to in that statement. We all realise that if there is to be re-armament it has got to be paid for, and to pay for it we have to raise more revenue.

Mr. Foot

I was not criticising the hon. Gentleman, but picking out from his speech the only part of it which I could commend. It was the only part which faces the situation. Once hon. Gentlemen opposite have admitted it is necessary to raise more revenue, it is no use going up and down the country suggesting that there is no need for further taxation at all and rest a campaign on the basis of no more taxation being necessary from the Entertainments Duty.

The right hon. Gentleman the Member for Southport also went on to say that it was very strange to raise money in taxation in order to distribute it back in the same industry through the National Film Finance Corporation. It is not so strange at all, because the money would never get back to the producers unless it were raised in that way. If taxation were reduced, the money would not seep back to the producers. That would not happen precisely because of the way in which the film industry is at present organised. In fact, almost every section of the industry and certainly all the trade unions in the industry, except that with which my hon. Friend the Member for Nottingham, North-West, is associated, are in favour of this system of the sharing of the revenues, as the industry say that more of the revenue of the industry will go to the producers who make the films. Therefore, it is this system, which the right hon. Gentleman finds so novel and so strange, that is supported by practically all sections of the industry and which, indeed, they wish to see extended.

Although I think it is perfectly clear that the big circuits and most of the exhibitors have no justified complaint against this tax, I think that there is a different position for the smaller exhibitors, and I think that one of the difficulties of the small exhibitors is that they have to present their case in company with the big exhibitors, and that the big exhibitors have spoilt the case of the small exhibitors. I have had many letters from small exhibitors throughout the country, like that received by the hon. and gallant Member for Angus, South (Captain Duncan).

As in the case he mentioned, they can put up a very strong case from particular balance sheets, some of which I have had sent to me. They are not able to voice their case to the Government through their organisation because they have no separate organisation of their own, and so they have to go to the Government always in company with Odeon and the other big circuits who have a very different interest in this matter. I have had a letter from one small exhibitor who says: There is no doubt whatever that the small exhibitor really has no voice and no specific organisation for his case in the general survey. I have had many statements of a similar nature from small exhibitors who have tried to put their case.

But if there were any doubt about this difficulty in which the smaller exhibitor has been placed in presenting his case to the Government, then I think it is shown from the discussions which have taken place in the industry between the Cinematograph Exhibitors' Association and the British Film Producers' Association. The British Film Producers' Association has got some pretty strong exhibiting influences on it, but they did propose a scheme which, I think, is a better scheme than anything the Cinematograph Exhibitors' Association have put up to the Government.

They proposed a scheme for a "floating penny," as it is called, which would mean putting up seat prices by 3d. instead of 2d. It was opposed by the Cinematograph Exhibitors' Association because it would have involved first run cinemas, including the circuits, in paying their share of the Eady levy to help small exhibitors, and would have forced the small exhibitors to present their case to the British Film Production Fund if they were to get any relief. The proposal of the, British Film Producers' Association was that the small exhibitors whose net box office receipts did not exceed £125 per week on a yearly average should be entitled to receive back the tax which they had paid on gross receipts up to and including £70.

I think that that was a proposal which, at any rate, should have been considered, but it was thrown out, strangely enough, by the Cinematograph Exhibitors' Association, the people who are supposed to represent these small exhibitors. So that any hon. Member, on whichever side of the Committee he may sit, who gets up and says he is speaking in particular for the small exhibitors must recognise that the case of the small exhibitors has been thrown out by the body which is supposed to represent them.

It is because of that that I have intervened in this debate in the hope that these negotiations with the Chancellor can carry through this proposal. I think the Government's further proposals after the Budget are better than their Budget proposals, and that they should certainly be accepted by the industry, in the interests of the cinemagoers—[Interruption.]—and in the interests of the various different sections of the industry. The hon. Member for Croydon, East (Sir H. Williams) has been yelling throughout the debate that he wants the consumers' interests represented, so I have got them in, and that may save him from having to make a speech later on. In the interests of those who go to cinemas and in the in- terests of British film production I hope the negotiations will be successful. The small exhibitors have a strong case for such proposals as were put forward and which, unhappily, cannot get through to the Treasury, because of the way that the Association misrepresents the real case of the small exhibitors.

10.30 p.m.

Mr. Redmayne (Rushcliffe)

It is not perhaps quite true to say that the case for the small exhibitors cannot get through to the Chancellor of the Exchequer, because many independent exhibitors very often put forward their cases with much better documents and support than those put forward by the associations. I hope to draw the Chancellor's attention to one such case, although perhaps it has already come to his notice. It is perhaps right that four-fifths of the speeches in this debate should relate to the cinema industry and it is also perhaps right that one speech should realise that the Entertainments Duty is a little wider than the cinema industry alone.

There is a danger in all taxation of luxuries of creating anomalies by an entirely arbitrary grouping of these luxuries. The grouping is governed by expediency for the Chancellor, by lack of opposition, or by some other convenient reason that may arise from Budget to Budget. This applies particularly in the case of Purchase Tax, although that is a subject which I must not mention here. And it is applying more and more year by year to Entertainments Duty.

The effect of that tendency, judging from the results of last year's Budget and from the result that may arise from this year's Budget, is that the cinema tax in its expanded form may well be a disappointment to the Chancellor. Had I been the hon. Member for Torquay (Mr. C. Williams) and been fortunate to put forward an Amendment giving the date on which these changes should come into force, I should have made it not 5th October, but a day of greater portent for this House—5th November. I believe that the returns of cinema tax will be up with rocket and very quickly down with the stick.

These anomalies in taxes on luxuries, particularly in Entertainments Duty, can be changed, but it is said that the levelling of them would be unpopular and disas- trous to the interests concerned. I think we should consider for a moment whether there is any truth in these suggestions. Let us suppose it is possible to level out the anomalies in Entertainments Duty. Suppose the duties now taxed at the lower rates were doubled. If theatres and music halls, football and cricket, and all those that pay duty at the lower rate, had to pay a doubled duty, they would contribute to the need for increased taxation a useful sum, amounting perhaps to £3 million to £4 million. That kind of suggestion produces great indignation here, but in my opinion there would not be any great indignation in the country. It is certain that to tax football and theatres and cricket would be unpopular. That simply means it is thought that it would lose votes.

If the cinema audience is not equally tax and vote conscious then perhaps it deserves to be penalised as it has been in the last two Budgets. I think that the man who goes to a football match looks at this with a much broader view than the politician is prepared to take. He knows that he pays 1s. 6d. for his admission, which includes one penny tax. In my opinion, he would not cavil at paying 1s. 7d. admission which would include 2d. tax, or even 1s. 9d. which would include 4d. tax, when he reflects that his wife and daughter, when they go to the cinema, pay 1s. 8d. for their amusement, and this includes 8½d. in tax. Whether it is football for the man or cinema for the wife, or a bit of both for each, the increase in tax all comes out of the same pocket. So far as the higher rates are concerned the working man pays them just as readily.

There is not much of fair shares in paying, on the one hand, to the theatre, the music hall, football and cricket 3s. 9d., to include 6d. tax, and, on the other, to pay to the cinema, dogs and speedway the same amount to include 1s. 9d. tax. I have no interest in the cinema: I am ashamed to say that I scarcely ever go to the cinema, but, at the same time, I do say that it would be in the national interest that this tax should be levelled up. All the arguments that have been put forward in regard to the cinema apply equally to entertainments of similar value, particularly speedways.

Those are my points on the general issue, but I want to make one point on the smaller issue of hardship to the small cinema exhibitor. The case I want to quote is one which has been sent to the Chancellor of the Exchequer. It has received his acknowledgment, and has also received some publicity in one or two papers during the past year. It is a cinema in Nottingham, the "Majestic," with a seating capacity of 700, and belongs to an independent exhibitor, a man I know—hard working, not particularly poor, not particularly rich. In the last two years his 700-seat cinema has performed the extraordinary service of paying £6,210 in tax, and he has taken out of the cinema in balance during that period nothing whatever. That case was put to the Chancellor of the Exchequer, and I do not doubt he has had many hundreds of others like it.

In the seven days ending April 28, 1951, the proprietor took £121 nett. Against that he had a standing overhead of £95, and this is certified by an accountant and which are perfectly reasonable and right, and include nothing for the owner-manager's own pocket, plus film hire of £29, making overheads chargeable of £125 for that week—a loss of £3 19s. 4½d. I might say—because it was referred to in a previous speech—that at least that owner-manager pays no Profits Tax and no Income Tax on the takings of his cinema. In addition, in that unproductive week he has produced for the Chancellor in Entertainments Duty the sum of £55 18s. 6d.

It is not beyond suspicion in the minds of a great number of people in this country that Socialism wants to drive out the small man in every branch of enterprise. I think that the Chancellor now has a chance, if he wants to take it, of proving that he has some claim to anything but the bitterest criticism and opposition from the small men in every trade and enterprise in this country, and I believe that in the cinema industry that class is as wide as it is in any other enterprise.

Mr. Carmichael (Glasgow, Bridgeton)

We have had an interesting discussion on the question of the Entertainments Duty. Already, one or two of the recognised authorities in the industry have made their contributions, and I merely wish to make it known at the outset that I have no special direct interest in either the distributive or exhibiting sides of the industry. In fact, I am an ordinary member of the public who frequently attends film shows in my own area.

I regret that the hon. Member for Rushcliffe (Mr. Redmayne), in his concluding remarks, introduced a political point which was quite unnecessary. He said that Socialists were anxious to drive the small man out of business. I do not want to enter into controversy unnecessarily, but the film industry can give ample evidence of big companies trying to drive out the smaller people.

I want to approach the question as the ordinary citizen would approach it. I think any form of taxation should be imposed in the most equitable manner, and it must be recognised that the cinema is one of the pleasures of the great mass of the people. The live theatre may be regarded as a very important branch of entertainment for certain people, but in the whole of Scotland—I do not say this with pleasure, but with regret—we have not got more than six what may be termed well-established live theatres. I am not talking of the comedy side of entertainment. I am speaking of the theatre in its artistic aspect, providing plays and musical entertainment of a high order.

One must recognise the great claims of the majority of the people, and the cinema is the form of entertainment that they enjoy. I appreciate the point made by the Financial Secretary, that already the Government are prepared to recognise the necessity of avoiding an increased tax for seats under 1s., but I would point out that there must be very few cinemas in the country today, even in the small and thinly populated areas, where there are seats costing under 1s.

10.45 p.m.

Although I appreciate the point, I would like to ask the Financial Secretary whether he and the Chancellor of the Exchequer will consider the possibility of suggesting to the Government a better figure than 1s.—probably 1s. 6d., or 2s. I say that because one gets evidence from another branch of entertainment. Only last week the Football League decided to increase the charges for matches next year by 3d. That will not add one penny of taxation. If one increases the charge at cinemas one is required to add considerably to taxation.

At present, if the gross taking is 9d. for a seat, the tax is one penny. If the cinema people desire to increase the cost by one penny, then they have actually to increase the charge to 1s. 2d. That is a very serious increase. I suggest to the Chancellor of the Exchequer that he might consider the advisability of going a little beyond 1s. I make the point specially for many of the poorer cinemas in the country. In the thinly populated areas, unless some approach is made to the cinema industry in a more comprehensive manner, taxation will ultimately close the cinemas.

There are two further points associated with this increase which are important. They have already been made, but they cannot be emphasised too strongly. First, the conditions of the people within the industry require to be seriously overhauled. The wages which have been mentioned tonight are a disgrace to the industry. It can be argued, because we have had representations before us, that the smaller cinemas cannot possibly approach the problem of increased wages unless they are allowed to make an alteration in their prices. I hope that, recognising the right of the people employed in the industry to a decent wage, that point will be borne in mind.

Further, if people go to an entertainment they are entitled to better comfort than is at present possible in some of the cinemas. The smaller cinemas cannot possibly produce the money needed for renovation or overhaul which they might desire to carry out.

I want now to make one small criticism which I think is justified. There is. I think, a grave danger that the Treasury approaches this problem too often thinking in terms of the productive side. I question very much whether it is the right of the Government unduly to encroach upon the industry to some extent protecting one side against the other. My own view is that the real problem lies in that industry itself being unable to accommodate its different departments. But if it is necessary for the Government to intervene in the manner suggested by the Financial Secretary to the Treasury, would it not be wise for the Board of Trade and the Treasury and the industry to go into conference? After all, the Board of Trade is closely linked with the problem because of the quota system. I gather from people in the industry that, because of the quota system, there are losses at certain periods of the year.

I am not going to argue that they should not take a quota of British films, but I do suggest that the tax and the quota cannot be examined separately. I think there should be a complete overhaul of the industry, taking into account the quota required. It ought, in my view, to be zonal. I think that it is wise to suggest that the quota in one part of the country should be different from that in another part; and I do say, therefore, that if there is any danger of the negotiations breaking down between the Chancellor and the people associated with the industry, then it would be wise to see if we could not extend the scope of the agenda. We should bring in the Board of Trade, and fix the examination on a much wider basis than at present.

That is something which cannot be done through the Budget, and I do not wish to be out of order on this point, but we are told, year after year in the House, that the industry is in grave danger and difficulty. Year after year we are asked to try to find a solution for the productive side of it, and we find that there is a conflict between the producer and the exhibitor; and we, in this House, seem able to do nothing about it. I hope that something will be done to reduce the burden of taxation on seats, and especially those under 2s., because if that was done, it would help to make possible a better wage condition in the industry and better enjoyment for those people who go to the cinema because they cannot get their pleasures more expensively elsewhere.

Sir H. Williams

I should like to say something on this matter. I took part in the 1926 discussions on the Bill which first introduced the quota system, partly because the hon. secretary of the Cinematograph Exhibitors' Association happened to be one of my constituents, and asked me to help. He is still the hon. secretary, but I mention that in passing. Broadly, there are three parts to this problem. We want cinemas, but we cannot have them unless they are properly maintained. We cannot have cinemas unless there are films, and we all want a reasonable supply of British films. I have no special knowledge of either side of the industry, but I read in the newspapers about the varied troubles of the producing side.

The hon. Gentleman who has just spoken said much with which I agree, but we are always hearing about the many thousands of persons who are employed in the production of films and in showing people to their seats in the cinemas. That is all very true, but then there are some 30 million other people who pay to be shown to their seats. Is there enough consideration for the taxpayer? I consider that I am monstrously over-charged when I go to the cinema, and I do not like the fact that I pay—

Mr. Rankin (Glasgow, Tradeston)

Where does the hon. Gentleman go?

Sir H. Williams

To a cinema in the Vauxhall Bridge road; it is quite a nice cinema.

I was saying that the last time I went there I did not like having to pay 3s. 9d.; I think that I paid far too much. The fact is that the taxation of this form of entertainment has gone beyond the economic limit; that is the real issue. I do not go to the cinema very often. For one thing, I am usually taking part in the particular form of entertainment which goes on here, but my wife and I are very fond of the pictures. However, what I want to emphasise is that the cinemas are much emptier than they used to be. I would tell the right hon. Gentleman that the last time I paid a visit to the cinema I noticed that in the best seats—costing 3s. 9d. each—there were 21 people where there was room for 400. There used to be queues outside the cinemas, but there are not any more.

Mr. Rankin

Did the hon. Gentleman go on a Saturday night?

Sir H. Williams

No, it was a Sunday afternoon. I was in church in the morning. [An HON. MEMBER: "With the mayor and corporation?"] Yes, that is the first place where one should consider Sunday cinemas, and I think that I am entitled to go to the cinema after having been to the parish church in the morning.

There are two very large cinemas where I live and they are two which we patronise frequently. But now there is a complete change. It is obvious that the cinema is suffering very severely; it is suffering because the public cannot afford it and because the cinema is overtaxed. That is the economic issue we are up against, not only in respect of the cinema but of a great many other things. The hon. Gentleman the Member for Devon-port (Mr. Foot) challenged one of my right hon. Friends about this question. My own view is that we are not making sufficient attempt to reduce unnecessary expenditure. I must not go too far, I know, but I am only following the right hon. Gentleman and the hon. Member for Devonport, who were talking about the necessity of raising additional revenue.

I think the Government have to do what I have to do and what the rest of right hon. Gentlemen and hon. Gentlemen have to do—try to fit our expenditure to our income. Every hon. Member has to do it now. Therefore, I think we ought to make some effort to reduce this increased tax. That is the only way to discipline H.M. Government, and make some effective economies.

Mr. Mitchison (Kettering)

I do not propose to take more than a few moments, but I want to repeat, if I may, from a slightly different angle, a point already made by the hon. and gallant Member for Angus, South (Captain Duncan) and by my hon. Friend the Member for Devonport (Mr. Foot). It is in regard to one particular kind of smallish cinema. I call it the semi-rural or the small town cinema. It often has to compete with larger chain cinemas a little distance away. It often is, as in two cases I have in mind, the only cinema in a place of about 5,000 people or about that number of inhabitants. There, they find it extremely difficult to make both ends meet and to maintain the cinema at present.

I think the Chancellor has it in mind, from what was said by the Financial Secretary, but I should like to remind him that the concession that was made to the village cinema, the smallest type of cinema, was made with the express object of preserving that part of the life of a village. There is exactly the same case to be made for the small town, on purely social grounds. That is the first point I wanted to make and I would remind the Chancellor and the Financial Secretary that year by year, since that phrase seems to be popular in this debate, I send him letters from the proprietors of two such cinemas in my own constituency which he will find in what must now be quite a bulky file in his office. I hope this opportunity will be taken of doing something for that type of case.

11.0 p.m.

My second point is this. I do not want to develop it at length, but I feel that in any concessions which are being made to the film industry, and in any negotiations with them, the monopoly element in the distribution of films really ought to be considered and some action ought to be taken about it. I had a rather bad case some time ago in which a working men's club in my constituency was exhibiting films. They were conforming with the law, and they were doing what they were entitled to do and they were only prevented by the somewhat mono-polistical association within the industry itself from getting modern and recent films. I call that kind of thing a reactionary step. Either stop that kind of exhibition altogether—and no one wants to do that—or, if we are to have it at all, do not put the industry into the position of being able to confine audiences to out of date films. If they persist in doing it, it is time the Government took some action about it.

Mr. Maudling (Barnet)

The hon. Member for Devonport (Mr. Foot) made some most misleading remarks in his speech. He referred, for one example, to the attitude adopted by the unions in the film industry, with one exception, but he did not add that the one exception has a considerably larger number of members in the whole industry than all the other unions in the industry put together. He also dealt with the financial position of the exhibiting side of the industry by referring to accounts, figures and statements made in 1948 when it is common knowledge, I think, that since 1948 there has been a very serious decline in the position of the cinema industry. That seems to me to be an important point.

We must consider whether the position has now been reached when official taxation will lead to diminishing returns. It is a point made earlier by certain hon. Members on the other side of the Committee, but it was the only point to which the Financial Secretary gave no effective answer whatever. In his Budget speech the Chancellor said, I think, it was not unreasonable to look to the Entertainments Duty for some modest contribution to the cost of re-armament. On economic principles that is no doubt difficult to work if the effect of asking for a higher rate of duty is to diminish the total returns to the Exchequer than it is going to devote to its own purposes.

I hoped the Financial Secretary would deal with that point. Certainly, I was left by his arguments with less knowledge of the present situation than I had when he started. I think we were glad to hear it is not the Government's intention now to raise the tax on the lower range of seat prices, but then he went on to say the Government's new proposals meant there would be more money available for the production side of the industry.

What he did not make clear was whether that additional sum would come from smaller amount given to exhibitors or a larger total amount taken out of the pockets of the public. I think if we are to consider this Clause properly we should have further information on that point. There is no doubt that the cinema industry at the moment is a State industry, as my right hon. Friend the Member for Southport (Mr. R. S. Hudson) said earlier. In my own division, at Boreham Wood, there is the biggest single centre of the film production in this country and there is there, despite the money spent through the National Film Finance Corporation, very substantial unemployment indeed. I do not think that as yet there is any sign of any improvement in that situation.

Turning to the exhibition side of the industry, I think it is quite clear that the position of the exhibitors has been seriously deteriorating. The Chancellor said in his Budget speech that gross box office receipts in 1950 were higher than in 1949. I think that is really due to the fillip given to box office receipts when the new prices were brought in late in 1950. The figures I have been given show there has been a substantial drop in gross box office receipts in the commencing months of this year.

They are the figures contained in this document circulated by the Cinema Exhibitors' Association, the figures on which a certain amount of doubt was cast by the hon. Member for Devonport, but figures which have not been disproved and which are based on facts. They show there has been a very substantial reduction in operating profits in cinemas, in many cases turning operating profits into operating losses. It is a very significant fact that a comparatively small decline in total box office receipts results in a very large decline in operating profits. With substantial overheads that will inevitably happen, and one must bear in mind that any substantial diminution in box office receipts may mean serious financial difficulty for the film industry.

The only other point I want to make is one raised earlier by my right hon. and gallant Friend the Member for Gainsborough (Captain Crookshank), to which I think the Financial Secretary to the Treasury replied. It is the method of taxation of this industry which combines the provision of revenue with the operation of price control. I do not believe that we shall ever succeed in solving this problem while maintaining the essentials of the present system intact. It may have worked in the past but with the present rate of duty it appears to be becoming unworkable.

There is the duty on spirits, or the ad valorem duty as in Purchase Tax, but I know of no other duty which combines price control with revenue. When it comes to increasing the price of some seats the revenue takes up to 75 per cent. of the addition. To obtain one halfpenny the industry has to collect another 1½d. on top of that for the Revenue. That is a kind of price control which should not be maintained if the industry is to prosper and to produce the revenue the Chancellor of the Exchequer wants to start the rearmament programme.

Mr. Oliver Lyttelton (Aldershot)

The debate we have had on this Clause has been very peculiar, at least in my Parliamentary experience, because I do not think any hon. Member from any part of the Committee has spoken in support of the Government. It may be that I do the hon. Member for Devonport (Mr. Foot) an injustice, because he always manages to mix a certain amount of bitterness with sweetness. He also muddled his figures—but perhaps he thought he was on television—and his milk of human kindness was somewhat curdled. There has not been a single speech that I have heard in favour of the Government.

We remain very much dissatisfied with the attitude of the Government on this matter of film taxation and I hope that we shall hear something more definite. All we have heard is that they intend to perpetuate the muddle into which this matter has got. They intend to go on patching when something more drastic is required. The first suggestion I make is that they should publish in full not only their own proposals but those of the Cinematograph Exhibitors' Association, so that the public may judge where the negotiations are going to get us.

Quite apart from that, an entirely new approach is necessary, and we on this side are objecting to the Clause standing part of the Bill mainly for three reasons. First, we think that the law of diminishing returns is beginning to operate, quite violently. That of course, will affect the workers in the industry. I do not propose to say anything about that, especially because I do not think any hon. Member could better the speech made by the hon. Member for Shettleston (Mr. McGovern) on this subject. It also affects the amenities of the cinema-going public in the picture houses. The second reason why we are against this Clause is because we wish to draw attention to the cinema jungle and jumble which everything the Financial Secretary said presupposes is to be perpetuated. The third reason is that there are very great anomalies in levying these duties.

I ask the patience of the Committee in following me through these three points. First, the law of diminishing returns operates not only directly but indirectly in a subversive way. I must quote once again from the Plant Report which says: …but when full allowance is made for errors of computation… —such as that of which the hon. Member for Devonport has been guilty— it remains abundantly clear that the average receipts fall far short of the minimum average cost of production. This conclusion has not been denied or traversed by the Government, and the conclusion is perfectly clear that the production of films in this country is permanently unprofitable at the present rate of taxation. I ask the Committee to consider what we should think of taxing any other industry upon its bookings—not upon its earnings—if an independent committee, set up by the Government, after thorough and objective research into the question found that production was permanently unprofitable. These laws cannot be set aside. They may not operate very quickly, but they operate very surely and are operating now. Not only does the quantity of films produced suffer, but quality as well. There will be too few first-feature films produced in this country and they will, by and large, be of insufficient quality, and attendances and revenue will fall.

Then there is the exhibitor, who, undoubtedly, is now suffering from rising costs and stationary receipts. There are many instances—they have been cited by hon. Members on both sides of the Committee of cinemas that are now losing money, and many of the privately-owned smaller cinemas are threatened with bankruptcy. The rise in costs has already been referred to—a rise of 300 per cent. to 400 per cent. in the ordinary maintenance of the cinema—furniture, and so forth; the safety regulations, which are highly desirable, are to cost the industry £1 million; and there are wage demands of between £2 million and £3 million which, after listening to the hon. Member for Shettleston, we should all feel are justified in present circumstances.

The Committee must also bear in mind, in thinking of the situation of the cinema industry, the threat, somewhat delayed here, of television, for we all know what serious problems television has given to the cinema industry in the United States. First then, I assert that the law of diminishing returns is now operating over the exhibitors, as well as over the producers.

The next subject I wish to raise is that of the cinema jungle and jumble. Under the unscientific and heavy burden of these entertainment taxes, levied not upon earnings but bookings, production of sufficient first-feature films is threatened. In these circumstances, the Government have been brought, by inescapable facts, into the position of trying to put back at the other end some of the money they have taken out of the industry. You put a high tax on bookings and then find the industry cannot stand them, so that you have to organise some means of giving it back through the Film Finance Corporation, which, although engaged in financing film production, is really giving the industry an indirect subsidy. They are quite frank about it in their own Report. They say if film production were by and large profitable the Corporation might now expect to operate without net loss.

This, in reality, is giving the industry a very necessary but nevertheless clumsy subsidy at the other end, and if production is always to be unprofitable, as the Plant Report says it will be, then losses made against production will in the end result in bad debts. There is a game that I suppose every parent has played with his children, taking from one hand and putting in another. My hon. Friends tell me it is called "Pat-a-cake, pat-a-cake, baker's man." That is exactly what the Government is doing with the film industry. [Interruption.] There seems to be some doubt whether I am entirely orthodox in my definition.

11.15 p.m.

The third point concerns anomalies. Most increases in prices have found their way into the Chancellor's pockets. Not only is the Schedule itself anomalous, but it works by fits and starts. If the exhibitor wants another penny to cover his costs and a reasonable profit on a seat costing 1s. 4½d. without tax, he will have to pay 2d. tax on the increase, and the penny for himself makes 3d. to the public. On a 2s. 6d. seat the difference goes as to a halfpenny to the exhibitor and 6½d. to the Chancellor.

Not only are these figures in themselves anomalous—[Laughter]—hon. Members who laugh are apparently quite unaware how these things work—but if we look at the-percentages we see how they go: on the 1s. seat the percentage is 29, on the 1s. 2d. seat 36, on the 1s. 5d. seat 38, on the 1s. 8d. seat 42, on the 1s. 11d. seat 46, on the 2s. 6d. seat 43 and on the 3s. 4d. seat 46. Not only are the amounts very heavy which the exhibitor has to add for a very small increase himself, but the percentages apparently follow no plan at all; they are completely anomalous and seem to be based on a patch-work policy without any principle at work.

There were other anomalies in the entertainment itself. My hon. Friends will move new Clauses regarding speedway racing and horse racing. I do not want to anticipate their arguments, except to say that not to classify horse racing as live entertainment is one of the most delicious pieces of nonsense ever heard from the Treasury Bench—and that is saying a good bit. Bertram Mills's circus is a live entertainment. At a dinner the other night I suggested that the Jockey Club should run a few elephants round the park courses, and give performing seals an opportunity in the enclosures, in order to classify racing as a live entertainment. Golf is a live entertainment, and hon. Members know that in that game a man hits a ball—or tries to. But if a man rides a horse it is dead entertainment.

That leads to the curious and illogical conclusion that the ball makes the entertainment live because the ball is dead, and the horse makes racing dead because it is alive. Or is it that it is within the meaning of the Act that the ball is deemed to be alive and the horse is deemed to be dead—unless the horse is accompanied by an elephant or other animal? I am staggered by this example of what the Winchester and New College school are able to do when they really try. I say "Bravo" to the Treasury for this superb example of the reduction to the absurd.

I hope I have shown the Committee in this short time enough to prove my three headings. I suggest to the Chancellor that the time has now come to tear up this Schedule in its present form and, in consultation with the cinema industry, to try again, because it is the one means by which the present proposals can be redrafted in a satisfactory manner. I suggest that the Chancellor tries to make this tax apply scientifically, even if its object should be to raise more revenue out of the industry, which I very much doubt the industry can stand. It will not work. I implore the Chancellor to leave to those who understand the business to run their industry without continual negotiations with the Treasury. No industry ought to depend on immediate plans. They have to have something much more comprehensive, which attacks this problem at the root. It would be much better for all to tear this up and start again.

Lastly, I warn the Chancellor to beware of the law of diminishing returns in this industry and, at the same time, to take care of some of the absurdities I have mentioned in the application of this tax in other parts of the entertainment industry.

The Chancellor of the Exchequer (Mr. Gaitskell)

I am sorry that the right hon. Gentleman threw cold water on the Eady plan. I thought we generally agreed in Committee that that plan, introduced last year, was on the right lines. I should have thought it fairly obvious, that if we want to help the producers—which, after all, was the main purpose behind the Eady plan—it was not possible to do that simply by reducing the Entertainments Duty.

Mr. Lyttelton

I do not wish to be misunderstood. I do not think the right way to do it is to introduce a schedule of taxation which afterwards has to be negotiated outside the schedule. We want a statute which enables people to know where they stand. That is not happening now.

Mr. Gaitskell

That is quite a different point, which I shall come to in a moment.

I should like to make it plain that if we want to help the producer, it is no good simply reducing the Entertainments Duty. The effect is that they will receive one-tenth of what the Treasury receive, the Americans will receive about one-third, and the exhibitors will receive the rest. When we decided to help the producers, we set about it by in effect giving back to the producers part of the Entertainments Duty and arranging it to be shared in the way we thought would help the producers particularly. We have not abandoned that plan at all. What I said in my Budget Speech was that the Eady plan pointed the way to what I thought ought to be done, and that whereas last year we gave up a little revenue for the Treasury, this year I wanted some revenue to help pay for re-armament.

The producing side of the industry have accepted the proposals and there is no difficulty so far as they are concerned. They are content with what we have suggested. The only difficulty arises in connection with the exhibitors. Here let me say that if the right hon. Gentleman and his hon. Friends have raised the point of diminishing returns, of getting less revenue out of the industry by putting on extra taxation, that view is not shared by the exhibitors themselves, because the proposals they made involved increasing the tax still further. Being in the industry, presumably they are satisfied that the consuming public can stand the increase. I do not think we need worry about that for a moment.

I would agree that to put the tax beyond a certain point might very likely lead to a reduction of revenue, but I am not certain this point has been reached this year. The increase is a small one while the proposals made by the exhibitors themselves were for a slightly higher increase and also involved more expensive seats. We do not need to worry very much about the public reacting very strongly against that.

Therefore, we have this situation. We have been discussing this with the industry. The producers have accepted. We have made new proposals, also I think acceptable to the producing side of the industry, which, unfortunately, the exhibitors are unwilling to accept. I very much regret this, because these proposals certainly involve a substantial improvement in the position of the industry. Taken with last year's Eady plan, they involve for the industry as a whole £7 million a year compared with the position before last year, that being shared, if I remember rightly, in the proportion roughly of 50–50, with rather more going to the producer and rather less to the exhibitors. I hope that they will think again about this.

Earl Winterton

May I ask the right hon. Gentleman a question about this, because he may be able to judge the situation, but the public may not? Will the right hon. Gentleman publish the proposals?

Mr. Gaitskell

I do not think it would be proper to publish them in detail at this stage, and I have carefully refrained from going into the matter for that reason. I would not like to do it without going into it first with the exhibitors.

Mr. R. S. Hudson

Surely it is an old tradition of the House that if a Minister quotes from a document he publishes it. The Financial Secretary quoted from the proposals made to the four associations. We are not supposed to know what these proposals were, but I certainly think the public are entitled to know what the exhibitors propose and what the new proposals made by the Treasury are, so that they can judge whether the description given to them by the hon. Gentleman was fair or not.

Mr. Gaitskell

I am not quoting from any document, and I am in a difficult position if one right hon. Gentleman asks me to give the information and another suggests that it will be wrong to do so. [Interruption.] I beg pardon; it was the hon. Member for Barnet (Mr. Maudling). We are now in the middle of negotiations with the industry, and I hope very much, as I should have thought the Committee would have hoped, that we should bring these negotiations to a successful conclusion. If the negotiations break down there will be ample opportunities for discussing the matter again when we come to the Schedules or on the Report stage, and no doubt further information can be made available after consultation with the industry. Meanwhile, and during the negotiations, I think it would be wrong to reveal or publish details which might prevent a successful conclusion of the agreement.

Earl Winterton

The Chancellor unwittingly did an injustice by quoting one part of the proposals and referred to the proposals the Government had put. He mentioned, and I will not say whether he is correct, that one proportion of the industry had rejected and the other had accepted. If he is not going to give detailed information, it is unusual, as my right hon. Friend has said, to quote from a document. He should have told as whether unanimous proposals were put to the Treasury which the Treasury had rejected, but it is unfair to mention one part of the negotiations without mentioning the other.

Mr. Gaitskell

My hon. Friend and I have mentioned that another proposal was put forward by the exhibitors.

Mr. R. S. Hudson

This is a matter of some importance and the public should be able to judge both proposals. The trouble is that a considerable number of hon. Members were not in the Committee when the Financial Secretary made his speech. The hon. Gentleman did not limit himself, as he might well have done, if he had been wise, to saying that negotiations were going on, that they were confidential and that he was not going to say anything about the proposals. He quoted details of them, and quoted proposals made by the Treasury about what was to be done for children. If he quoted—[HON. MEMBERS: "Speech."] We are in Committee, are we not?

The Chairman

The Minister having given way, the right hon. Gentleman is entitled to intervene, but it is not usual to intervene in a Minister's speech at such length.

11.30 p.m.

Mr. Hudson

Nor, if I may say so with respect, Major Milner, is it usual for the Government to give a bowdlerised version of proposals that have been made. It is because they have refused to carry out the normal procedure of publishing a document from which they have quoted that I have risen to my feet. The Financial Secretary quoted some of the Government's proposals about children, but failed entirely to quote similar portions of the industry's proposals covering the same sort of prices of admission. Why did he do it? The only result was to create prejudice in people's minds.

Mr. Gaitskell

Nothing has been quoted from. My hon. Friend has not quoted from any document. He mentioned, in passing, that a proposal was raised about children. It was quite un-controversial, as far as I know. I do not think that is a point at issue at all, but he thought it would probably be of interest to the Committee. I think the Government are entitled to decide whether they should tell the Committee and whether they think the Committee would be interested, as obviously they were, in the way in which we thought this problem might be solved. That is all that has happened. I do not wish to carry the matter any further, only because I do not wish to prejudice the negotiations. If, at a later stage, the negotiations break down completely, no doubt all the offers and counter-offers can be made public, but I submit that meanwhile we had better leave the matter as it is.

There are only two other points of importance which have been raised by the right hon. Gentleman. In the first place, there is the position of the small exhibitors. I am aware of the number of cases that have been brought up, and as a matter of fact I think that in the discussions—I feel most apologetic in referring to them—with the trade last year and this year a considerable amount of attention has been concentrated on that point. I do not wish to be pulled up by the right hon. Gentleman again and told that I must not give this information, so I will not say more than that is being fully borne in mind in these discussions. We are anxious to try, so far as we can, to improve their position relative to that of other exhibitors.

The last point was the question of the structure of the present tax, and on that I would say that we are prepared to have a discussion with the trade in due course on the present rates of tax and the way in which the incidence is felt, to see if we can get a more satisfactory arrangement. I have no objection to that. The Customs officials are quite willing to sit down with the industry and talk it over with them. But I must say that I do not think it will be very easy—not quite so easy as some hon. Members assume—to find a satisfactory solution.

I must reserve the right, as Chancellor, myself to define, in the last resort, what the taxes shall be, but we are willing to discuss the matter with the industry to see if we can find, before next year's Budget, a more satisfactory arrangement. I hope that with these explanations and assurances we can now have the Clause.

Mr. O'Brien

What does my right hon. Friend mean by "the industry"? Does he refer only to the employing interests or is he willing to consider the trade union interests as well?

Mr. Gaitskell

I am prepared to consult the trade union interests as well.

Mr. O'Brien

I am obliged to my right hon. Friend.

Clause ordered to stand part of the Bill.

To report Progress; and ask leave to sit again.—[Mr. Royle.]

Committee report Progress; to sit again Tomorrow.