HC Deb 21 June 1921 vol 143 cc1267-79

On and after the first day of August, nineteen hundred and twenty-one, in lieu of the entertainments duty imposed by Section one of the Finance (New Duties) Act, 1916, as amended by Section three of the Finance Act, 1917, Section eleven of the Finance Act, 1918, and Section seven of the Finance Act, 1919, there shall be charged, levied, and paid on all payments for admission to any entertainment as defined by the Act of 1916 an Excise duty at the following rates (namely):—

Where the payment, excluding the amount of the duty—

s. d.
exceeds 1d. but does not exceed 2½d. 0
exceeds 2½d. but does not exceed 5d. 0 1
exceeds 5d. but does not exceed 7½d. 0
exceeds 7½d. but does not exceed 1s. 1d. 0 2
exceeds 1s. 1d. but does not exceed 2s. 1d. 0 3
exceeds 2s. 1d. but does not exceed 3s. 2d. 0 4
exceeds 3s. 2d. but does not exceed 4s. 0 6

s. d.
exceeds 4s. but does not exceed 5s. 0 9
exceeds 5s. but does not exceed 7s. 6d. 1 0
exceeds 7s. 6d. but does not exceed 10s. 6d. 1 6
exceeds 10s. 6d. but does not exceed 15s. 2 0
exceeds 15s., 2s. for the first 15s. and 6d. for every 5s. (or part of 5s.) over 15s.—[Mr. Newbould.]

Brought up, and read the First time.


I beg to move, "That the Clause be read a Second time."

I am very reluctant indeed to occupy time at this hour, particularly because if I am to do justice to the case I am afraid it will take some considerable time. However, I must as briefly as I can put the essential points. It would be foolish of me to pretend that I am entirely disinterested in this matter, seeing that I am occupied in the industry concerned, but I do claim to have given as much attention to the effect which my proposals will have on the revenue derived from the tax as I have to the effect which the tax will have on the industry itself. It is because I am satisfied, and convinced I can prove by arguments, that my proposals would increase the Revenue rather than decrease it that I am venturing to occupy the time of the Committee in putting them forward. The proposals themselves are nothing more than justice and equity demand, and they are devised in the light of knowledge and experience and forethought, and they are also based on facts and figures which are not disputed, which have been put before the Customs and accepted by them. In my opinion the proposals should be welcomed by the Chancellor of the Exchequer because they will, over a period of years, and a short period of years, enormously increase the revenue which he derives from this source. The Chancellor of the Exchequer, I know, will refuse the proposals on one ground only, that the Revenue will lose something this year, and he will say to the Committee: "I cannot afford to lose anything this year, be it only comparatively small." He probably will not tell the Committee, but I must tell the Committee, and I will try to convince him that if he did accept these proposals, over about three, four, or five years,—there is no question whatever, in my mind—and I can bear it out by figures and arguments—he would receive considerably more than he is now doing from this revenue.

The Chancellor of the Exchequer is going to get infinitely less this year than he got last year. He is going to lose revenue in any case, and mainly for this reason, not because of the general depression and the inability of people to spend money, but because by the taxes on cigars and champagne and so on the industry is over-taxed, prices of admission have to be raised to a higher standard than people will pay, and the consequent result is the number of attendances has fallen enormously. With regard to this question of the number of attendances, I can give a few very startling figures to the Committee. I will take twenty typical cinema theatres spread all over the country. I find that in these twenty theatres, of average seating capacity, in the year 1920 the number of attendances was 1,350,000 less than in the year 1919. I now take the first twelve months of the year 1921 and I find that the number of attendances again fell as against 1920 by a figure which at the end of the year, if it maintained the same number of attendances, would add another 1,400,000 to the fall in 1920. That would mean that the attendances for the current year would be something like 2,700,000 less in these twenty ordinary typical theatres than in 1919. That means, of course, that the Exchequer is going to lose very heavily in the revenue derived from this tax. In 1919, when this decrease in attendances commenced, it synchronized exactly with the fact that the exhibitors found it necessary to put up their prices. They found it necessary to put up their prices, ever so little, in order to meet the increased cost of running these places, the increased price of films and many other things, and the fall in attendances started with the increase in price.

I would point out to the Committee that, owing to the nature of the incidence of this tax, the exhibitor is not at liberty to raise or lower his price by a small sum, such as ½d., 1d. or 2d., in order to meet the changing conditions—increase in cost or decrease in the ability of the public to pay. He is not able to make this very small increase without making, in addition to it, a very much heavier and larger proportional increase in the amount of the tax.

Let us take an instance. Suppose the price charged for admission, including tax, is 3d.; the tax is ½d. and 2½d. is the money retained by the exhibitor. Supposing now that the exhibitor says: "I can no longer afford to take people into my place at 3d.; I am going to increase the price to 4d." The tax is then increased by 100 per cent.; so that whereas the tax on 2½d. is ½d., the tax on 3d. is 1d., making 4d. inclusive, an increase in the tax of 100 per cent., just because the exhibitor has to put his price up ½d. because he can afford no longer to sell his seats at this price.

Take another charge. If you charge 4½d. for admission and add 1½d., the amount of the tax, you get a 6d. seat; 4½d. for the exhibitor and 1½d. for the Exchequer. If you say that you cannot afford that seat, if you want to make your 4½d. seat into a 5d. seat and add ½d. to the price of the seat, you have also to add ½d. to the amount of the tax. Therefore, whenever we want to increase our prices ever so little—and they must be little if we are to retain the public—we have to add to the increase, we put on the increase in the tax, and thus we get the sum of these two increases, which makes the prices higher than the public will pay. What happens exactly is that the people who used to pay 6d., who used to go into the 6d. seats, no longer do so; they go into the 3d. seats; the people who used to go into the 9d. seats go into the 6d. seats; the people who used to go into the 1s. seats go into the 9d. seats, and so on. When you come to the much more expensive seats which you depend on for your profits, you find them empty, because people cannot afford to pay the price. That is the effect of the tax.

Before the War the cinema theatres in this country compared more than favourably with the cinema theatres in America, which is the great home of the cinema theatre. The theatres were as good in every respect. They were as large, as well-built, as well-ventilated, and in every way compared favourably with the American theatres. During the War we were unable to build, we were unable to enlarge, we were unable to improve our theatres. But film production at that time in America developed enormously, and made very rapid strides during the period of the War. Whereas before the War we had an entertainment of an hour or an hour and a-quarter, which cost us something between £25 or £30 or £60, making an entertainment which we could run through eight times in a day, we now have an entertainment which occupies two and a-half to three and a-half hours, an entertainment which we can only put to use three times or at the very outside four times a day, costing us five times the amount of money for the films which we show owing to the enormous development and improvement which has taken place in film production. We used to think that a 1,000-feet film was too long; in fact, before the War we very often turned down a film of 1,000 feet in length because it was too long. Now we cannot procure a film of any value at all under 5,000 feet, and our films run into 10,000 feet, and the film which cost £1,000 or £2,000 to produce before the War now costs £10,000, £20,000 or £100,000 to produce, and to hire that film for one of our shows for two or three days frequently costs us £300.

1.0 A.M.

What I am trying to bring the Committee to is this, that whereas before the War these cinema theatres were admirably fitted in every way to the form of entertainment which we gave, and gave very profitably, to-day the cinema theatres are a great deal too small to hold the number of people to take the money to pay these enormous increases in the cost of running, the cost of programmes, the higher wages, the higher assessment, the higher cost of electric light, the higher cost of everything connected with the running of our entertainments. But there is one essential thing that we have to do if the industry is, to become in a promising condition. We must enlarge our theatres, and where we cannot enlarge our existing theatres we must build new theatres in their place. What in effect are my proposals? They amount to this, that in a range of prices—3d., 6d., 9d., 1s., 1s. 6d., and 2s.—if you fill one of each of that category of seats you receive a total of 6s. Out of that total of 6s. the Chancellor of the Exchequer takes by way of Entertainments Duty 1s. 3d. and leaves the exhibitor 4s. 9d. My proposals are very moderate. I am re-arranging the incidence of the Duty so that out of every 6s. instead of taking 1s. 3d. he should be satisfied with taking 1s., leaving us 5s. But you say "Threepence out of 6s. How can you meet the case you are putting to the Committee by what is so small? Your case seems absurd." I think the figures I have given in regard to the number of attendances show that we deal with vast numbers of people. Whilst 3d. in 6s. sounds very little indeed, when you come to deal with tens of millions of people you, will find it will very soon mount up to a considerable sum. I tell the Chancellor of the Exchequer that every penny of the concession which I am asking him to make us will come back through the rebuilding and enlargement of existing theatres and provide him with the revenue he expects to get from these duties. There are hundreds of these theatres which will go out of business unless he can make these concessions. Instead of next year receiving more revenue from the taxes of that industry he will get less because the existing theatres cannot be enlarged. For the sake of a sum of money—I do not know at what he estimates the amount—for the sake of this sum of money, which is really small, he is going to sacrifice revenue for years to come, and it will take years to overcome the damage he will do to the industry unknowingly.

I must thank him for receiving a deputation in this matter, which I led myself and laid the case before him frankly. He rightly referred it to advisers at the Customs. I had three hours with the Customs authorities. They commenced by challenging my figures and ended by accepting them. They started by challenging my arguments and finished by stating there was a great deal in them. They said it was going to cost the Revenue money. I have cut out so many essentials that I cannot do justice to the case at this hour of the night, but I can assure the Chancellor of the Exchequer that I am absolutely correct in saying that unless he can make this concession he is going to lose millions of money during the next five years. One of his predecessors made a concession to the industry in 1918, which the Customs authorities said would cost the Exchequer £200,000. The whole of the concessions I then asked for would have cost £1,000,000. That concession increased the Revenue by over £1,000,000, and the only regret of the Chancellor of the Exchequer was that he did not give us the whole of the concessions. If he had given us the whole he would have increased the Revenue still more. We must enlarge our buildings and decrease the prices of admission. The revenue is going down rapidly, as I know it by having the figures for seventy cinema theatres every day. I know he is going to lose heavily this year, and every penny he gives back will go in capital expenditure. I hope he will consider this, and not do an injustice to an industry which has done its best to serve him in war and at all times of national crisis.


I wish to supplement and support the arguments that have been advanced by my hon. Friend. My wish is to call the attention of the Chancellor of the Exchequer to the fact that this duty was originally a war measure. Like many other war measures conditions have unfortunately made us continue them into peace. This, and similar war measures, are more irritating when nothing is done to meet argument arising out of personal experience. It has been frankly stated that the Treasury may lose some small revenue this year, but I am also certain that it is an absolute fact that what would be lost by the operation of the Clause this year would be more than recouped in the years to come. After all the Chancellor of the Exchequer does not live from hand to mouth. That policy always brings its own penalties. In the case of champagne and cigars the prophecies of those connected with the trade came true and the Treasury had to relax the taxes after they had done almost mortal injury to the two industries.

A graduated scale would assist the cinema trade to be carried on in the coinage of the realm, which after all has some effect upon people's spending. The present basis makes for delay in handing coins. In this new Clause you will have 3d., 6d., 9d. and 1s. You may say that is only a small difference between the taxes. It makes a difference to the people when their spending power has been reduced. It used to be a great method of conducting trade by selling things for 1s. 11½d. because it did not seem as much as 2s. Exactly the same thing occurs if people want entertainment. When they can get it for 6d. instead of 7d. it makes a difference in breaking into a 1s. Under the present incidence of the Duty, because it breaks into the shilling of the person who would be going to the sixpenny seat it was doing an injury not only to the trade, but the Treasury as well. With reference to one part of the proposed scale I want to impress on the Chancellor of the Exchequer as a very serious consideration its effect on children's matinees. This is really a question of the poorest section of the community—the children of the working classes in the dense areas of population. In the pre-War days, as referred to by my hon. Friend, costs were low and it was within the power of the exhibitor and the owner of the cinema to give an entertainment at children's matinees for a penny, and although no profit was made it covered the costs. It was an enormous advantage to the poor in the large towns and cities, and these children of parents of limited means had the opportunity of getting pleasure, and education as well, and amusement from the cinemas. But with the increased costs, both in wages and in the raw material, it is an impossibility for children's matinees to be given at a figure of a penny. Twopence might cover the bare costs, but if the duty is maintained at its present basis tens of thousands, probably hundreds of thousands, of the poorest children will be denied this source of entertainment and education because it would be impossible for the cinema proprietors to give matinees for children at a penny. Twopence would probably cover their costs, but no more.

I beg the right hon. Gentleman to realise that this is a form of tax that is going to help the Chancellor of the Exchequer more and more as the years roll by. Although the duty is a war measure, the majority of those who are affected by it recognise that it must continue for some considerable time. But, bearing that in mind, let him have a little vision for his successor. I hope it may not be next year or the year after, but the time will come when there will be a successor, and let him remember that he inherited the tax on cigars and champagne—a penalty inflicted by his predecessor—and let him have some little vision for his successor and not inflict on this industry an injury which means a reduction to the Treasury as well as an injury to the trade itself. I ask him to take that bigger vision, accepting the evidence we give. He said that he wanted to consult his advisers. Where do his advisers get their information from? Simply by sitting in their offices, speculating and laying down a hypothesis that if so-and-so happened last year, so-and-so must happen now, and without any relation to actual experience. This Schedule is the outcome of the experience of an industry that has not only given support to the Government and the country during the War, but is prepared to bear its fair share of the burden; out it wants the right hon. Gentleman to take that experience, which is in the interest of the Chancellor of the Exchequer as well as of the trade itself, against the mere speculations of his Departments. If ho takes the latter he would find that a mistake has been made and a grave injury has been done to a form of entertainment that brings joy and pleasure to multitudes of the people of this country.


I should like, in the first place, to say that I cannot really accept the statement of my hon. Friend when he suggests that all of the information with which my advisers are able to supply me is that which they can find by sitting in their offices and conceiving for themselves some imaginative figures. That, I think the hon. Member who moved the Clause will agree, by no means describes what took place in connection with this matter. My advisers went thoroughly into the figures of the cinema entertainments, and they discussed with the hon. Gentleman himself what those figures represented and what might be achieved by adopting the proposals. I do not think there was very large disagreement between them in the end. I think there was not much dispute about the figures or what the results in money would be. Nor do I think there was any grave difference as to the arguments. But the result is that on the figures we should lose in a full year—not in this current year—something like £2,500,000.


Oh! That shows where they get their figures.


If the scale now suggested were adopted.


That is if the number of attendances remained the same as last year.


No doubt it is upon that basis. Of course we are suffering at present not merely from a general depression, but also from the experience of the coal stoppage. It cannot be expected that we are going to have anything like an ordinary year's revenue. Therefore my position is really more perilous than it would be. Undoubtedly the scale proposed would have a serious effect on the revenue to be drawn from cinema houses in the present year. My hon. Friend must accept that as the considered judgment of people who have had all the proper figures before them for forming a judgment.

On the general argument, I would like to point out to the Committee that we are just now having precisely the same proposition put to us by every trade and industry. It is said by each industry in turn: "If you go on taxing us to this extent you would be depriving us of those sums of money which we have been laying aside for development, and the less we are able to develop the less revenue you will get in the future."That is the regular, stereotyped argument which industry always puts forward to any Chancellor of the Exchequer. No one can say to a nicety what really will happen. No one can say what the precise amount of money is which any industry will require in order to conduct its appropriate development, and in each case it is for the Chancellor of the Exchequer to balance as well as he can the possibilities. It would be foolish for him in one case to take more money than the industry can afford if it is going to kill the goose that lays the golden egg; on the other hand if he has to find enough revenue on which to carry on the country then he must get as much as he can without doing injury to the industry. These undoubtedly are the principles on which he must proceed. We are not satisfied, on the one hand, that the cinema industry is going to suffer so badly as those who represent the industry say. There is always a certain amount of exaggeration put forward in the case of any person who comes to the Chancellor of the Exchequer to ask for some remission of taxation. On the other hand the State undoubtedly, particularly in this year, cannot get along without

revenue which the present scale of taxation upon the cinema industry yields. Our difficulties grow greater every day instead of less. One would like to remit as much taxation as possible but we have to deal with facts and to confront the realities of the situation. So in dealing with them I cannot see that it is possible to make the changes which the mover of this Motion himself acknowledges would inevitably result in the reduction of the revenue which we should obtain from the cinema industry this year.


Two and a half millions.


That is the figure we have arrived at upon the best information we can get, and we must accept the information that you obtain after you have made sufficient investigation to satisfy yourself. Looking at all the facts it is impossible for us to do anything which would enable me to remit taxation upon the cinema industry, and accordingly to my great regret I cannot accept the Motion which my hon. Friend has made.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 9; Noes, 135.

Division No. 187.] AYES. [1.23 a.m.
Acland, Rt. Hon. Francis D. Henderson, Major V. L. (Tradeston) Wedgwood, Colonel Joslah C.
Barnes, Major H. (Newcastle, E.) Holmes, J. Stanley
Benn, Captain Wedgwood (Leith) Morgan, Major D. Watts TELLERS FOR THE AYES.—
Entwistle, Major C. F. Remnant, Sir James Mr. Newbould and Mr. Seddon.
Agg-Gardner, Sir James Tynte Coote, Colin Reith (Isle of Ely) Harmsworth, C. B. (Bedford, Luton)
Amery, Leopold C. M. S. Cope, Major William Hennessy, Major J. R. G.
Armitage, Robert Davidson, J. C. C. (Hemel Hempstead) Henry, Denis S. (Londonderry, S.)
Atkey, A. R. Davidson, Major-General Sir J. H. Hope, Lt.-Col. Sir J. A. (Midlothian)
Bagley, Captain E. Ashton Davies, Alfred Thomas (Lincoln) Hopkins, John W. W.
Baird, Sir John Lawrence Davies, Thomas (Cirencester) Horne, Edgar (Surrey, Guildford)
Baldwin, Rt. Hon. Stanley Doyle, N. Grattan Horne, Sir R. S. (Glasgow, Hillhead)
Balfour, George (Hampstead) Elliot, Capt. Walter E. (Lanark) Hotchkin, Captain Stafford Vere
Barlow, Sir Montague Evans, Ernest Hunter, General Sir A. (Lancaster)
Barnett, Major Richard W. Eyres-Monsell, Com. Bolton M. Jameson, John Gordon
Barnston, Major Harry Falcon, Captain Michael Jones, Henry Haydn (Merioneth)
Bell, Lieut.-Col. W. C. H. (Devizes) Falle, Major Sir Bertram Godfray Joynson-Hicks, Sir William
Bellairs, Commander Carlyon W. Fildes, Henry Kellaway, Rt. Hon. Fredk. George
Benn, Capt. Sir I. H., Bart. (Gr'nw'h) Ford, Patrick Johnston Kidd, James
Betterton, Henry B. Forestier-Walker, L. King, Captain Henry Douglas
Birchall, Major J. Dearman Foxcroft, Captain Charles Talbot Lane-Fox, G. R.
Boscawen, Rt. Hon. Sir A. Griffith- Fraser, Major Sir Keith Law, Alfred J. (Rochdale)
Bowyer, Captain G. W. E. Fremantle, Lieut.-Colonel Francis E. Lindsay, William Arthur
Boyd-Carpenter, Major A. Gange, E. Stanley Lloyd-Greame, Sir P.
Bridgeman, Rt. Hon. William Clive Ganzoni, Sir John Locker-Lampson, Com. O. (H'tingd'n)
Briggs, Harold Gee, Captain Robert Lyle, C. E. Leonard
Brittain, Sir Harry Gibbs, Colonel George Abraham M'Lean, Lieut.-Col. Charles W. W.
Brown, Major D. C. Gilmour, Lieut.-Colonel Sir John McNeill, Ronald (Kent, Canterbury)
Bruton, Sir James Glanville, Harold James Mallalieu, Frederick William
Buckley, Lieut.-Colonel A. Goff, Sir R. Park Manville, Edward
Butcher, Sir John George Gould, James C. Moore, Major-General Sir Newton J.
Carr, W. Theodore Greene, Lt.-Col. Sir W. (Hackn'y, N.) Moore-Brabazon, Lieut.-Col. J. T. C.
Chamberlain, Rt. Hn. J. A. (Birm, W.) Gretton, Colonel John Morrison, Hugh
Chamberlain, N. (Birm., Ladywood) Hacking, Captain Douglas H. Neal, Arthur
Clay, Lieut.-Colonel H. H. Spender Hallwood, Augustine Newman, Sir R. H. S. D. L. (Exeter)
Colvin, Brig.-General Richard Beale Hamilton, Major C. G. C. Ormsby-Gore, Hon. William
Conway, Sir W. Martin Hannon, Patrick Joseph Henry Parker, James
Parry, Lieut.-Colonel Thomas Henry Sprot, Colonel Sir Alexander Weston, Colonel John Wakefield
Pickering, Colonel Emil W. Stanier, Captain Sir Beville Wheler, Col. Granville C. H.
Pollock, Sir Ernest Murray Stanley, Major Hon. G. (Preston) White, Col. G. D. (Southport)
Pownall, Lieut.-Colonel Assheton Steel, Major S. Strang Williams, C. (Tavistock)
Pretyman, Rt. Hon. Ernest G. Stephenson, Lieut.-Colonel H. K. Wills, Lt.-Col. Sir Gilbert Alan H.
Purchase, H. G. Sugden, W. H. Wood, Hon. Edward F. L. (Ripon)
Raper, A. Baldwin Sutherland, Sir William Worthington-Evans, Rt. Hon. Sir L.
Rawlinson, John Frederick Peel Thomson, F. C. (Aberdeen, South) Young, E. H. (Norwich)
Roberts, Samuel (Hereford, Hereford) Thomson, T. (Middlesbrough, West) Young, Sir Frederick W. (Swindon)
Robinson, S. (Brecon and Radnor) Thomson, Sir W. Mitchell- (Maryhill) Younger, Sir George
Samuel, Samuel (W'dsworth, Putney) Tryon, Major George Clement
Sanders, Colonel Sir Robert Arthur Walters, Rt. Hon. Sir John Tudor TELLERS FOR THE NOES.—
Scott, Leslie (Liverpool, Exchange) Ward, William Dudley (Southampton) Mr. McCurdy and Colonel Leslie
Shaw, Hon. Alex. (Kilmarnock) Watson, Captain John Bertrand Wilson.
Shaw, Capt. William T. (Forfar)

Question put, and agreed to.