FIRST SCHEDULE.

HC Deb 24 February 1938 vol 332 cc606-45

The following Amendments stood, upon the Order Paper in the name of CAPTAIN ARTHUR EVANS:

In page 40, line 7, column 1, leave out "15," and insert" 20."

In line 16, column 1, leave out "30," and insert "40."

In line 21, column 1, leave out "12½" and insert" 15."

In line 30, column 1, leave out "25" and insert "40."

Mr. Speaker

All the Amendments in this series deal more or less with the same subject and it would probably be convenient to discuss them together on the first Amendment.

5.0 p.m.

Captain Arthur Evans

I beg to move, in page 40, line 7, column 1, to leave out "15," and to insert "20."

I am very happy, Mr. Speaker, that you have made that suggestion, because when discussing the renters' quota it is difficult to avoid introducing arguments which apply to the exhibitors' quota.

Mr. Day

Is it not all a question of finance?

Captain Evans

I am glad that the hon. Gentleman has given me the opportunity of saying that I have no financial or any material interest of any kind in the film industry or any section of it, and I am not a shareholder in any section of it. While congratulating myself on that fact, may I say that my only interest is that, in common with many other hon. Members, I am anxious to see as many pictures of British production as possible exhibited, not only in this country but in the United States as well. From the discussions which took place yesterday on Clauses 3 and 15, the House will have gathered that the First Schedule is really the heart of the Measure. Unless we can persuade my right hon. and gallant Friend and the Board of Trade to review their present proposals, I am apprehensive that when the Bill becomes an Act, it will not carry out the will of Parliament and of the people. I take it that the ultimate aim of the Bill is to stimulate the growth of the British film industry to a point at which it will be capable of holding its own in competition, without any statutory aid, but at present I think the House clearly recognises the need for fostering the native art of the cinema under the protection of this Measure. Much, therefore, hangs upon the figure for percentage of the exhibitors' quota, to be decided by the House this afternoon. Hon. Members will recall that the quota figure determines the minimum number of British films that audiences must see, and, ultimately, the degree of security enjoyed by producers and the number of films which they will be called upon to make.

The first two of these Amendments relate exclusively to renters' quota. Their purport is clear. The first proposes to raise the renters' quota to the 20 per cent. at which it has stood for the last two years. The second proposes to raise the top limit of the renters' quota from 30 per cent. to 40 per cent. If this latter Amendment is accepted, it is assumed that consequential Amendments will also be accepted to grade up the quota, so that it will reach that figure by easy stages. With regard to the quota for the year beginning on 1st April next, the main point is that the renters' quota has stood at 20 per cent. for the last two years and under that figure, British producers have been enabled to produce 7½ per cent. in excess of the quota under the present Statute.

I invite the House to remember that my right hon. and gallant Friend yesterday, and my right hon. Friend the President of the Board of Trade in Committee, said that the only reason for not increasing the quota, or, as against that, for lowering it from the present figure of 20 per cent. to 15 per cent., was that there would be certain "temporary difficulties" owing to new obligations imposed by the Bill. But the difficulties to which my right hon. Friends drew attention were not, I think, difficulties which could not be overcome. The only obligation of any consequence, as far as the renters' quota is concerned, is that the films will have to conform to a cost test. The merit of a cost test, as the President of the Board of Trade has reminded us, is that it makes certain that the renter will know where he stands. If he spends the necessary money on the film, it will qualify for quota. Under the Bill, if his labour costs are over £7,500, his film for the purposes of quota will count once. If the labour costs of his film exceed £22,500, it will count double. Surely those conditions, it might well be argued, do not create difficulties but make it easier for the renter to fulfil his quota than ever before under the existing Act.

In such circumstances, I seriously submit to my right hon. and gallant Friend that there is no justification for not starting the renters' quota at 20 per cent., the figure at which it has stood for the last two years. The capacity of British film producers is more than adequate to meet the requirements. I am informed on very good authority that there are no fewer than 60 stages in film studios on which no production is going on at the present time, and that there are some thousands of technicians, skilled artisans and artists out of work. It is common knowledge and commen opinion in the industry that it needs only a stiffening of the renters' quota to put many of those back into work. The President of the Board of Trade in Committee defended the reduction by saying that the original figure was largely made up of what are known in the trade as "quota quickies" which, under the cost test imposed by the Bill, will cease to be made. Therefore, he argues that the maintaining of the proportion at 20 per cent. would leave the exhibitors without a supply sufficient to enable them to fulfil the law.

As I attempted to show yesterday, this is far from the case, but even if my right hon. Friend is right in his argument—and that is the important point which the House has to bear in mind—that the producers would not be in a position to supply the number of pictures required, he is in a position to excuse cinemas which cannot in certain circumstances carry out fully their quota obligations. Therefore, the danger, if it exists at all—and I submit that it does not—is adequately safeguarded in the Bill as drafted. I agree with what has been said by my right hon. Friend the President of the Board of Trade that the industry is in a parlous state. Most of its studios are closed down, and the vast majority of its actors and technicians are out of employment. What is the reason? That is the fact which I am endeavouring to ascertain. I suggest that it is not, as my right hon. Friend suggested because worthless films called "quota quickies " have been produced in the past, but because the springs of finance have dried up. I submit that it is mainly because the existing Act failed to offer the City adequate security for money invested in the British film trade that we are in the state in which we find ourselves to-day. It is obvious that whatever plans have already been perfected for expanding production, it is impossible for the producers to go ahead with that work unless they can command the necessary finance for their productions. The production of a film, particularly one of high quality and one calculated to appeal not only to English audiences but to audiences of an international character is a very expensive undertaking. To-day we have to satisfy the people who are called upon to put up the money that the conditions are favourable for that purpose.

In Great Britain there is, I believe, sufficient organisation and equipment to produce 10 times as many films as are required by the present suggestion of an exhibitors' quota of 12½ per cent. We have to realise that before that equipment was established a vast amount of money had to be raised either by the City of London or directly from the public, to meet the cost of the erecting the necessary studios and providing the necessary machinery. It was possible to raise that money only because the existing Act which expires on 1st April next, raised hope in the minds of those who were optimistic as to the future of British pictures. But the supply has dried up because of the insecurity in the Bill which we are now considering. If we are really anxious to stimulate production, the vital need is to restore the necessary faith by giving a reasonable prospect of a substantial and permanently sheltered market for British films. It is common knowledge that those who are called upon to finance pictures to-day are not satisfied that an exhibitors' quota of less than 20 per cent. affords them the necessary protection. So much for the argument in favour of beginning the renters' quota at an adequate level of 20 per cent. I think my right hon. and gallant Friend will agree that the arguments for raising it gradually over a period of 10 years up to 40 per cent. are equally strong. He knows that the Moyne Committee suggested that there was no reason why the ultimate figure should not be 50 per cent.

I come to my last two Amendments on the Schedule. The object of those Amendments is to raise the exhibitors' quota scale from 12½ per cent.—25 per cent., now proposed in the Bill, to a 15 per cent40 per cent. range. I have already pointed out that the 12½ per cent. at present in the Bill is insufficient. It will be little use my right hon. Friend antedating the discretionary powers of the Board of Trade, if the film production industry is to be maintained in its present doldrums by such an inadequate quota at the start. While the exhibitors' quota under the existing Act is 20 per cent., the average of British films shown has been 27½ per cent. during the past two years. This shows, I think conclusively, that there is no unnecessary hardship imposed on the exhibitors by a quota of that percentage. Last night I cited certain British films which, I think, the average picturegoer will agree were of a very high standard, and I submit that the record of the immediate past may thus be taken as a guarantee of quality in the future. The statistics of equipment and the number of people available for employment may be held to ensure that not only will quality be produced, but quantity as well. I think there is no doubt that that necessary life-blood of British films, the finance, will be forthcoming if my right hon. Friend accepts the Amendment. If it is suggested that there is a danger that, with the high quota, some exhibitors may default through lack of supply, the answer is that they may be excused under Clause 13; but if the low quota is retained, there is the greater danger that there will be no supply at all, and that the objects of this Bill and the will of Parliament will be defeated.

5.17 p.m.

Vice-Admiral Taylor

I beg to second the Amendment.

I propose to speak first in relation to the renters' quota, and afterwards in relation to the exhibitors' quota, as they are not altogether the same. This question of the height of both quotas is one of the most vital parts of this Bill, and, therefore, I think it should be discussed in considerable detail. It is very necessary at the beginning of this discussion to remind ourselves why the renters' quota is in the Bill at all. It was put into the 1927 Act, so that the exhibitors might have the assurance that there would be sufficient British films produced for them to comply with their exhibitors' quota. It was through both of these quotas that we were to build up and establish on a firm basis the British film industry. Immediately this renters' quota was introduced, the renters looked upon it simply as a tax upon them, which they had to pay for the privilege of importing American films. The main object, therefore, is liable to be lost sight of. It was implicit in the 1927 Act that the films which they made or acquired, in order to fulfil their obligations, should be produced at a reasonable price—not bought at any price irrespective of quality. That would have been of no assistance whatever to the British film industry.

It is obvious now, that the operation of the 1927 Act, as far as the renters' quota is concerned, has been a complete failure. The renters, while they have complied with their quota obligations in regard to number of films, have not complied with the intention of the Act. They have complied with the letter of the law, and not with the spirit. They have introduced what everyone knows by the name of "quota quickies," which have merely served to bring disgrace upon the name of the British film-producing industry. These "quota quickies," made to comply with the quota at a ridiculously low price, have given rise to the belief that the British film-producing industry can produce nothing better. During the Committee stage of this Bill, the President of the Board of Trade advanced arguments to show why it was necessary for him to reduce the renters' quota to 15 per cent., whereas to-day and for the last two years it has stood at 20 per cent. He said that, in view of the fact that we now compel the renter, by means of a cost test, to make or acquire films of a reasonable price, we cannot expect him to fulfil a quota of 20 per cent., and accordingly, in the Schedule, it is reduced to 15 per cent. I would point out that it was always the intention of the 1927 Act that the renter should be acquiring or making, during all the time of the operation of that Act, films at a reasonable price; but because we are now forcing the renter to do by law what he ought to have been doing during the whole of the last 10 years, by imposing a cost test upon him, we are told that we have to reduce the quota percentage.

The President of the Board of Trade also advanced the argument, in support of his intention to reduce this percentage, that a new set of conditions was to be imposed which necessitated a reduction of the renters' quota. I submit that it is only technically correct to speak of a new set of conditions. In principle, the conditions in this Bill are exactly the same as in the 1927 Act—that the renters should make or acquire films at a reasonable price. The fact that they have not done so—and they have only failed to do so because they did not choose to do so—is surely a very poor argument for reducing the quota. It may be argued that it would be unwise to increase the quota percentage if we were not in a position to supply the necessary films. My hon. and gallant Friend who spoke to-day and yesterday has made it quite clear that, so far as the capacity of production of this country is concerned, there is no reason why we should not more than fill a 15 per cent., 20 per cent., or even 25 per cent. quota. It is absurd to suggest that—taking the basis of 450 American films which the President of the Board of Trade estimates will be imported next year—we cannot make more than 50 films, with the equipment which we have.

But there was another argument brought forward by the President of the Board of Trade. He said that, because the renters' quota year will start very shortly after the passage of the Bill, the reorganisation which they had to carry out entitles the renters to some remission of the quota for the first year, and that therefore we must reduce their quota percentage. To meet that argument, which was put forward in Committee, I would remind hon. Members that since the publication of the Government's White Paper last July the renter has been in no real uncertainty as to what his immediate obligations would be under the Act. The present Bill, for all practical purposes, is the White Paper, and, therefore, the renter has had ample time to make any reorganisation he may have considered necessary. But even supposing that he has made no arrangements for reorganisation, he is still in a position to make or acquire the films which will be required for a 15 per cent., 20 per cent., or even 25 per cent. renters' quota. Another consideration is that the double quota scheme makes it easier for him. There is yet another proposal in the Bill in regard to this matter. In the first year of the operation of the Act the renter is being permitted, just because the renters' quota comes into force very shortly after the Bill becomes an Act, to have the whole of the first year in which to fulfil his quota obligations, instead of having to fulfil them in each of the six-months' periods. I suggest that the arguments put forward by the President of the Board of Trade upstairs for reducing the renters' quota have no substantial foundation.

Into the question of whether we are capable of producing I will not go further, because that has been already dealt with. The question of finance also has been dealt with. But I would remind the House that whatever height you may fix the renters' quota at, the renter pays, therefore, there is no difficulty about it. Otherwise, he defaults in his quota obligations. It may be argued that that is a very unfair burden to place on the back of the renter. But why? He has, for the last two years, had the obligation placed upon him. He has not carried it out, I agree. In the year 1939, under this Bill, he will have to carry the same obligation of 20 per cent. I would like to know what facilities the renter will have in a year's time to complete his quota obligation. I suggest that if this Bill goes through as it is, the facilities for British production will be less, because during that time many of our best technicians will have left the film industry and they will not be attracted back to it. There are an enormous number of people out of work already. They cannot stay out of work and they must divert their interests to some other sphere. They will leave the film industry. I do not object at all to the double quota provided the percentage of the renters' quota is raised in proportion, but that is not the case. If all the films in the renters' quota were to count only one, we could amply fulfil the quota percentage of over 20 per cent., and, where we have the double quota scheme in operation which automatically reduces the number of films required by the renter to fulfil these obligations, it must be evident that the renters' quota should be raised. I will leave that point, and I am sorry to have to detain the House for so long, but to me the Films Bill is very important.

I now propose to deal with the question of the exhibitors' quota. It is different. It is by means of the exhibitors' quota that we can give real protection to British films. The voluntary film is the film that we wish to help, and it can receive protection through the exhibitors' quota. There was a separate quota scheme suggested in Committee, but that has been rejected. That would have been the means of giving protection to the British voluntary film, and it would only have been from 7½ per cent. to 5 per cent. Therefore, all that we can do now is to make the best of the exhibitors' and the renters' quotas as they are in the Bill. The way to do it is to make the exhibitors' quota higher, and in this connection, I would draw attention to the very en-light leading article in the "Times" and commend hon. Members to read it. They will find it very illuminating. As far as the exhibitors' quota, which is fixed at 12½ per cent. in the Bill, is concerned, it may be argued that because of the double quota scheme, the renters' quota could be reduced from 15 per cent. to 7½ per cent. Therefore there would be an excess margin in the exhibitors' quota, which is 12½ per cent., of 5 per cent. over the renters' quota, and automatically in this Bill there has been provided this sheltered market for the British film. I agree that that is a most excellent thing, but I suggest that, if the renters' quota was raised to 20 per cent. and the exhibitors' quota, in accordance with the Amendment of my hon. and gallant Friend, was raised to 15 per cent., and we were to have exactly the same relative position, there would be a great increase in the volume of British film production. That is the object of the Bill. Unless we have volume in the production of films we shall not get quality, and you must have quantity if you are to get quality, and the way to get quantity is to increase the percentages of these quotas.

I want to deal exclusively with the figures given by the President of the Board of Trade, and I am extremely sorry that he is not able to be present in the House to-day, particularly so because it is on account of illness. The right hon. Gentleman stated in Committee that the fixing of the exhibitors' quota was very largely a matter of mathematics. He insisted upon it, and mentioned it several times, and said that the greatest difficulty arises over the exhibitors' quota for the first year. I am sure, having said that it was largely—almost entirely—a question of mathematics, the President of the Board of Trade will welcome an analysis of the figures which he used as an example and as a reason for lowering the exhibitor's quota. I will take the figures, and we will see. The President of the Board of Trade stated that 50 odd films would be made for the first year for the renters' quota and that 50 would be made outside—100 films altogether. He then stated that it was by no means abnormal to find five first-run theatres in direct competition with each other, with a programme of two features changed once a week, and that there were even worse cases than that in the country. As a practical illustration, this would mean, allowing for Sunday opening in some cases, for each cinema a showing of about 160 films in a year. He went on to say that a 10 per cent. exhibitors' quota, as it was then, would mean that each theatre during the year would have to show 16 British films—80 altogether.

What is in fact the mathematical truth of the example given for the direct purpose of showing to the Members of the Committee upstairs that he was justified in lowering the exhibitors' quota? The example was given by him of five first-run cinemas in direct competition, each requiring 160 films a year. Five times 160 films is 800. There have never yet been 800 films in this country in any one year, and that was confirmed by the Parliamentary Secretary in his speech yesterday, when he stated that the total number of films both British and foreign had been 618 in 1932, 643 in 1933, 679 in 1934 and 667 in 1935, rising to about 700 during the last two years. The figures given by the Parliamentary Secretary included the Colonial and the Indian films which are never shown, bought to fulfil the renters' quota, and also a number of films made abroad in foreign languages, German, French or whatever it is, and shown only in particular theatres in this country. Even if we include these films and the quota quickies, which have never been exhibited, there is nothing like 800 films available for exhibition in any one year. There is definite proof, and I challenge anybody to contradict it, that the example given by the President of the Board of Trade was mathematically impossible. There never can be five first-run cinemas in direct competition requiring 160 films a year each, and, more over, the President of the Board of Trade told us in Committee that this was not an abnormal case and that there were even worse cases.

There is another point in respect to which I wish to examine this question, and it is an important one. It is that of the choice of the exhibitor, the number of films an exhibitor requires and the number of films from which the exhibitor can choose. The President of the Board of Trade quoted the example of these five first-run cinemas. They would have an insufficient margin of choice if they had to take 80 British films and had only 100 to choose from. It would be a terrible position in which the exhibitors would be placed. How much better would they be in their choice of the American films at their disposal? Let us see.

Captain Wallace

I do not want unnecessarily to interrupt my hon. and gallant Friend but as we are going into mathematics, we might perhaps just as well keep together as far as we can. My hon. and gallant Friend will no doubt take into his calculations the fact that, since he made that speech in Committee upstairs, the Committee has raised the exhibitors' quota from 10 per cent. to 12½ per cent., and that, therefore, it would not be 80 but 100 that would be required.

Vice-Admiral Taylor

I am quite prepared to take a figure of 100. I do not mind at all. We will take it that they have a quota of 100 British films and that they require 100 British films. Is that the argument?

Captain Wallace

indicated assent.

Vice-Admiral Taylor

All right then. I take the case of the exhibitor. The exhibitor, as far as British films are concerned, requires 100, and he will have 100. He has no opportunity of choice, and it is a very bad position for him. Let me examine the margin of choice with regard to American films.

Captain A. Evans

Before the hon. and gallant Member leaves the point, may I remind him that in the year ending 31st December, 1936, there were no fewer' than 222 British long-feature films registered as against 752 of foreign manufacture.

Vice-Admiral Taylor

I am much obliged to my hon. and gallant Friend, but I am basing my argument entirely on the figures of the President of the Board of Trade, and I am showing how absurd they are. As far as the American choice is concerned, in the case put forward by the President of the Board of Trade they will require, if they take 100 British films, 700 American films. They want 800 altogether, and if they get 100 British films then 700 must be American films. But the President of the Board of Trade said in Committee that only 450 films would be imported next year and, therefore, the exhibitors in this country, as far as American films are concerned, while requiring 700, will have only 450 from which to choose. Therefore the exhibitor has an infinitely better margin of choice with regard to British films than as regards American films. That shows the absurdity of the example given by the President of the Board of Trade in Committee in order to show how necessary it was to reduce the exhibitors' quota.

The significant fact is that it is upon this entirely erroneous mathematical calculation that the exhibitors' quota is low in the Bill, and I think I have proved conclusively that these mathematical calculations are entirely wrong. Actually where there are five cinemas in competition requiring 160 films a year each, it is a mathematical impossibility that they can all be first-run cinemas, some will be second-run cinemas, and perhaps some will be even third-run cinemas. The President of the Board of Trade stated upstairs that the question of the exhibitors' quota is one of mathematics. I am quite content to leave it at that provided, in veiw of what I have pointed out, he will re-examine the figures he gave to the Committee, alter the conclusions he came to, and act upon the basis of correct figures.

5.49 p.m.

Mr. Mander

I desire to support the Amendment, but I do not propose to traverse the ground already covered by hon. Members who have spoken. I want to refer to some of the authorities in this matter. We have the Moyne Committee, who gave their view that there was no need to put the percentage quota as low as it is, and who said that in their opinion it should be higher. It is also reasonable to refer to the views expressed by the hon. Member for East Dorset (Mr. Hall-Caine) in Committee, for he knows perhaps more about the film industry from an independent point of view than any hon. Member in the House in view of his great experience on the Advisory Committee during the last 10 years. He expressed the view that there was a case for a higher quota, and that there was no risk in increasing it. Let me also call the attention of the House to a remarkable leading article in the "Times" of to-day. I may say that throughout the proceedings on this Bill the "Times" has shown a very close understanding of the problem, and a clear view of the right way in which it should be approached. I wish I could say that of all its opinions. In their leading article the "Times" say: In existing studios there is equipment for producing ten times as many films as are required by Mr. Stanley's Bill as it stands—that is, with an exhibitors' quota of 12½ per cent. This equipment was built up with capital attracted by the hopes the old Act raised, and has become derelict largely owing to the success of the 'quickies' in evading that Act. The need now is to restore the optimism inspired ten years ago by the prospect of a substantial sheltered market for British films. The City is not likely to think that market substantial if the exhibitors' quota is less than 20 per cent. But, provided the statutory security for investment is made at least as good as it was in 1927, the other influences are much more favourable. That is in the direction of supporting the Amendment. It seems to me to be absolutely vital to the success of the Bill. I can find few people in the trade who think this is going to be of much, if any, advantage, but certainly if it is to do any good an increase in the quota is necessary.

A good deal has been said about the potentialities in this country for further production. I am not going into that except to give details which have not so far been given regarding certain of the more important concerns. I said something yesterday about the possibilities of the Metro-Goldwyn-Mayer Company, to show that under the new provisions there is going to be less necessity for them to produce films than there has been in the past. Then 20th Century Fox Films, who have a studio at Wembley, have produced in the last year some very striking films, like "Wings of the Morning," another called "Dinner at the Ritz," and another "He was her Man," featuring Gracie Fields and Victor McLaglan.

Under these proposals the latter two films now available for production are going to be worth double owing to their cost, but hon. Members will not be surprised to hear that in these circumstances the Wembley studio of this company is closing down. I say that it would not close down if the quota were fixed higher, because then there would be a necessity for that company to go on. It has been said that a certain amount of time is required for future organisation. That does not apply in this case, because if they are told now that they have to produce more, all they will do is to slop closing down. Warner Bros. who have a studio at Teddington have closed down, but they could and would open if the quota were raised. Then there is the case of the Universal Films of America who in the years 1936–37 produced more than was necessary for the quota, and most of the films were of the double quota character. Obviously they could produce more if an incentive were provided. My contention is that we have in this country the studios waiting, the organisation waiting, the finance available, and also the personnel, the actors and actresses waiting. I say that if we pass the Amendment all these elements will not have to wait in vain.

5.55 p.m.

Sir William Wayland

The point I should like to put is how the Board of Trade arrived at these percentages. I presume they consulted the producers, but in the voluminous correspondence and circulars which the producers have sent out, their figures do not tally with those given by the Board of Trade. The question then arises how the Board of Trade arrived at these sterilising percentages for the first year. Surely they must have given serious consideration to it. I think the President of the Board of Trade in Committee was far too nervous of the possibilities of British production in the first year and for the nine years ahead, but now that we are going to be a little more elastic for the first year why should we not have a little more confidence for the year which is about to begin? I shall support the Amendment on the ground that not sufficient consideration or confidence has been given or felt in the possibilities of British production, and I should certainly ask the Minister to explain how the percentages were arrived at.

5.57 p.m.

Mr. Duncan

We are all in a little difficulty in considering the right quota to put in for this year, because we have not sufficient information before us. We have no information except the information given us in Committee by the President of the Board of Trade. I am prepared to accept the figure which the right hon. Gentleman has given. We all want to give the utmost protection to British producers, and I am sure the Board of Trade are in the same line of thought. It is not so serious now as it was when the Bill was first introduced, because the Films Council have power, after the first year, to make recommendations for altering the quota, and if alterations are to be made, I want to put in a plea that the short film quota should be considered if the long film quota is going to be altered. In my opinion the short film has justified itself better than the British long film, and deserves sympathetic consideration from the Board of Trade even more than the long film.

I think there is some explanation of the mathematics which the hon. and gallant Member for South Paddington (Vice-Admiral Taylor) seemed to find difficult. For instance, there are some circuits in this country which show more than the quota, and that leaves less for the other four cinemas in standard towns. I am anxious that the rest of the cinemas in such a town shall not be placed in the difficulty of not being able to fulfil the quota. In spite of Clause 13, which gives the Board of Trade power to get over the difficulty of an exhibitor not being able to show his quota and not being prosecuted for not doing so, I am most anxious that the Board of Trade should not have to go above the law, as it were, more than is absolutely necessary. The Board of Trade I believe is in entire agreement with the sentiments of the House that the utmost protection should be given, and therefore in the interests of all sections of the trade I think we should keep to the figures for this year.

6 p.m.

Mr. Hall-Caine

I do not wish to be in the least ungrateful for the kind concession which was given by my right hon. Friend the President of the Board of Trade in response to my plea for a rise in the quotas on the renters and exhibitors, which was referred to by the hon. Member for East Wolverhampton (Mr. Mander), but I am puzzled about how my right hon. Friend and his advisers arrived at the figures, both for the 10 per cent. exhibitors' quota and the 15 per cent. renters' quota, and later on, with the concession made in the Standing Committee, the 12½ per cent. quota. Not only the Moyne Committee, but the committee of which I was a member, which contained members of the trade, including several exhibitors, examined this matter very carefully in the light of the fact that the cost test would exist, and would undoubtedly bring down the number of films. They also considered it in the light of the fact that last year, 91 out of 225 films registered were quota "quickies," and the fact which was referred to by the hon. Member for North Kensington (Mr. Duncan), which was perfectly well-known to us at the time, that the percentage of 27½ which has been referred to by hon. Members who support a rise in the quota, is largely accounted for by the consideration that the producer-exhibitor is able to bring the percentage up to 30, 35 or even 40. All those facts were put before us and we considered them carefully.

I think my right hon. and gallant Friend the Parliamentary Secretary will agree that the question of the quota is a fundamental one. In this matter we are safeguarded to a large extent by the fact that at the end of one year, the Films Council will be allowed to review the quota, but at the same time I think we should take a little risk in favour of the film producer in order to give him some confidence in the future and something which will enable the City of London to support him. If there is any bias to be shown by the Government, I would like to see it on the side of the film producers in this country. The Bill is intended to fulfil two functions. Its first and main function is to encourage the showing of British films on British screens, and its second function, if possible, is to increase an industry which we regard as important for the country. If there is any risk to be taken, if this is not to be an entirely "safety-first" Bill, let us take a little bit of risk in the interests of the film producers.

I should be the last to advocate a Bill which was based largely upon exemptions, for nothing could be more ridiculous than to pass a Bill and then appoint a Films Council which would give exemptions all over the country. I am conscious of the difficulty which the Minister and the Parliamentary Secretary must have in deciding this very intricate point, but I beg the Parliamentary Secretary to confer with his right hon. Friend with a view to their going into this question again between now and the time when the Bill goes from the House to another place for the purpose of seeing whether ample justice has been done to the film producing industry in this matter. My view is that the figure should be 15 per cent., and I think that the margin between the renters' and the exhibitors' quotas should be left the same as it was in the Bill as originally drafted. I am sure that my right hon. and gallant Friend will admit that in making this plea, I have every wish for the success of the Bill, and that I speak with some knowledge of the subject.

6.6 p.m.

Captain Wallace

My hon. Friend the Member for East Dorset (Mr. Hall-Caine) has brought to the Debates on this Measure an almost unrivalled knowledge, born of 10 years' experience, and naturally it is difficult for anybody in my position to be deaf to the sort of appeal which he has made. In dealing with these Amendments, which are the last Amendments to this very complicated Measure—for you have agreed, Sir, that we should consider together these four Amendments to the Schedule—I wish once more to place before hon. Members as clearly as I can the mathematical facts of the case. When I have done so, I hope hon. Members will find that they are able to agree with me that my right hon. Friend, in the light of all the existing circumstances, as he knows them, has done the best he could for all sections of the industry.

There are really two questions to be dealt with in this series of Amendments. In the first place, there are the proposed new upper limits, that is to say, 40 per cent. on both renters and exhibitors; and secondly, there are the starting figures—which it is proposed to raise in the case of the renters' quota from 15 per cent. to 20 per cent., and in the case of the exhibitors' quota, from 12½ per cent. to 15 per cent. Having considered those two questions as a whole, we shall be obliged to go in more detail into certain aspects of both the renters' quota and the exhibitors' quota. The upper limits proposed in the Amendments are 40 per cent. for both the renters and exhibitors as against 30 per cent. for renters and 25 per cent. for exhibitors in the Bill. The upper limits were fully discussed by the House on a series of Amendments to Clause 15, and it was agreed that the power of the Cinematograph Films Council to recommend alterations should not extend above 30 per cent. for both renters and exhibitors. Therefore, to suggest now that there should be put into the Schedule the figure of 40 per cent., when the Films Council have been deprived of any power to raise the quota above 30 per cent., is to put the Council in an absurd position. If the situation were reached in which a quota of 40 per cent. for both renters and exhibitors was justified. I must repeat what the President said in Committee and what I said in the House last night, namely, that in the opinion of the Government an entirely new set of circumstances would have arisen. In that case, we should perhaps have got nearer to the position envisaged by my hon. and gallant Friend the Member for South Paddington (Vice-Admiral Taylor) where the British film industry was able to stand on its own merits without any form of statutory protection, and it would be necessary for the President to bring forward a new Bill to deal with the situation.

Next I would like briefly to deal with the point that the Moyne Committee recommended a 50 per cent. quota, as that point has been mentioned by a number of hon. Members, and obviously it is one to which a great deal of importance is attached both in the House and in the industry. The Moyne Committee said: The quota of British films exhibited should, in our view, ultimately reach a figure as high as 50 per cent. of all films shown on the screens in this country; and we have heard nothing in the evidence laid before us which suggests that a goal of that magnitude is impossible of attainment 10 years hence. On the contrary, we consider that given adequate finance, with all the advantages which ample financial resources bring in their train to a film production industry, the further measures we recommend should provide sufficient personnel and ability to enable the requisite output of films of high quality to result. For this to be possible, however, it will also be necessary for the industry to accept whole-heartedly the opportunity which legislation on the lines we suggest would afford, of improving the organisation both of its production and of its finance. I think the last sentence is a fairly important caveat to the earlier part of the passage. With all respect to the Moyne Committee, I must say that, although they included that paragraph in their report, they did not produce in the report any evidence to support that view, and such a figure was certainly never suggested to them in any of the evidence which they took. For these reasons, I think the House may well dismiss the upper limits of 40 per cent., which are proposed in the Amendments, as being outside the bounds of practical possibility.

Vice-Admiral Taylor

May I interrupt my right hon. and gallant Friend, since this is an important point? He said that the Moyne Committee, in reporting that they considered that the industry should be able to provide 50 per cent., had no grounds for doing so. That is a very serious charge to make against the Moyne Committee.

Captain Wallace

I did not wish to bring any charge against the Moyne Committee. I simply stated the facts. The committee did not produce any evidence in their report to support their view; and, what is more, that figure was not suggested to them in the evidence which they took.

Vice-Admiral Taylor

My right hon. and gallant Friend made the charge that the committee made this very important suggestion and that they had no right to make it because there was no evidence to support it. Obviously, they had a very good reason for suggesting that the industry could fulfil a 50 per cent. quota, or they would not have said so—at any rate, they would have been very wrong if they had done so.

Captain Wallace

I would ask my hon. and gallant Friend to note my exact words. I said that the Moyne Committee did not give in their report any evidence in support of the conclusion which they reached, and that no evidence was given to them, as far as the evidence was published, to suggest that this figure would be attainable.

I suggest that the real question to which the House should address itself is, therefore, the lower and not the upper limits, that is, the question of what the initial quotas should be during the first year. In this connection, the Moyne Committee recommended initial quotas of 20 per cent. for renters and 15 per cent. for exhibitors for long films. The Government have, in fact, accepted this recommendation in principle, but they propose to delay its application until the second year of the operation of the new Act. Hon. Members will see that those quota figures would apply in the second year, except, of course, for a possible revision of the exhibitors' quota in the second year, which everybody hopes will be in an upward direction.

Captain A. Evans

On what grounds did the Government come to the conclusion that the quota in the first year should be reduced?

Captain Wallace

That was the point with which I was about to deal. The Government have accepted, in principle, the Moyne Committee's proposal regarding the initial quotas, but they have deferred the application of them until the second year. The reason they have done so is the new conditions which will prevail. My hon. and gallant Friend the Member for South Paddington suggested that the new proposals regarding the double quota will enable the quota to be satisfied very much more easily. He asked how the renting organisations will be in a better position next year to produce the necessary number of films for a 20 per cent. quota than they are now. The answer is that they will be in a better position regarding time. The production of the films which will count double for quota will require a great deal more organisation than the production of anything in the nature of quota quickies.

Vice-Admiral Taylor

rose—

Mr. Deputy-Speaker (Captain Bourne)

The hon. and gallant Member forgets that we are not in Committee, and that he has exhausted his right to speak.

Vice-Admiral Taylor

This is an important point.

Captain Wallace

I do not think the House would wish me to keep giving way. Hon. Members will recognise, on the figures recommended by the Moyne Committee, that the renters' quota has simply been delayed in its application until the second year of the Bill for a reason which has been explained many times in Committee, that is, that renters will find themselves faced with an entirely different set of obligations on the 1st April this year. It has been contended that renters have seen this coming for a long time and that they ought to have gone on with production, but I think that the renters and everybody else may well have been in some doubt of what the outcome of this Bill was to be. Even the Government are not certain it will reach the Statute Book in the same form as that in which it was presented.

It must also be emphasised in regard to the renters' quota that it is based, not on the number of imported films, but on the number of films acquired. The British quota must be added in and then a percentage taken of the total figure of films acquired. The renters' quota of 15 per cent. as it stands in the Bill is actually about 18 per cent. on imported films, or very nearly one British film for every five imported. I am glad to have the assent of my hon. Friend the Member for East Dorset who knows that very well. A renters' quota of 20 per cent. is equal to 25 per cent. on imported films, that is, one British film for every four imported. This, as I think the House will recognise, is a substantial obligation which increases when we reach the limit of 30 per cent. quota in the Schedule to two British films for every five imported. In these circumstances we feel that it is wise to postpone in the first year putting upon the renters an obligation which would be somewhat unfair, and that it is essential to allow production to organise itself on the new basis.

Another point which has been made during the Debates is that only 10 per cent. of the studio space in this country is now occupied. It was made by the Mover of these Amendments and by the hon. Member for East Wolverhampton (Mr. Mander). It is suggested, although extremely politely, that the Government is in some way to blame.

Captain A. Evans

It is not right for my right hon. and gallant Friend to infer that. What I said was that it was in the power of my right hon. Friend and his Department to correct that state of affairs.

Captain Wallace

I beg my hon. and gallant Friend's pardon. I was, perhaps, thinking of the leading article which has been referred to. The truth is that the boom in British production began in 1935–36, long before the Moyne Committee started work, and the bottom was already dropping out, owing to the withdrawal of city support, at the time when the Moyne Committee reported. The boom was a manifestation of what one might call sheer unmitigated optimism, and it was not anything to do with any guarantee, actual or implied, by the Government, which led to big studio expansions. The subsequent fall in production was due to the withdrawal of financial support from the city (except in cases where there were long standing commitments) because of extragavance and waste of money in many cases which led to losses.

Vice-Admiral Taylor

That is an unfair statement to make.

Captain Wallace

The producers, basing themselves on the results of one or two films, thought in all good faith that the American market was open to them. No one regrets more than I do that they found it was not; and in the process of trying to capture the American market they spent more money than they could hope to get back here. That only reinforces the point which I made to the House last night when defending the proposal for a treble quota, that you cannot get into the American market unless you make films on a fairly big scale. We are trying to make a more modest approach to building up an American market through our reciprocity proposals and the double and treble quota, though the latter for the time being, as a result of my right hon. Friend's decision last night, is in abeyance.

So far as the exhibitors' quota is concerned, the Moyne Committee put the initial figure at 15 per cent. It was recognised that some margin between the two quotas was necessary at the outset of this Bill. They added this sentence: In view of the loyalty with which exhibitors have worked under the Act in the past we are anxious that future legislation should, while helping film production in this country to the utmost, not be unduly onerous on the exhibiting end of the industry. That is the point to which my hon. Friend the Member for East Dorset referred tonight, and which was referred to often in Committee. It is the general feeling in the House, and not only in regard to this Bill, that it is bad to pass legislation and then be obliged to keep giving exemptions to people because they cannot comply with it.

In considering what material we have in order to find out what exhibitors' quota would be fair for the first year, we must take into account not only the films produced for renters' quota, but also the films produced not primarily for renters' quota at all, for a considerable number come in the latter category. The Board of Trade must be satisfied that there will be a sufficient number of British films available. If there are not, we shall have to face the position of a large number of defaults and the Cinematograph Films Council will have to spend time giving exemption certificates, on a scale which might almost result in a breakdown of the Act. Certain of the information on which my right hon. Friend attempted to assess the exhibitors' quota is somewhat scanty. We are told that American production is falling off and that during next year it would not be safe to calculate on more than 450 imported films, exclusive of those specialised films which under Clause 4, will not require renters' quota. These 450 films require a statutory quota against them of 80 films costing £15,000 each. If the reciprocity Clauses are taken advantage of to a reasonable extent, that 80 may perhaps be reduced to 50. The number of British films produced surplus to the renters' quota is problematic, and the agitation which has gone on during the passage of this Bill will not do anything to make finance easier. The Federation of British Industries who have at least as good a claim as any other body to represent the British producers, have suggested 50 as a working figure.

This gives us the 100 films of fairly good quality, as my hon. and gallant Friend for South Paddington rightly said. I am prepared also to agree with him on the next stage of his calculations. Statistics which we have obtained of groups of first-run theatres show that, on an average, they want 160 films a year, that, taking two-feature programmes changed weekly in some cases and twice weekly in others. With a 12½ per cent. quota they will have to show 20 British films each. Exhibitors argue that legislation must take account of the position, not always the worst, where five theatres are in competition for first-run films, thus requiring 100 British films between them.

Sir A. Baillie

How many areas are there in the country with five first-run theatres?

Captain Wallace

I cannot say offhand, but we are considering a position of which the Board of Trade ought to take account. It is a position which is not always the worst one from the exhibitors' point of view, but which occurs sufficiently frequently to be an essential factor in our calculations. Again, no one can guarantee that all these British films will be even reasonable booking propositions. It looks, therefore, on the assumptions I have made, as if a 12½ per cent. quota in the first year is putting on the exhibitors an obligation as high as is possible; but here I must enter an important caveat in regard to last night's proceedings. The calculation of the number of renters' quota films available, which I put at 50, and to which the hon. and gallant Gentleman agreed, was made on the assumption that the treble quota and double reciprocity proposals would be agreed to. The President mentioned the figures in Standing Committee, when he was in blissful ignorance of the fact that his treble quota proposal would find so much disfavour last night that it would have to be put into cold storage. As therefore, this proposal has been withdrawn, it is only fair to say that the Government, if they decide not to proceed with it in another place, must reserve the right to reconsider the exhibitors' quota in the light of this new development.

The Government's view on treble quota was the long view. They felt that it would do two things, first, to induce the production here of the more expensive type of films which would blaze the trail for British films generally in overseas markets; and secondly, and perhaps more important to the question which we are now discussing, it did seem to us that to the extent to which this concession induced the renters of imported films to meet their obligations by taking advantage of it, it would free the market in this country for the more modest type of programme picture as regards which the British producer has been complaining, possibly with complete justice, that he suffers from underselling by American renters.

In trying to assess our initial quota figures we took into account that in some places certain theatres or groups of theatres have a very much greater booking power than others and take the best of the British films, leaving fro tanto a very much smaller choice to the others. As my hon. Friend the Member for North Kensington (Mr. Duncan) rightly said, this figure of 28 per cent., which was actually the quota of British films shown by exhibitors in the year 1935–36, covered wide variations between the different parts of the country and also numerous variations as between circuits and independents; and I must remind the House that in spite of that high average of 28 per cent., which has frequently been quoted as a convincing argument in favour of raising the quota, there were in that year—the exhibitors' year ending 30th September, 1936–35a defaults. In addition to that we know that in many cases exhibitors, rather than face prosecution, only met their quotas by showing very poor films at a substantion loss to themselves. I am sure the hon. Member for Don Valley (Mr. T. Williams) will corroborate that statement.

Those calculations are all, to a certain extent, problematical, because no one can with any certainty foretell the future, and especially in the film industry. It is to-meet this situation that the Government have accepted the proposal that the exhibitors' quota should be reviewed by the Films Council early in 1939, and if they made a recommendation for a higher quota, which my right hon. Friend thought was justified and this House accepted, it would actually apply to the exhibitors' quota in the year beginning September, 1939. The amount of the exhibitors' quota during this first exhibitors' year must, therefore, be problematical to the extent that it depends upon the various factors which I have tried to set out. They are, in the view of the President, and in the view of the people who are best qualified to know, when taken in the aggregate, factors which make, with the caveat which I have entered about the treble quota, an exhibitors' quota of 12½ per cent., the highest which can safely be put forward to the House. After the first exhibitors' quota year the determination of that quota will depend not upon figures which of necessity must be slightly conjectural but upon ascertained facts, and I hope the House will accept the figures in the Bill and reject this series of Amendments.

6.35 p.m.

Sir Adrian Baillie

After the very able exposition of the Government's case I do not wish at this stage to delay long the obsequies of this Bill. I would like to point out that in the opinion of some of us the case has been made primarily for the exhibitor, secondly for the renter, and finally only for the producer. Without repeating any arguments previously made, I should like to make one or two observations arising out of the Debate last night and this afternoon. Last night I was, I am afraid, rude enough to interrupt the hon. Member for Don Valley (Mr. T. Williams). I asked: Is it not a fact that the President of the Board of Trade and other speakers have pointed out that the main reason for reducing the quota was the onerous condition which he thought he was putting upon the foreign renter? To that my hon. Friend replied: I do not think the right hon. Gentleman was so gentle in his treatment of the foreign renter as the hon. Member suggests."—[OFFICIAL REPORT, 23rd February, 1938; col. 479, Vol. 322.] I feel that the Government have been extremely gentle to the foreign renter, and that the foreign renter is extremely grateful to the Government for that kind treatment, because I do not see that there is anything onerous at all in a renters' quota at the percentage which is suggested. I can see ways in which, owing to the double quota, the conditions imposed upon the foreign renter will be less onerous. It might be possible that a renter of foreign pictures, in order to supply his British quota, might go to a British producer-renter-exhibitor—such do exist—and ask him to make his quota for him. He might say, "Make me a picture in the £45,000 category and if you do that I will buy that picture for distribution in America for £15,000." The moment that picture is completed he hands over to the producer £15,000, The £45,000 picture has only cost the producer, therefore, £30,000. And it has cost the foreign renter only £15,000 to obtain a double certificate, or, rather, to obtain a double quota; so instead of paying £15,000 for one quota he pays £15,000 for two quotas. I have no doubt that the British producer-renter-distributor could also give the foreign renter a little consideration in return when he is distributing and exhibiting the foreign renters' pictures. He might say, "Instead of charging you 25 per cent. I will charge you only 15 per cent. and then everyone will be happy." I suggest that there is a possible means of evasion of the real spirit behind this proposal.

Let me show, further, that this is not an increased burden on the foreign renters at all. Having reduced your exhibitors' quota from 20 to 12½ per cent. you automatically give the foreign renter 7½ per cent. more screen time in which to make money with his super-pictures. Therefore, I think that the foreign renter, so far from feeling that he has been badly treated, will feel a certain amount of relief so far as the exhibition side is concerned. On Second Reading I endeavoured to make the point that there was one cardinal error in the 1927 Act and that it had been committed again in this Bill. When the 1927 Measure was brought forward it was realised that the British production industry must be protected, and that protection was given. But then fears were expressed by the exhibitors, and in order to calm them a renters' quota was created. There was, therefore, no protection given to an independent producer, one who produces independently of the requirements of the quota.

In this Bill we have got exactly the same cardinal error repeated, if anything in somewhat worse form. So long as the renters' quota is higher than the exhibitors' quota there can never be a protected market for independent production. Nevertheless—this is a point to which the Minister referred in his summing up—since 1927 and up to 1935–36 there has been an increasing amount of British production, a very large amount of which has been independent production, production which does not depend upon any form of quota for the selling of its products. Here is where the cardinal error comes in. My hon. Friend made a very good point about the limitless optimism of the City when they were approached by producers who thought they could get their money out of the American market, but that consideration does not account for all the losses which there have been in production. Obviously there have been no losses in the production of pictures which have been guaranteed a market by the quota, but outside those few would-be super-productions there have been hundreds of other productions which have been made for this market only, but for the market unprotected, and I suggest that money has been lost largely in that unprotected market because of the cutthroat competition which exists there. The problem of under-selling was brought up in Committee, and it was recognised by the President, but it has never been tackled, except by the solution of the separate quota, and that was turned down by the Government.

It has been said that it is ridiculous to ask for a quota of 40 or 50 per cent. at this stage when the industry is in the doldrums, but that should the industry settle down to business then, in two or three years' time, the Films Council can review the situation, and if those in the industry have been good boys, and make a lot of money for their backers, they could probably get a higher degree of protection. I suggest that this is a most unfair argument. Producers are not philanthropists, and do not make films merely because it amuses them to do so. Good films are expensive to make and cannot be made without financial backing, and financial backing will not be forthcoming for the production of an adequate number of expensive films unless there is a reasonable assurance that they can be sold in a properly-protected market.

This Bill does not provide a properly-protected market, and the films will not be made, and then presumably it will be argued that as they have not been forthcoming further protection cannot be granted. I suggest, therefore, that the argument used against some of us who want a higher initial quota, and a quota guaranteed to be higher in a year or two's time, is a most unfair one. It is a case of putting the cart before the horse. In conclusion, I should like to refer, as some other hon. Members have done, to the leading article in the "Times" this morning where they have a good point: There may be a slight danger that with the high quota some exhibitors may default because of a lack of supply. With the low quota there is a greater danger that there will be no supply at all. On behalf of my hon. Friends and myself I would say that we do not desire to carry this Amendment to a division, but to withdraw it, in the hope that some of the arguments which have been more recently adduced may receive further and more sympathetic consideration in another place, especially on one or two of the other points which I have made, and to which I would call the special attention of my right hon. and gallant Friend. We hope that the Bill will be considered in a more favourable light in another place and that the British film production industry will receive a larger measure of protection.

Captain A. Evans

I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

6.46 p.m.

Captain Wallace

I beg to move, "That the Bill be now read the Third time."

I am sorry to have to inflict upon hon. Members a further spate of oratory after I have done more continuous talking than, I think, ever before in this House; but in view of the importance of this Bill the Government spokesman, locum tenens though he be, could not let the Third Reading pass without making a few further observations. I must begin by paying a tribute of sincere gratitude on behalf of my right hon. Friend and myself to the spirit of co-operation which has animated all parties during the passage of the Bill. We had a long time upon it in Committee, and nobody can say that the Bill was dealt with in any slapdash spirit. During the whole of those discussions and during the differences which my right hon. Friend and I had with hon. Gentlemen opposite and the possibly even more painful differences with friends who usually support us, the deliberations were always conducted on the assumption that the aim of every person in the House and the country was to do the best for the British film industry.

The Bill is designed to produce good British films for public exhibition, and although some doubt has been thrown in high journalistic quarters to-day upon its ability to do so, my right hon. Friend and I believe that the Bill contains within it the seeds and possibilities of future expansion for the British film industry. It is based first of all upon the Act of 1927. A good many hard things have been said about that Act but, if I am not mistaken, a very important leading article this morning admitted that the 1927 Act had conferred great benefits upon the British film industry. The Bill is based also upon the report of the Moyne Committee, although it does not follow it in every detail. Since the Bill first appeared we have tried to meet the general wish of all parties to give it more flexibility. It is generally recognised that the film industry is not a static one, and although at the present moment it may be in the doldrums, it is in essence dynamic. We have sought, for instance, to give more flexibility by giving three revisions to the renters' quota during the 10-year period, and not three but four revisions of the exhibitors' quota. We have enacted that the exhibitors' quota may be raised up to 30 per cent. on the advice of the Films Council if this House agrees; and we have also decided that variations in the cost test and in the amount payable under the reciprocity Clause are no longer to be restricted to 25 per cent., provided that the Films Council recommend it, my right hon. Friend agrees and that this House approves.

Another thing which we have tried to do was to put in safeguards against evasion. It is always difficult to say with certainty that any Act of Parliament is completely watertight. I can only say that we think this Act is a good deal more watertight than the last, and any effort which my right hon. Friend and I may have to put in, in the way of hard work and ingenuity, to prevent circumvention or evasion of the Act, we shall do not merely as a matter of duty but with considerable pleasure.

As regards the general policy which we have pursued in relation to the British film industry, I claim that my right hon. Friend has taken the long and not the short view. It has been suggested in many quarters of the House that persons are unemployed in Elstree and elsewhere in large numbers because of the lack of adequate protection for the British film industry. Nobody in this House could listen with unconcern to stories of that kind or could see those unfortunate men come to the Committee Room or the outer Lobby. To have pursued certain courses in this Bill might have created a situation where there would be what my right hon. Friend has described as another gold rush, in which finance would be forthcoming in large quantities and all those people might have secured immediate but temporary employment. But action on those lines would not have been in the interests of the British film industry or of those people themselves. We must face the fact that if the British film industry is to cater for a small, protected market alone, it cannot have a real future. It is one of those mathematical facts which you can prove by figures, that the market here is not big enough to provide a return to the producer of films which are on a large and ambitious scale.

If we wish to compete with what I may call the top class of film production we can do it in only one way, and that is by making films of the necessary calibre and by making with our friends across the Atlantic arrangements of the necessary character to enable British films to be shown in America in the same way as American films are shown here. The American film industry obtained the advantage of our common language in the years which succeeded the War. It is up to the Government to do what they can to create the conditions and to the industry to do what it can to make the most of them in order that we may fully reciprocate. My right hon. Friend and the whole House have shaped this Bill with an eye not to another immediate and short-lived boom but to the development of the industry on lines which we should like to see it follow. Important as it is from the national point of view that our films should go to America and should, if they are good enough, secure the golden harvest that is presumably waiting for them there, it is right also that America should have a taste of our culture as we have had a taste of theirs. I am sure that they are willing to do it if our films are of the right kind.

I acknowledge the co-operation of all sections of the House in making the Bill as fair as possible to the three sections of the industry. The House will appreciate the extreme difficulty which we have had in dealing with a situation in which the interests of one section were almost invariably diametrically opposite to the interests of the other two. The film industry was not able to produce a homogeneous policy and to respond to the appeal made by my right hon. Friend that it should produce its own Bill, and His Majesty's Government have therefore had to present this Bill, under which the protection given by the 1927 Act for 10 years is widened and extended for another 10 years.

When the Bill passes into law, as I hope it soon will, and when the quarrels, uncertainties and propaganda have died down, I believe we shall see the end of the period of stagnation which everybody has deplored. As I ventured to say in winding up the Debate on the Second Reading, no Measure which the Government can take can ensure for a certainty the success of the British film industry. All we can do is to try, so far as in us lies, to create the conditions in which that industry can thrive. We believe that we have done the best we can in a difficult situation, and it is up to the industry, in the ultimate resort, to take the best advantage of the conditions that we have established.

6.57 p.m.

Mr. T. Williams

When we come to the Third Reading of a first-class Government Measure we almost invariably speak in terms of selecting some person to give a last kick to the Bill. I do not intend to give this Bill a last kick; rather would I prefer to give it my blessing, although I am not sure that it will be an unmitigated blessing to the industry. I agree with the last observation of the hon. and gallant Gentleman. You may pass an Act of Parliament providing machinery and safeguards for an industry, but you cannot make the industry, unless those responsible for it help themselves, within the conditions and the safeguards which have been created. That is as far as Parliament can be expected to go.

This is the fourth successive day on which we have discussed foreign affairs, but the foreign affairs of the first two days were slightly different from those of the last two days. On these last two occasions we have been non-party and have been contributing our mite to a difficult, complex industrial problem. I hope that the net result will be, at the commencement of the next 10-year period, a much greater measure of common agreement among the interests involved than has been the case during the last 10-year period. Many hon. Members have complained that there has been too much shouting of stinking fish; that may be true, and the producers have not been blameless but, by the same rule, it might be argued that many producers have had very different experience over that period of time. They have all had their lesson, anyway, and employers and employés have had a very difficult time. The Bill provides a new lease of life.

Fundamental changes have been made which may not go as deep and as broad as some hon. Members felt was desirable. Compared with the position under the Act of 1927, some of the changes should at least make it possible for the industry to help itself to a greater measure of success than has been the case during the last year or two. I opposed the establishment of the Cinematograph Films Council because I preferred a films commission, but the Films Council has been established. It provides a fair amount of flexibility, which was not apparent in the Act of 1927. Clause 13 enables exhibitors who fail through no fault of their own to fulfil all the conditions to be exonerated from police court prosecutions. Clause 15 enables the Cinematograph Films Council to recommend to the Board of Trade a variation of the quota, the variations presumably being consistent with the known production over the period preceding their calculations. Clause 26 enables the exhibitors to lodge a certain appeal against films which come within the category of quota quickies, should they emerge during the period of the next ten years. Clause 34 enables the Films Council to make a slight variation upwards or downwards with regard to labour costs, which is bound to be helpful over the period. The costs test has been applied and the viewing test has been applied, and between them, though they may not be 100 per cent. of a success, they ought to provide us with a better picture than some of those that have been produced during the last few years.

It may be that the Bill will not give the industry the amount of protection that it wants, but that is understandable. I am sure that the right hon. Gentleman and the President of the Board of Trade, in issuing a warning for the first 12 months, have not only not injured the industry but have helped it to appreciate that they cannot have protection without fulfilling certain community obligations. If they appreciate that during the first 12 months, there is no doubt that in the subsequent periods they will get the full measure of protection that the Bill gives. With regard to the reciprocity Clauses and co-operation generally, it has been said that our films will not go to America even under the terms of this Measure. I do not suppose that America will accept films from this country, any more than we ought to accept American films, which do not contain an appropriate measure of entertainment value. The American has apparently studied our market very well. He has not always succeeded and I hope, when a bad film comes here and the public do not relish it, the exhibitor will do the right thing with regard to the renter if he comes along with a second edition.

If our producers want to get into the American market they must go there and watch American audiences closely and ascertain what the American public are prepared to pay for them. If on top of that they do their best to enter into co-operative agreements with those who import films from America, they will not only create the proper talent in this country to meet the general needs of the exhibitor and the cinema goer, but establish a real industry in this country worthy of the name and the right hon. Gentleman will feel that he is helping the industry to help itself. I hope during the next 10 years we shall not only stabilise it and produce decent high-class British films but place ourselves really on the map.

7.5 p.m.

Mr. Mander

I support the Third Reading and wish the Bill every success. I am sure we are all very glad to have come to the end of the discussions on this highly complicated Measure. We have all learnt something on a subject about which a great many of us knew very little before. How much we have learnt, speaking for myself, is, I feel, rather doubtful. But I do not feel that the Bil is going to be very successful. I pin my faith to the Films Council. I have always felt that that was a vital part of the Measure because, while it is impossible for us to legislate for 10 years and to deal with every problem that may arise, if you have a body of independent experts who are concentrating their attention all that time, to a great extent advising the Board of Trade, they will be able to make recommendations and to call the attention of the President from time to time to things that may be going wrong, enable him to make such alterations as he can, and, if necessary, stimulate him to come to Parliament to deal with exceptional circumstances that may arise. I am sure that attempts will be made, and are already being studied, to evade the Bill. The American interest will do everything it can, as it did under the last Act, to get round it, and that is why the Films Council has such an important task, to watch from day to day what is being done and recommend the necessary steps for preventing it. While the Films Council is not the kind of body that I should have liked, I think it will lead to something of that kind in the process of evolution.

I hope the Bill is going to give a stimulus to the production of really good British films, but I appeal to the industry to pay careful attention and see that our national institutions are properly represented. May I give an example? I went the other day to see "Victoria the Great," a very remarkable film, in which there is a representation of certain proceedings in Parliament. They are quite unlike any proceedings that I have ever seen here. They certainly cannot represent what actually took place. I understand that in 1846, the old Houses of Parliament having been burnt down and the new Houses not having been erected, the House of Commons was sitting in the old House of Lords, but all the paraphernalia of our procedure was just the same as at the present time. In the film Disraeli rose from the Front Bench and made a violent attack upon Sir Robert Peel, who then got up from beside him, standing, not at the table, because there did not appear to be a table, but in the middle of the floor, and castigated Disraeli in the language that was actually used. He addressed the House as "Gentlemen," and, as far as I could gather, the Prince Consort paid his one and only visit to the House of Commons and sat somewhere in the Press Gallery. If the British film industry is going to produce Parliamentary scenes I hope they will take care to see that they represent what actually takes place in this, the greatest of our national institutions. I have great pleasure in supporting the Third Reading and I wish the Bill more success than it seems likely to achieve.

7.10 p.m.

Mr. Hall-Caine

Having been associated with the Bill in all its stages, I should not like it to pass to another place without wishing it God speed. No one claims that it is perfect, but I think it is as near that amount of perfection which we can hope to get in dealing with an industry so diversified in opinion. Those who have been associated with it must pay a very high tribute to the manner in which the President of the Board of Trade and the Parliamentary Secretary have handled this very technical and complicated question, and I must particularly pay a tribute to the Parliamentary Secretary for the manner in which he has handled the Report stage alone and almost unattended. He said I have some knowledge of the industry from 10 years' study. He cannot have had 10 years' study, but he shows a much greater knowledge of it than I can ever hope to possess. Although the Bill is not perfect, it is in my view a very substantial contribution and a tremendous improvement upon the present Act of Parliament. In my view it will go a long way towards stopping those inequalities which have been observed in the working of the present Act. I also believe it will effectually stop that abomination, the quota quicky, which gives a wrong representation of British mentality and morals. If it does nothing else than that it will do a tremendous job of work.

I think the President of the Board of Trade has been ultra-careful. He has played a good deal for "safety first." That is why I appealed to him to reconsider the quota proposals so far as exhibitors are concerned, and I still hope he will do so before the Bill becomes law. One of the great features of the Bill is the elasticity which it gives in an industry which is constantly moving forward. I think it is a substantial contribution towards the film industry. It only remains for all sections of the trade to combine together in making it a workable Act of Parliament. If they will do that, as I believe they will once they get over the lobbyings and the pamphlets and the circulars that we have had pouring upon us, once they agree to join together to make the industry what it should be, one of the finest in the country, I have no doubt that they will be materially assisted by the Bill.

7.14 p.m.

Mr. Bellenger

It seems almost like sacrilege on my part to disturb the harmony that has pervaded our discussion on Third Reading, but I propose to do so because I do not think the Bill of which the Parliamentary Secretary has spoken so charmingly, and which even my hon. Friend the Member for Don Valley (Mr. T. Williams) seemed to support, will achieve the main object that the President of the Board of Trade stated on the Second Reading, which was the foundation of a prosperous and considerable. British producing industry.

We listened to-night, during the closing stages of the proceedings on Report, to the efforts of Government supporters to induce the Government to alter the quotas, because of the depression which has come over the British industry. I should have liked, had the President of the Board of Trade been here, to make some remarks more critical than those I am able to make to-night, but unfortunately he is absent owing to illness, and, therefore, I do not want to say anything about his conduct in the proceedings such as I should have said had he been here. I will only say, in view of the fact that the President has had to conduct the proceedings, both on this Bill and on another important Measure, the Coal Bill, concurrently, it seems to me quite possible that his illness may be due to the very hard work he has had to undertake throughout these discussions. That, perhaps, might be a reason for altering our procedure somewhat, although this is not the time to discuss that subject.

The fact remains, whatever the Parliamentary Secretary may say, that 73 per cent. of the screen time in this country is taken by American renters, and I cannot see, in spite of what has been said by the hon. Member for East Dorset (Mr. Hall-Caine), that the Bill which we are now about to send to another place will reduce that 73 per cent. to any considerable extent. It has been said by speakers from various quarters of the House that our main consideration should be to see that in this industry, which is quite different from all other native industries, a larger proportion of the screen time is reserved for British films, and for that purpose I would advocate an entirely different Measure from this. British cinema audiences have now no alternative programmes, and no amount of words will alter the fact that in the next 10 years the American producers—Hollywood, in other words—will have a tight grip, not only of British audiences, but of British thought. I say that it is intolerable, either in peace or in war, that such an important educative and informative part of our life should be taken as it is by a foreign country.

I appreciate the difficulties of the situation; I know they are immense; but, had I been asked what I would do, I would have dealt with the matter in an entirely different way; and probably the President of the Board of Trade could, in the trade negotiations which are going on at the present time, have informed the American Government that they cannot expect to have that large proportion of British screen time which they have been having for the past 20 years. The Government seem to have a peculiar fascination for foreign ideas and foreign domination in more respects than one. In conclusion, I would draw the attention of the House to these words, which were used by the President of the Board of Trade in the Second Reading Debate: I do not want our defences to be made in Hollywood. I want the world to be able to see British films true to British life, accepting British standards and spreading British ideals."—[OFFICIAL REPORT, 4th November 1937; col. 1173, Vol. 328.] We have been constantly reminded of that in the Committee upstairs. I ask the House, is this Bill going to achieve what the President said on the Second Reading? It is because I do not think that the Bill will achieve that purpose that I cannot agree even with the remarks which my hon. Friend the Member for Don Valley has just made, or with the compliments that have been paid to the President of the Board of Trade and the Government for introducing a Bill of this nature. I understand that the House will not divide on the Third Reading, but I cannot let this opportunity go by without recording my protest.

7.21 p.m.

Mr. Day

I, too, like the hon. Member for East Dorset (Mr. Hall-Caine), had the pleasure, if I may say so, of sitting through the proceedings in Committee on the Bill upstairs, and I want to congratulate both the President of the Board of Trade and the Parliamentary Secretary on the manner in which they have handled a very intricate Measure. People who are interested in any way in the film business will marvel at the fact that these two right hon. Gentlemen have been able to grasp such a difficult business at such short notice. I also had the pleasure, if I may say so, of being a member of the Committee which considered the Bill of 1927, the proceedings on which lasted considerably longer than in the case of the present Bill. They occupied practically 40 days, and, if hon. Members care to look up the OFFICIAL REPORT, they will see that what we predicted would happen to that Bill has happened during the last 10 years. I sincerely hope that the interest taken in this Bill by the President of the Board of Trade and the Parliamentary Secretary will assure better working during the continuance of the Measure than was the case with the last Act.

We have heard several times during this Debate that it was a question of reciprocity with America. But it is impossible for us to force our films on the American public; unless we give them something that they want to buy, they will not buy it. We cannot make the American public take British pictures, or pay their money to see them, even if we can by some means make the American renters take our films as a matter of reciprocity. We know in this country that, if we produce a good British film which is a box office attraction, it will capture the theatres. The exhibitors will tell you that a good British film will do practically 30 per cent. more business than an American film, provided that it is a good film, well produced. Our difficulty is that the majority of British films are not organised properly as regards their production. The public themselves are the judges, and we in the House of Commons, whatever we may do, cannot force the British public to see a British film if it is not one that is to their liking. I sincerely hope that the result of the effort that has been put into this Bill will be that the British producer will now set his hand to organising the industry in such a way that films can be produced which will have a drawing capacity for the public.

As to the question of finance, we know that the finance market in the City is frozen for British films at the present time. We have heard suggestions in the House that money is not forthcoming from the City. But that is only temporary. If the British producer will organise his business and arrange his production in such a way that the financiers who find the money can get a return, he will find that just as much money can be got in this country as can be got in America. I do not blame the financiers here for not continuing to provide large sums of money for an industry which is not run on a proper commercial basis, but if these people, who have found for British film production hundreds of thousands of pounds that they will never get back, can be shown that they will really get a return for their money, there will be no trouble in the City of London or elsewhere about getting the money.

I have here a list of films introduced in England lately. I will not read the names, because it might be prejudicial to them, but they have cost between £57,000 and £120,000 each. Only one of these films has made money in this country, and they cannot be booked in America; America will not take them. How can it be expected, even with this Measure, that films produced at a cost of £35,000, £40,000 or £50,000 will be of any use in America when it is not possible even to book any of these films, because the American renters will not take them? How can we work a system of reciprocity? We cannot say to the American renter, "You must take our films in consideration of our taking yours," unless we give them an article that will suit their public. I sincerely hope that the British producers will now, after having lost hundreds of thousands of pounds, if not millions, which the financiers have invested in their work, will have learned their lesson, and will be able not only to show a return to their backers, but also to increase, with the aid of this Act, the prosperity of the industry as a whole.

Question, "That the Bill be now read the Third time," put, and agreed to.

Bill read the Third time, and passed.