§ (1) The powers of the Treasury, by virtue of paragraph 12 of the Third Schedule to the Finance Act, 1939, by order to vary certain provisions of that Schedule (which relates to the customs duties on imported cinematograph film) shall, in relation to exposed cinematograph film, include power to alter or add to Section ten of the Finance Act, 1935 (which relates to the valuation for duty of imported goods), as if that Section were among the provisions mentioned in sub-paragraph (2) of the said paragraph 12.
§ (2) Without prejudice to the generality of the foregoing subsection, an order made by virtue thereof may in particular provide—
- (a) that for the purpose of computing the price which any imported film would fetch on a sale in the open market there shall be made (in addition to the assumptions required to be made by the said Section ten) assumptions with respect to—
- (i) the inclusion in the sale of exclusive rights of reproduction and exhibition, and. the accrual to the buyer of the gross proceeds of any resale or letting of the film or any reproduction thereof for exhibition;
- (ii) the proportion of the said gross proceeds with which the buyer will be content in respect of all or any of his costs, charges and expenses and of his profit;
- (iii) the exclusion of the seller and other persons from any interest, direct or indirect, in the subsequent reproduction or exhibition of the film;
- (b)that the value of any imported film shall, in such cases as may be provided by the order, be determined by reference to a supposed sale not of that film but of any version prepared or to be prepared for exhibition wholly or partly from that film or a duplicate thereof.
§ (3) Any order of the Treasury made by virtue of the said paragraph 12 may also contain incidental or supplementary provisions for the purpose of securing the collection and recovery of the customs duty on exposed cinematograph film, including provisions—
- (a) that an application for the registration of a film under Part III of the Cinematograph Films Act, 1938, shall not be entertained unless accompanied by such evidence as the order may require for the purpose aforesaid;
- (b) that where, with intent to evade the payment of customs duty on exposed cinematograph film, any film not registered under the said Part III is delivered to an exhibitor or exhibited in contravention of Section twenty-two of that Act, any of the enactments relating to customs shall apply with such adaptations as may be provided by the order.
§ Brought up, and read the First time.
§ Mr. Dalton
I beg to move, "That the Clause be read a Second time."
This also is a matter which has been ventilated in the House previously. I need not speak at length on it, but I will listen with interest to the points which are made, and, if need be, add a word later. The broad purpose of the Clause is to enable us—and I choose my words with care so that they will not be misunderstood by anyone—if it should seem desirable to do so at a later date, to impose this new duty upon imported films. We have no power now to impose a duty of this kind. If we should desire to introduce it later, we must get power to do it now. This is an enabling provision. I make no proposal for the imposition of such a duty now, but I desire to obtain from the Committee the authority to do so later by order, if it 2278 should seem desirable. If we did it, the purpose of it would be to make a further economy in foreign exchange. That is its purpose. The form of the duty is not, in its substance, in any way different from the form of a vast number of other duties. It is to levy an ad valoremduty upon the value of the object taxed. That is the subject and purpose of the Clause.
It is necessary to define how this valuation shall be carried out and we must recall, of course, that it is not the usual practice when a film is imported into this country for it to be sold outright by the importer to some other person. If that were the usual practice, everything would be quite easy. There would then be a valuation based upon the price at which the film changed hands. There may be some cases in which that might happen. It may be that the Rank organisation, for example, may desire to purchase outright certain films manufactured outside this country. If so, the thing is very simple from a fiscal point of view. If we decide to operate this, we shall put a levy at the rate prescribed upon the value as revealed by the sale.
But that is not the normal proceeding and, in order to determine what is the value on which the levy should be charged, we must endeavour to arrive at i4. from the earnings of the film. These only gradually become known. Therefore, we must have, as it were, a trial shot, a ranging shot, at the earnings. An effort will be made, and no doubt the Customs will be able to do it with reason able accuracy. A shot will be made, in the first instance, at what the earnings seem likely to be as an indication of the value of the film. In the first instance, the duty will be levied on the basis of this trial shot and later on, if it should prove that the shot has gone wide in either direction, an adjustment will be made either by repayment by or to the Customs, as the case may be.
I think this is an ingenious way of doing it. I am much obliged to the ingenious people who thought of it. It did, for a little while, baffle us, but I think now that an ingenious method has been devised. I can think of no more effective method. If the purpose is accepted, namely, that we should have it in our power to reduce the flow of foreign exchange in respect of imported films—and that has often been put to me 2279 as a thing that at least we ought to have the power to do, and many people have gone further and said we ought to do it, whilst some have said that we ought to have done it some time ago—these people ought now to give their general support to this proposal. I will not say any more at this stage, but I will be glad to reply to any points that may be raised.
§ Lieut.-Commander Gurney Braithwaite (Holderness)
I do not think it will be denied in any part of the Committee that some machinery of this sort should be at the disposal of the Chancellor in our present predicament. "Food before fags" and now, "Food before films."
§ Lieut.- Commander Braithwaite
Exactly—with some doubt as to just how long the food will be forthcoming in its present volume. All these things have been brought home to us very sharply. It was only yesterday that my right hon. Friend the Member for Warwick and Leamington (Mr. Eden) pointed out that in the last half of last year our expenditure on machinery was 5 per cent., on films it was 7 per cent., and on tobacco it was 32 per cent. Therefore, no one will be in a mood to object to some apparatus of this sort being at the disposal of the Chancellor of the Exchequer. What I think should be said is that perhaps ingenuity may have been carried a little too far. In this new Clause there are certain rather new departures from our normal procedure.
The right hon. Gentleman indicated one of them when he referred to the shot in the dark in the first place, with a calculation which will follow a little later. This, of course, is an entirely new principle. This also imposes what is in effect a tax on the profits made on the showing or exhibition of the films in various parts of the country. One does wonder—and I think this should be said at this stage —whether the right hon. Gentleman will succeed by this method of control in preventing the tax from being passed on to the renter and the exhibitor. It seems to me that some of the smaller independent cinemas outside the great combines and groups with which we are all familiar might find that the tax descends upon them with harshness. Then, of course, there is the one old bogy of ours which has cropped up so very often 2280 during this Parliament. However desirable the objective may be, I think it must be stressed upon the right hon. Gentleman that again we are giving away certain of our powers. We are going to allow the Chancellor a very wide range of activity by way of regulation—
§ Lieut.-Commander Braithwaite
Yes, but we all know the circumstances in which affirmative Resolutions are taken. Generally it is at 1 o'clock in the morning with the Closure applied after a Debate of three-quarters of an hour or an hour. That safeguard is not quite the strength and stay that it used to be in the days of Tory Government when there were affirmative resolutions. These things are now taken in the night watches with a tired and generally hilarious gathering. The Financial Secretary has had to cope with some of the hilarity frequently. He will realise the force of what I am saying. I must also mention that no rate of duty is here specified, so that really we are giving the right hon. Gentleman a good deal. Even those who have faith, and they are a diminishing number both in this Committee and outside, must look at their responsibilities as private Members before they give too much away. While it is necessary to curb the import of American films—and that is something which I think will be supported by my hon. Friends on this side of the Committee; certainly, I support it—I think we ought to proclaim some disquiet at the method which is being adopted to do it.
§ Mrs. Leah Manning (Epping)
I rise merely to ask for some little explanation. Personally, I welcome the steps that are being taken in the new Clause, not least because I think it will help eventually not only to save dollars, but to get the cinema trade in this country to put its house in order. What I wish to know is the relationship of non-discrimination in this matter. Are we taking powers in the Regulations to tax films from all countries abroad? I should regret that very much. While I would keep out every American film—I do not like spending dollars on them because they are mostly bad—I should very much regret having to exclude in any way, or even make it difficult to bring here, every 2281 French film that is made. They are all charming and delightful, and I would be sorry if it would have that effect.
§ Mrs. Manning
Indeed, the places where one can buy films cheaply are the places where good films are made. I regret that the Chancellor has indicated that my fears are well founded.
§ 7.0 p.m.
§ Mr. Gallacher
Yesterday's discussion made it very clear to everyone in the House, and I hope in the country, that what we were suffering from is the stranglehold of the American dollar. That is correct. [Interruption.]Hon. Members should read the Debate yesterday and see what the Chancellor said. Anything the Chancellor can do to loosen that stranglehold will be work well done and will help this country to recover, because it will be impossible for this country to make a recovery while we are dependent upon or tied to the dollar. So I am with the Chancellor in any cuts he makes. It will save him from having to chase around the world for dollars. Two men may stand together: one may look to the West, and see that all is dark and gloomy; the other look to the East, and see blue skies and sunshine. That is quite a common experience. We could go now to the terrace and look one way and find blue skies, and look another way and find dark clouds.
I am not quite clear whether the hon. Gentleman is describing a new film or referring to the new Clause.
§ Mr. Gallacher
I will get to the Clause. Yesterday the deputy Leader of the Opposition said that he was very concerned about the discrepancy of two voices last week. The Chancellor was depressing when he was looking to the West and the dollar situation, but, the next day, the Food Minister was looking to the East and new trade agreements and we had a speech of blue skies and sunshine. The dollar is the factor that is condemning this country to hardship and austerity, and not until the Chancellor gets us out of the clutch of the dollar will we go ahead. So, accordingly, I support the Chancellor in any cuts he may have to make, and I say to the right hon. Gentleman that the people of this country—if he has to make cuts, however 2282 regrettable from certain points of view, they may be—will face them with the same spirit as they faced many other hardships. I am quite certain the people of this country are prepared, if it is necessary, and the Chancellor considers it desirable, to face any cuts he may make, and to tighten their belts if need be. They will echo the desire of the Chancellor for: "Food before Fags" and "Grub before Grable."
§ Mr. Benn Levy (Eton and Slough)
As the Chancellor of the Exchequer has said, there are two issues involved here. One is the question whether there should be an import duty on films and the other is the form which that duty should take. On the second question, I have some reservations. On the first question, I am wholeheartedly behind the Chancellor. It seems to me of first importance that an import duty should be levied very early. Indeed I am only sorry that there have been, in the presentation of this proposal, so many qualifying "ifs," and I hope that, in fact, the Chancellor, although this new Clause is only a permissive one, will take an early opportunity to implement it. The Chancellor, I understand, has also had the unanimous endorsement of the workers on the production side of the industry, through their joint organisation—the Film Industry Employees Council—which has passed a resolution to that effect. That is not altogether surprising, because, quite recently, they issued a memorandum in which they called for precisely this proposal. They said:If it is practicable, we would propose tax being made on all box office takings on all foreign films.I am a little puzzled, therefore, at the attitude of my hon. Friend the Member for West Nottingham (Mr. O'Brien) who, apparently, opposes this import duty, or so committed himself during the course of a broadcast. I am all the more puzzled because the union of which he is an official is also a signatory to this document, and made no reservation. I have read the report of his broadcast speech, which prompted me to the reflection that, although the hands were the hands of N.A.T.K.E., the voice was the voice of Mr. Rank.
As I understand it, his three arguments are these. He points out that the present output of British films accounts for 20 per cent. of existing screen time, and he holds 2283 that it would be impossible to extend this percentage within five or even 10 years. That seems to me to be unreasonably defeatist. I know what the restricting factors are. Studio space is foremost: and, in a letter to "The Times" the other day, Lord Grantley pointed out that the maximum that the studios could turn out was 68 British films a year. Nevertheless British screen time could be expanded, for example, by the re-issue of British films, and not necessarily of very old British films, films no earlier than those made four years ago. Studio space could also be used more economically. Moreover, it is possible for extensions to be made; at present, there are extensions to stages being made and building work being carried on. It might be a national economy for this to continue, and further extensions be made within reason. I say that with some reluctance, and certainly no building project of that kind should take place without careful vetting. For instance, it should not be carried on exclusively at the expense of the local building resources. There is no reason why the immediate locality should bear the whole burden of such building. Also there should be much stricter overseeing of the temperamental tendency to extravagance to which film companies are addicted. If they want to build a new wash house, the only standard they know for a wash house—or can remember—is the standard of the Savoy.
§ Mr. Stanley
On a point of Order, Mr. Beaumont. For our own guidance, may we know whether we shall be allowed to discuss the sanitary ideas of film company directors, which would seem a little remote from this new Clause?
Owing to my being otherwise occupied, I was not listening with very close attention to what the hon. Member was saying. We must not, however, discuss irrelevant matters.
§ Mr. Levy
Surely, the provision of studio space is relevant to the question of expanding the output of British films. The second argument advanced by my hon. Friend is that any cuts in programmes such as this proposal might well result in, would mean that cinemas would actually have to close down. I really cannot accept that argument. What it means if it means anything at all, is that if a new 2284 tax on imported films reduced the number of films available, and, as a result, the exhibitors had to revert to the old practice of single-feature programmes, then, according to my hon. Friend, the public would be so distressed that they would either strike or sulk, and stay away altogether if they could not see two films in one programme. I cannot accept that argument for one moment. There is no reason why single-feature programmes— if they were universally and uniformly accepted in view of any stringent measure which the Chancellor may have in mind— should harm the cinema business in any way.
Apropos of that, the extraordinary auxiliary argument was advanced in the course of this broadcast that there would be less taxation for the Chancellor. I suggest to my right hon. Friend that, in point of fact, there might be more, not less, Entertainment Duty available because a single-feature programme means that it could be shown to four of five audiences a day instead of, perhaps, to only two or three. It would be profitable from the point of view of the exhibitors, the industry, and my right hon. Friend the Chancellor of the Exchequer The third point—and this is really the heart and core of the argument put forward by my hon. Friend—is this I will quote him verbatim:If we cut American pictures we would embarrass Mr. Rank just when he hoped to arrange for 20 million dollars' worth of British pictures to be exported to America.Mr. Rank has been hoping for a very long time, and has been putting up a very brave fight. He has been wrestling with the American markets, but there is very little concrete evidence that he is really having any substantial success. Whenever a measure of the sort which my right hon. Friend is now putting forward comes on the tapis,there is always immediately talk of new deals, and we are asked, "Please do not rock the boat; let the negotiations proceed." I take the view that it is now time that we had the actual facts and figures stated fully in public. Let us have no more of these vague suggestions of what may be done, of what it is hoped to do. There is talk of a new deal with American organisations amounting to 12 million dollars. It is not said, however, whether that is a guaranteed 12 million dollars; it is not said whether it is a gross or a net 12 million dollars. What we 2285 really want to know is the net figure, and whether it is guaranteed. We have not got that information, and we never get it. I suggest to my right hon. Friend the Chancellor that the time has now come when we should strike, in public, a balance sheet in dollars for the whole film industry and its ramifications.
Therefore, I should like to ask some specific questions which are really relevant to this discussion. The first is what have British films grossed in dollars in the last two years: secondly, what have they netted in dollars after all promotion costs have been deducted and what amount of dollars have therefore been available for bringing back into this country. Thirdly, what, if anything, has been spent in dollars on the acquisition of theatres in America or in Canada by the Rank organisation, or any other organisation? Might I have my right hon. Friend's attention on this point, as it is a specific question which I would like to put to him?
I have allowed the hon. Gentleman a good deal of latitude, but I think that he has now gone too wide of the subject under discussion.
§ 7.15 p.m.
§ Mr. Levy
I am trying to argue the desirability or not of an import tax and whether or not it is true that without such a tax there is a reasonable chance of the industry in its present condition succeeding, as it claims, in getting dollars from America. I think that that is really relevant to the discussion, because, as far as I can see, that is the only argument against an import tax.
What I would like to ask my right hon. Friend, if I may, is whether it is true that theatres have been bought, acquired or built at the expense of dollars by any British film company and, if so, how many dollars have been involved? Fourthly, I would like to ask what dollars, if any, such theatres are bringing into this country in the ordinary way of business? I also understand that a general allowance of dollars is made to the British industry. May we be told what the annual amount of that allowance is, and for what purposes it is expended? Considerable expenditure has been made and continued to be made on the importation of directors, actors and technicians. I would like to know what is the sum involved. It should, of course, be offset by equivalent figures for the export of our own tech- 2286 nicians to America. What is the balance between those two?
Finally, what do all these factors amount to in dollars? Is the balance very heavily against us? If so, how much is it against us and should not that sum be added to the £17 million of dollars which we lose to America every year? When we have these figures we can then examine fairly and reasonably the claim of the Rank and other organisations to be allowed to paddle their own canoe on the dollar question. Moreover, even if Mr. Rank's hopes were justified, and even if he should succeed in America, I think we should still hold to our course because the only argument against doing so is the fear of retaliation. That is not a fear which we need entertain because what it means is that we are afraid that, if we reduce our £17 million worth of dollars for American films, they will retaliate by reducing the odd half million pounds' worth that go back the other way. Is that a threat we need worry about? If it is a question of competition in tariffs or quotas or duties between ourselves and America in regard to films, that is one competition which we could go into quite fearlessly because they vitally depend on our market, whereas we would merely like to get into theirs. Theirs is extra to us, but ours is their life-blood. We have the whip hand in that connection, and there is nothing of which to be afraid.
As to the form of the tax, for my own part, I prefer what is called a footage tax—that is to say, a flat tax of so much a foot on imported films. The objection to an ad valoremtax is that it is extremely difficult to administer. It is inevitably difficult to administer. The Chancellor has not yet told us how it is proposed to make the initial assessments. Will a body be appointed by the Customs and Excise to sit on each of 300 odd films which come into the country? I cannot think that that is practicable. At what point will it be decided that there is no more money to be derived from a film, that its life is exhausted? Surely that is a very difficult thing to assess. Secondly —this point has been made by my hon. Friend the Member for West Nottingham —what arrangements can be made to ensure that the tax is not passed on to the consumer? I understand that the Board of Trade is satisfied that that point can be looked after, but I think the Committee should be told about it.
2287 My main objection to the proposed form of tax, however, is that it fulfils only one function; that is to say, it collects dollars. That is very important, but it is not the only thing that a tax could do. The advantage of the footage tax, as against this, is that it gets the dollars just the same. It is much simpler to administer. It keeps cheaper and inferior films out of the country, because obviously, if one has to pay £60,000 or £70,000 flat on any film, regardless of cost, one will not undertake that additional expenditure if the film costs only that amount. On the other hand if the film costs £500,000, the additional £60,000 or £70,000 will not be a deterrent.
The general standard of imported films, therefore, will be improved by a footage tax. Also, it promotes the export of British films to foreign countries, because the proposal is that it should be linked with a rebate, so that an exporter who has to pay his £10, or whatever it may be, a foot tax on exporting into Great Britain will get a rebate in respect of any films which he imports. The net result would be a considerable help to Mr. Rank and others in their negotiations with the Americans. Also it would not keep out other foreign films, because apart from the Americans, most countries import more British films than they export into Britain; so that they would not be cut out, whereas the present tax—an ad valoremtax—might have the great disadvantage that we would be cut off from all foreign films except American films, which is not a desirable state of affairs. The Chancellor has told us that the Clause is permissive and, that being so, I hope that the alternative proposal for a footage tax will be sympathetically considered.
§ Mr. Walter Fletcher (Bury)
One thing is clear from the speech of the hon. Member for Eton and Slough (Mr. Levy), and that is how pleased he must be that there is no tax on shadow boxing, because that is what he has been indulging in steadily for the last half an hour. He has been attacking a speech which has not been made in Parliament at all by the hon. Member for West Nottingham (Mr. O'Brien). He has not spoken at all today and, therefore, this superstructure based on a speech which has not been made here cannot have quite the value 2288 as a contribution to this Debate that it might have. My other point arising from the hon. Member's speech is this. I was brought up on a poem, one couplet of which was:And even the ranks of Tuscany Could scarce forebear to cheer.The "Ranks" of Odeon are not likely to cheer the speech which we have just heard. The Chancellor was reproaching us, on another Clause, on the basis that when he gave us an inch we always asked for an "ell" of a lot. He is asking us for the widest possible powers to adminster this tax. Some years ago I was in the cinema owning industry myself —not on the high level on which hon. Members opposite are, in big groups; not the super cinemas, but just what are technically known as "flea pits," which is the technical trade term for the cinema which is not gilt all over and with a magnificent foyer. When I was an owner, before my chain of cinemas was absorbed, like so many other things are, by the Coop, I discovered that when any form of taxation is brought in to the cinemas, it is invariably the small cinema and not the big group that suffers. I have the greatest fear that in giving the Chancellor of the Exchequer these very wide powers— whether one calls them permissive or any other name one likes—the eventual result must inevitably be to harm the small independent cinema which is an integral part of the life of a small town or village. A great deal of harm is done by the mass-produced super cinemas which do not fit into the landscape or the ideas of the small town or village. Any form of taxation which will tend to punish the small cinema, and encourage monopolists, who are the natural friends of the Chancellor and of this Government, will undoubtedly do something extremely harmful.
It was delightful to hear the hon. Member for Eton and- Sough, who is one of the ruling protagonists of the live form of entertainment, in the dirge that he was singing on the "Corporation of canned culture." One thing is certain, that if we continue this practice of allowing the Chancellor as free a hand as possible in the administration of the tax, whether it be good, bad or indifferent, we will find that its incidence will be harmful to exactly that class which we ought to seek to protect.
§ Mr. O'Brien (Nottingham, West)
My right hon. Friend the Chancellor of the Exchequer last week gave an assurance that before he exercises the powers which he seeks to obtain, he would not only consult me as a Member of Parliament, but he would also consult with the interests of the industry. That assurance has robbed me of much of the criticism which otherwise I would have levelled at the proposal. I do not know where my hon. Friend the Member for Eton and Slough (Mr. Levy) found that I had opposed the proposal. I opposed the timing of it, and the way in which it has been done, but in Parliament I did not oppose the issue and the principle at all, and I do not think the Committee will agree that I am called upon to justify an opinion on this matter which I have expressed in a broadcast speech. Surely, on such an occasion I can state what opinions I like, so long as I am within the law. If I express them I ought not to be the subject of criticism such as my hon. Friend has levelled.
§ 7.30 p.m.
§ Mr. O'Brien
Let us get down to the plain facts. Imposition of a tax of this character would have an effect on the future of the British film industry as a whole. British films as they are made now—the producing side of the industry— cannot possibly expand or even be maintained at the present rate of expansion without a considerable access to the American market. That is a fact which anyone who knows anything at all about the film industry of this country could not possibly contradict. There are sections in the film production side who would, no doubt, profit considerably by the Chancellor's carrying out the proposals that he wants. There are certain interests— important, and small, probably—that could get considerable advantage out of this proposal. But I am not taking the view of any one particular section. I am looking at the industry as a whole.
If we want to develop the British film industry, if we want to have our pictures 2290 on the screens of the world, we must not adopt this method. We cannot do it by this method. The approach is psychologically bad. I wish to concentrate on that point. Mr. Rank is quite capable, with his vast organisation, of looking after himself; but it is precisely to prevent Mr. Rank becoming a private monopolist in this country that I and many of my colleagues are opposing the way in which this is being done. Where are the distributors to get the films from? The only producer to be producing films on any large scale will be the Rank organisation, and we shall put that organisation into a position in which it will become almost a monopoly. Mr. Rank has been attacked from time to time—and my hon. Friend the Member for Slough has taken part in the criticisms—for being a private monopolist. This is going to make him completely a private monopolist, not only dominating his own cinemas, but having a far-reaching domination of the independent distributors whom the hon. Gentleman the Member for Bury (Mr. W. Fletcher) mentioned just now.
I am not going to develop the whole thing fully, but I do beg of the Chancellor, when he deals with this matter later on, as he will, to have regard to the position in the United States. We can gibe at American films, but when I was in the States a few weeks ago I met Mr. Herbert Wilcox. He is an example of a British independent producer away from the Rank organisation, away from all the big money in the film industry; and he is doing, and has been doing, a good job of work for this country in producing and selling British pictures. His last picture, made with his wife—Anna Neagle—starring in it, has gone to the United States. He went round the big film offices trying to sell that picture to America, trying to bring dollars back to this country. I do not know what has happened, but I think he has had a certain degree of success. Just imagine the position of Mr. Wilcox or anybody like him, in going round these commercial film offices—meeting the big shots of the American film industry, trying to get his picture shown on the screens of America, and trying to bring dollars back to this country—in that atmosphere, that bitterness, that has been created by the timing of the Chancellor's proposal. We can take another example, that of Sir Alexander Korda, who has just come back. No 2291 doubt he has informed the Treasury of the arrangements or deal he has made in America. That was made, of course, before these proposals were known. Whatever may be the success of Mr. Rank in getting his pictures over there remains to be seen, but, on the whole, we cannot expect our pictures to go over into America to earn dollars for this country unless the feeling that we are trying to do something wrong is removed.
Everyone sympathises with the Chancellor's difficulties about dollars. But let us try to approach the problem in the interests of the British film industry itself, and do not let us try to solve one problem by creating another and more difficult one. I have already said that the future of the film industry of this country is involved in this matter. Production is involved also in the success we have in getting our pictures on American screens. We do not want any threat of retaliation. We do not want anything like that. Perhaps there will be no retaliation, but we should not put ourselves in the position of asking for it, and making things more difficult for our industry.
§ Mr. O'Brien
I would not say we need fear it. I do not know what the American film industry leaders will do if this proposal is put into operation. I do not know whether they will try retaliatory measures, or try to keep our films out of America. But this is not a good atmosphere; not a good background. We hear a good deal of talk about competition between different countries. This is not a satisfactory background at this very moment when we are doing everything possible in the interests of the British film industry, and when we are trying to get our commodities over there, and trying to bring money that we want over here.
§ Mr. O'Brien
Yes, we have been trying for years. We ask the Chancellor for certain information about dollars. The Chancellor will give that information if he wants to give it. But when we are breaking into a country, when we are trying to open up a new market for films, especially in the United States, we must understand that we have to create a considerable organisation, a distributing 2292 organisation, a sales organisation there exactly as the Americans have done over here. The only organisation in this country that could make the experiment and that would have the capital available would be the Rank organisation. I do not know of any independent producer who could possibly afford to set up a vast distributing organisation in the United States. My hon. Friend should remember that dollars earned by British films in the United States have to pay for the creation of this vast organisation.
§ The Temporary Chairman (Sir Robert Young)
I am sorry to interrupt the hon. Gentleman, but he may not discuss the details of the question of the export of films on this new Clause. That is not under discussion now.
§ Mr. O'Brien
Thank you, Sir. I was making a comment on a remark which my hon. Friend the Member for Eton and Slough made in his speech. However, it takes a good deal of money to establish a distributing organisation in any country, and we must not overlook the fact that that is paid for by the earnings of British pictures in that country. With regard to the effect of this proposal on labour, on the workers of the industry, I do ask the Chancellor to have regard to the fact that wage conditions, wage and working conditions, particularly of the cinema workers, may be adversely affected. It will certainly make the negotiating task of the union more difficult. Wages and working conditions in cinemas can be improved, and ought to be improved, in the ordinary way of negotiation; but if the exhibitors of this country should be confronted with serious difficulties arising from this proposal, that will be bound to affect the particular standards of livelihood of those who are in this business. I do ask the Chancellor seriously to take that fact into consideration.
As to the production side. Obviously, if our films cannot get out of this country the production side will be affected. We cannot expand our studios. It will be five or ten years before we can treble, or even double, the present studio space. While priority must, of necessity, be given to housing and industry it will not be possible for us to make in Britain sufficient films to supply all the cinemas, even with one feature programmes; that cannot be sustained at the present rate of output. No doubt when the Chancellor 2293 replies he will be able to give further assurances on the lines asked for, and will say that he will try to meet all the interests jointly—both the labour and the proprietorial sides —and no doubt he will explain to us more fully what can be done. If that is not possible, I hope he will implement the assurances he gave last week. In the interests of the British film industry as a whole—the production side, the rental side and the exhibiting side—I ask that nothing shall be done which will damage or prejudice its development in this country and abroad.
§ Mr. Edgar Granville (Eye)
The hon. Member for West Nottingham (Mr. O'Brien) and the hon. Member for Eton and Slough (Mr. Levy) both speak with considerable knowledge and experience of the films business, and, therefore, we listen to what they have to say with a great deal of interest. No doubt they will forgive me if I do not intervene in the difference of opinion between hon. Members opposite about what they wish to do with Mr. Rank. It is always extremely difficult for this Committee to have a Debate on films without Mr. Rank's name cropping up a good deal. I have no association with Mr. Rank in the film business, although I have been connected with the film industry for 14 or 15 years. It is a little early to say whether the Rank organisation will succeed or not in the great attempt it is undoubtedly making to secure in the United States of America a market for British films. As has been said, a great deal of spade work has been done; a large number of dollars have been spent in printing, promotion expenses, and so on. But whether we should now draw the line, add up the dollars, and say whether they have succeeded or not, quite frankly, I do not know. The Board of Trade must know more about this, and I have no doubt that sooner or later the day will come when the Board of Trade must take a decision. If the Rank organisation's experiment to obtain dollars for British films is a success, then this new Clause will not be necessary, and the Chancellor will not have to impose these restrictions.
§ Mr. Granville
The hon. Member appreciates quite well what the hon. Member for West Nottingham was referring to. He knows the fundamentals of film production, and that in the very earliest days the Ostrer brothers made the same experiment—I acknowledge that —that the Rank organisation is making today, and they failed, in costs and everything else. One of the fundamentals of film production in this country is, and always has been, that there is a home market comprising a population of only 48 million.
The costs must always be related to that, and whether the American market is obtained or not, it is a gamble. Obviously, the American companies, with a home market comprising a population of 120 million film-minded people, can spend very much more than the film companies in this country on scenario writers, technicians, sets, the "star" system, and so on. When American film companies produce a film they can spend three times as much as we can in this country. The hon. Lady the Member for Epping (Mrs. Manning) referred to French films, about which I am in agreement with her in saying that they are very much better value for the money. But the American companies can spend two million dollars on a film, on which they can break even in the home market, and they make their profit over here, because we are both English speaking nations, and there is not the language difficulty as in the case of French films, and over the years we have grown to like American films. Of course, the British market is vital for the American film producer. The right hon. Member for West Bristol (Mr. Stanley) has had some experience in this regard, because he it was who was responsible for introducing the Cinematograph Films Act which imposed the last quota.
§ 7.45 p.m.
§ Mr. Scollan
Is it not the case that it is not a question of liking American films, but of the American films being foisted upon the British public whether it likes them or not?
§ Mr. Granville
The fact is, there is a block booking system; there is an interlocking arrangement with many of the United States companies, which means they can supply to hundreds of cinemas every week one or two films, as the case 2295 may be. I disagree with the hon. Member for Eton and Slough and I agree with the hon. Member for West Nottingham. If the Chancellor came down to this Committee next week and prohibited a large portion of the American film imports into this country it would mean virtually the shutting down of the cinemas and the putting on of variety.
There is at present, as the hon. Member for West Nottingham has said, a great studio shortage, about which the Board of Trade knows. If all the American films were excluded from this country—and I personally would have no grievance about it, none at all—we should be forced to produce films in cowsheds, in order to keep the cinemas open. The Board Of Trade have some responsibility in this— unless they want the cinemas to be shut down, or unless we are merely to show a film in this town this week end and in another town next week. To maintain a regular supply of films week after week requires a gigantic production, of which this country is not capable at the moment. Another important factor when dealing with the home market is that the cost of films is rising seriously today. We must face the fact, that in order to break even and make a profit, a British film can rely only on the home market here in Britain, whereas, an American produced film can break even in the United States and make its profit over here. The British film industry has no guarantee at all that if the production costs exceed the return obtainable from the home market, it will be able to recoup the balance from the United States.
That, I suppose, is what the Rank experiment is all about. It is a gamble. Many people think it will fail disastrously. Undoubtedly, the Board of Trade and the Chancellor must have had some information about the net results. Whether they are in a position to do what the hon. Member for Eton and Slough suggested— namely—to present a dollar balance sheet —I do not know. But I do think that before they use the powers of this enabling Clause it would be only right and proper —because the Committee takes a great deal of interest in this subject—to give us a dollar balance sheet I suggest that he should give some sort of interim report so that we can learn whether this Rank experiment will succeed or not. Another difficulty, which was referred to by the 2296 hon. Member for Eton and Slough, is not only the shortage of studios and the rising costs, but the definite shortage of artists. The United States, with their enormous contract powers, can turn round and make very large offers for artists. If this Clause is accepted. shall we be in a position to find enough artists to increase production so that we can fill the cinemas?
§ Lieut.-Commander Braithwaite
Can the hon. Member give an indication whether his statements are in favour of this Clause or against it?
§ Mr. Granville
I found some difficulty, in listening to the hon. and gallant Member's introductory speech, in finding out whether he was in favour of it or not. Many attempts have been made to deal with the importation of films The right hon. Gentleman the Member for West Bristol (Mr. Stanley), when he was President of the Board of Trade. enacted the quota Measure, which is to be re-enacted next year. I say that this is an experiment well worth supporting at the present time.
§ Mr. Granville
I am sorry that the right hon. Gentleman the Member for West Bristol is not going to make a speech, because if the Government cannot do what they want under this Clause, they will have to do what they want when his Act is re-enacted next year. Some hon. Members still think that we can get enough films, but how many prosecutions will have to take place because of non-fulfilment of quota obligations, I do not know. As I say, the Government ought to give us a balance-sheet. I have no doubt that before the right hon. Gentleman's Bill is re-enacted, we shall have the same sort of arguments he had to deal with on whether the exhibitors' quota is right or wrong
I have no doubt that as a result of this Clause there will be discussions going on in the film industry in this country and in the United States. I suggest that it might be possible to draw a line, and to say to the United States film industry that they can import into Britain a certain number of films, but if they import over that number, they must take the same number of British films in return. I think that it is a scheme which would work. 2297 It might be well worth considering if negotiations are open between the American and British interests. This is another attempt to deal with the importation of films into this country, and an attempt to reduce the dollars the Government have to remit. It is a complex and difficult problem, but, on the whole, the Government should be given support on this Clause.
Mr. Scott-Elliot (Accrington)
I should like to consider first how we are to put on a tax, if we have to put on a tax, and next whether the tax should be put on at all. I have no objection at all to this way of putting on a tax. It is novel, and it is simple. Each film pays according to what it earns. We have to consider what will be the result. It is generally admitted, I think, that the average American film depends for its profits on the net earnings it gets overseas, and the bulk of those earnings are in this country. If we are to put a tax on American films coming into this country, we shall have to put it on at a substantial rate to get anything appreciable, and by so doing we put a considerable tax on the profits of American films. I do not pretend to be as well informed as my hon. Friend the Member for Eton and Slough (Mr. Levy) or my hon. Friend the Member for West Nottingham (Mr. O'Brien), but I am inclined to the view expressed by the latter. I feel that there may be a certain degree of American reaction, to put it no higher than that. It would be a very unfortunate thing at the present time, although I have no tenderness for American films which I do not think anything like as good as English films, if we did not have some regard to American interests.
I come to the alternative method mentioned by my hon. Friend the Member for Eton and Slough, namely, that we should put a footage tax of, say, £10 per foot on imported films. That would have a comparatively small effect on the expensive American feature films, but it would probably shut out the cheaper American films, which may not necessarily be bad films. I have been told by many people in the film industry that a film upon which a comparatively small amount of money has been spent is not necessarily a bad film. That takes us to the question of whether we have the capacity, in our film studios, to produce the requisite number of films to take the place of those 2298 which are shut out. I do not think we have that capacity. There was the letter in "The Times" by Lord Grantley, to which reference has already been made, showing that we can make only 68 feature films; he also estimated that there might be an expansion by about 10 under certain conditions. It is improbable, therefore, that in the next two or three years we shall be able to take up the slack caused by shutting out some American films.
I do not wish to take up a long time on the question of the pros and cons of a single feature programme. A good point is that this would give the greatest possible impetus to the production of British films of all kinds, and in particular British shorts and documentary films, which are generally considered to be predominant throughout the world. It would have an educative effect on the public to see British documentaries instead of less good American feature films. Against that there might be a decline in cinema attendance. Some people might argue differently, but, as I understand the matter, it is likely that there would be a decline in cinema attendance, with the result that the revenue to be derived from Entertainment Duty might be reduced. For that reason, I prefer the method which my right hon. Friend is suggesting. The real point is whether we should put on this tax at all. I want to go a little further than my hon. Friend the Member for Eton and Slough, who seemed to throw cold water on this question of whether the Rank organisation would get films into America in a fairly big way. I speak subject to correction by the Parliamentary Secretary, but my information is that some kind of agreement has nearly, if not quite, been fixed up, that a definite number of British feature films will, for the first time, go into the big American circuits for showing in America. Obviously, that might earn a considerable greater number of dollars than anything we could obtain by putting on the tax which the Chancellor envisages. It was explained by the Lord President of the Council yesterday that it is the policy of the Government to proceed along expansionist lines. Those lines are particularly favoured in America, and I appeal to the Chancellor not to put on this tax unless he is certain that British films will not get a showing through American circuits. We should aim at expansion, rather than 2299 restriction, in the interests of our two countries.
§ 8.0 p.m.
§ Mr. Eccles
The Committee has had four or five speeches from experts on this subject, and two from the hem. Member for West Nottingham (Mr. O'Brien), to whom I want to say that I preferred the speech he made himself to the one which the hon. Member for Eton and Slough (Mr. Levy) made for him. I have no expert knowledge of the making of films, but I would like to say a few words about the tax. Can the Chancellor explain how he will ensure that the tax will not be passed on, because this is an income tax dressed up as a Customs duty? Unless the Board of Trade have complete control over the price at which each film is sold, or rented, so that this additional burden will not be added to the old price, we shall not save any dollars. We shall have to remit to America the same amount of dollars if it is possible for the person who sells the film to put up the price. Somebody would then have to pay more if the price was raised. We must be sure that there is no possibility of the price being advanced to cover this tax. That is a difficult administrative operation, but I hope we shall have an explanation of how it can be done.
I join with every other Member of the Committee in being anxious that we should cut down our dollar expenditure, and it is clear that films are less essential than many other things which we buy from America. I want to ask the Chancellor to take this point into consideration. Our dollar position is so bad that it is evident that many different negotiations and adjustments will have to take place between the Government and the Americans, so that we may get into a solvent position again. Is it in the best interests of the over-all dollar position that we should make these piecemeal pinpricks against the Americans? I am thinking about this matter as a businessman. If I have to deal with another businessman, and I want to sell to, or buy from, him a large number of articles, it is not likely that I would think that the best way to go about that would be to try to make him deal with me on a tender spot first. Our dollar shortage is so serious that what is wanted is general negotiations with America about our im- 2300 port programme. I think solutions might be found by that method. I hope the Chancellor will assure us that this tax will not be put on unless he is sure that it fits in with all the other various changes and modifications that will Have to be made in our import programme from the United States.
Finally, I would like to see discrimination between French and North American films. I suppose that is impossible, and that under our agreement with the Americans, if we tax American films, we must tax all other kinds. [An HON. MEMBER: "SO we should."] Yes, I agree in principle that multilateral trading is much better in every way than any other kind of trading, but where shall we be if our dollar loan runs out, and another large loan is not made to us? We shall have to buy from those countries which are willing to sell; we shall be forced to make that sort of bargain and, that being so, I think it would be better to have French films here, and not shut our cinemas, than to have no films at all
§ Mr. Michael Foot (Plymouth, Devonport)
I realise that there is a strong desire in some parts of the Committee to get on to other matters, but I think it is right for a few minutes to continue this Debate, because it raises most important issues for a very important British industry, and we should consider this question, not only from the point of view of the dollar situation, which is a serious matter, in all conscience but, as my hon. Friend the Member for West Nottingham (Mr. O'Brien) said, from the general aspect of what will benefit the British film industry. The hon. Member for Chippenham (Mr. Eccles) brought the Debate back to the question of our dollar expenditure. It is because of the general feeling of the Committee about this matter that the Chancellor has the support of the Committee for the tax which he is proposing. Personally, I would be very much happier if he were actually putting a cut into effect, if he were actually proposing such a cut to the Committee. But all he has proposed is an enabling provision. In my view, there has been an unconscionable delay in applying cuts to the imports of American films on which we have to spend dollars.
There is a marked contrast in the way the Government have dealt with different items of dollar expenditure. There has been great speed in applying cuts to, say, 2301 newsprint, and long delay in applying them to films. On balance, on the grounds of culture, or whatever may be advanced, newspapers have the right to be considered more favourably than films. That we should have the situation where, over two years, action has been taken on two or three occasions against the newspapers and the book trades, while nothing has been done in respect of films—
§ The Temporary Chairman
The hon. Member must keep to the question of the film industry, and not make the Debate too wide.
§ Mr. Foot
I apologise, Sir Robert, if I went too far. We hope that action will be taken on the subject of film imports. I think it is valuable to discover why there should have been this delay. I think the reason why there has been delay, and why there is still delay, is because of the excessive tenderness of the Board of Trade towards the Rank film monopoly, and because of their excessive readiness to treat the claims of the Rank monopoly organisation at their face value. The hon. Member for West Nottingham told us quite clearly what is the argument, and it is also the argument of the Rank films organisation. The argument is that even if we are spending £17 million worth of dollars in importing films from America, it is still true that they are trying to earn dollars in America, and we must not jeopardise the whole of that development. That is the whole of the Rank organisation argument. I support the plea that is made that if we are to base action on that kind of argument, and therefore delay in applying these cuts, it is essential that we should have in this Committee the figures on which we can make up our minds.
Never once has the Rank organisation made any attempt to give to the public of this country the figures on which they are basing their argument—the figures of what are the prospective earnings from the United States and the figures about these extraordinary arrangements that go on for bringing American stars and even American directors over to this country and giving them huge dollar incomes free of Income Tax. They have never given an account of these things, and of the amount of money spent in propaganda in America in order to earn the dollars which they say are coming along 2302 later. They even boast about it. There was a remarkable article in the "Evening Standard" a week or so ago in which this matter was very plainly explained. It was a good deed in a naughty newspaper to reveal these facts. That article concluded with a remarkable statement by Mr. Rank's public relations officer to the reporter of the "Evening Standard." This was the statement: "The Rank organisation never gives any figures." We know that applies in their dealings with the British public, but does it apply also to the Board of Trade? Have they managed to extort any figures from this private organisation which is a powerful monopoly? We know what howls there are from the other side of the House if, for instance, the Coal Board do not provide figures every month. Here is an organisation, with a powerful monopoly situation in this country, which boasts that it never gives any figures. We want those figures, and before this Committee decides what it will do about the film industry, it ought to have the facts upon which these cuts can be based. I say that the facts revealed in the "Evening Standard" article, particularly in view of the critical dollar situation of this country amount to a first class scandal. It is our business today to try to get to the bottom of that scandal.
The main argument of the hon. Member for West Nottingham was a perfectly valid argument which he is entitled to advance. It is equally valid for us to contest it and strictly relevant to the kind of methods which we should use to check the import of films from America. The argument concerns the principle on which we are trying to base the prosperity of the British industry. The hon. Member for West Nottingham says that he believes that it is right for the British industry to base its prosperity on the idea of crashing into the American market. That has been the view held by the Rank organisation for a long time. Mr. Rank is now trying again, and he will not give any figures as to how far he has got, but he asks this Committee to hold off any cuts on films, although he does not give us the figures. This view of the Rank organisation that we can base the British film industry on crashing into the American market—
§ Mr. O'Brien
The hon. Member keeps referring to the Rank organisation, but there are others in the British film industry 2303 besides Mr. Rank and his organisation, such as Alexander Korda and Herbert Wilcox—large independent producers of feature productions—and they all agree that it is necessary to get into the American market, so there is unanimity of belief in the trade on that point.
§ The Temporary Chairman
I hope the hon. Member is not going to follow that up. We are not dealing with films going into America, but the importation of films into this country.
§ 8.15 p.m.
§ Mr. Foot
I hope I am not going outside your Ruling, Sir Robert, but I think the Debate has gone very wide, and I would submit that it is a proper consideration to discuss, when we are imposing a novel tax like this, the effects of that tax generally upon the British film industry. There are two alternative views on that subject to which I hope I shall be able to refer—one, the contention that we should crash our way into the American market; and the second that we should build up a British film industry by providing as many films as we possibly can for the British market. The hon. Member for West Nottingham says that the whole British film industry agrees with his view. I do not think so, because I know that many people in the film industry have long since argued that it is much better to go in for less expensive films and seek a policy from the Government which will assist that process. Instead of that, unhappily because of this delusion that we can crash our way into the American market, which the American companies themselves can fully provide for, for they can fill all the screen time in America, we have the attempt at the present time to Americanise the British industry which is a serious threat. We have got in charge of the Rank organisation today not the technicians and the artists and the people who in the last four or five years have enormously enhanced—
§ The Temporary Chairman
I must ask the hon. Member to keep to the subject before the Committee—that is, the importation into this country of American films and the tax thereon. There may be another view on this question, but that does not give the hon. Member the right to discuss it here.
§ Mr. Foot
I am sorry if I have gone outside what is legitimate, but I think if we are to deal with this matter in a way which would best assist not only the purpose of gaining dollars but would assist also the British industry we should discuss not merely the matter of a makeshift film tax such as we are discussing at this moment, but the renewal of the quota Act plus, possibly, some kind of a tax which would enable—
§ The Temporary Chairman
Let us get back to the new Clause and what it deals with. The hon. Gentleman is not dealing with the facts of the new Clause before us, and those matters with which he deals do not arise here.
§ Mr. Foot
I apologise again and I would appeal to the Chancellor to say that this tax is only to be regarded as a temporary measure for dealing with this problem and that it would be much better to have a quota approach to it. I appeal to him to recognise that a different kind of instrument will be needed to deal with the whole situation in a way which will assist the industry, and I would ask him to regard this tax as a temporary measure when dealing with the much bigger questions which it would be wrong for me at this moment to try to discuss.
§ Mr. Stanley
We have had a long and at times heated Debate, and I am sure no one who listened to our debates would have been prepared for the fact that at the end of that Debate everybody was going to support the Clause which we are now discussing. This may be tempting for one who was President of the Board of Trade and responsible for the Cinematograph Act, but despite the fields that have been opened up as to the Rank organisation, the proper way to build up the film industry in this country and whether we should Americanise the industry or not, I feel that we can leave that for next year when, as has been said, there will have to be another Cinematograph Act, and when all those questions will not only be important and interesting but will even be relevant.
I want to speak for only a very few minutes to say that we on this side of the Committee accept the new Clause which the Chancellor has put down. I do not mean necessarily that we accept it with glowing enthusiasm, or without certain criticism, but in the first place it is 2305 obvious that no one who had listened to yesterday's Debate, or who was aware of the seriousness of our dollar position, could question the necessity of being in a position to take steps to reduce our dollar expenditure on films. No one, therefore, is entitled to oppose the Chancellor's proposals unless he is prepared to put forward proposals which will be equally useful from the point of view of dollar exchange and, as he might think, less disadvantageous or more advantageous from the point of view of the film industry. I confess at once that I do not particularly like the method which the Chancellor has chosen, but though I can think of other and, I believe, better ways, I think that when the hon. Gentleman comes to wind up he may be in a position to give me reasons why they are impracticable.
First, I dislike the Chancellor's proposal because it is a novel method of taxation and, therefore, one of whose operation we are uncertain. I sympathised very much with my hon. Friend the Member for Chippenham (Mr. Eccles) when he asked for an assurance that this tax, which is supposed to be a tax on dollar exports, will not in fact be converted into a tax on the cinema exhibitors in this country. In other words, are the Government satisfied that there is no way in which this tax can be passed on to the consumer in this country? Secondly, I agree with the hon. Gentleman the Member for Devonport (Mr. Foot) that it is a very great pity that when we are faced with a new tax of this magnitude and importance it is not possible at the same time to tell us what the rate of that tax is to be. Why was it not possible, at the same time as the new Clause was put down giving this power to the Chancellor, to tell the Committee, and to obtain the assent of the Committee to the way in which that power was to be used, at least in the first instance? I dislike giving powers of this kind unless we have at the same time an indication of the methods in which those powers are to be used.
§ Mr. Tiffany (Peterborough)
Surely it is a question of how many dollars were expected to be earned in America by British films?
§ Mr. Stanley
The right hon. Gentleman knows how many dollars are earned or expected to be earned. What he must 2306 know approximately is how many of those he wants to stop. What I should have liked to know was the rate of duty he intends to put upon the film after the new and rather complicated process of valuation has taken place. I should prefer to have that information now than to wait for a quite indefinite time and then have it given to us in an Order. Quite frankly, I should have preferred to deal with the matter by the ordinary method which will be open to us within a few months—namely, by raising the quota of British films. That is the way we have done it in the past, and, on the whole, I think that it is still the most satisfactory way. I understand that the objection to it is one which, for the present at any rate, we certainly cannot overcome—that the studio space, technicians and so on are not sufficient to allow this country immediately to fill the gap which would be left if we reduce the number of American films by as increase in the quota.
The other alternative, which certainly would seem to me to be preferable, would be for the Chancellor of the Exchequer to say exactly how much in dollars he was prepared to allow film companies to take out, and to freeze the rest—that, in fact was the method adopted in the early days of the war—and say, "In addition to that, you may take out from this country, pound for pound, or dollars for pound, what you allow us to earn in your country." You would thus have a basic amount which the American film industry could count on, and above that an unlimited extra amount according to the opportunities that they gave us, and the success We-can make of those opportunities. There again, I am afraid that there is a snag. Even if the right hon. Gentleman were sympathetic to it, I am afraid that probably Bretton Woods or the Loan Agreement would prevent us from freezing the requisite number of dollars in the way I have suggested, and I have, therefore, reluctantly come back to the conclusion that if we are to take power to cut down the film imports—and obviously we must not only take powers but the time must come, and many think it has come, when those powers will have to be exercised— there is no alternative to the plan adopted by the right hon. Gentleman until we are able to increase our own abilities to produce.
2307 For that reason we certainly shall not oppose the proposal in the Lobby, but may I say one word in conclusion? A great deal of this Debate turned on the activity of Mr. Rank. I have no connection with him and do not even know him, but naturally, since Board of Trade days, I have taken an interest in the film industry, and I have followed what Mr. Rank has been doing. He may be right or wrong, he may be going to succeed or fail, but when a man is at any rate trying to do what he and a great many others believe is a great thing for our film industry and for the trade of the country as a whole, I think it is a pity to refer to him as if he were just a money-making monopolist trying to get away with anything he can. I particularly resent the reference to his refusal to give to the public the exact figures of what he is making or hopes to make in America. The hon. and learned Gentleman the Solicitor-General is here. He and I have been sitting day after day in Committee on the Companies Bill upstairs, and it was laid down there, without any party division, that there may well be instances where it might be damaging to the whole prospects of a company to reveal publicly, estimates as to the business they are likely to do in a certain field before it is actually done. For that reason the right hon. Gentleman defended a proposal whereby the disclosure of that kind of information should not be made compulsory upon a company. I am sure he will be the first to say that in that refusal of Mr. Rank to which reference has been made, there is nothing really that could be regarded as against. the interests of the country or as a desire to keep from the public information the public are entitled to have.
§ 8.30 p.m.
§ Mr. Stanley
I am not defending the words P.R.O's use. I have not the same experience of P.R.O's as the hon. Member for Devonport (Mr. Foot). When the P.R.O. says that Mr. Rank never 2308 gives any figures, he is talking nonsense. Mr. Rank has to publish a balance-sheet.
§ The Temporary Chairman
The right hon. Gentleman the Member for West Bristol (Mr. Stanley) will be out of Order if he pursues that subject.
§ Mr. Stanley
I will most certainly not offend against your Ruling, Sir Robert, but I was under the impression that as you had allowed the hon. Member to put a question to me, you would allow me to answer it.
§ The Temporary Chairman
The hon. Member for Devonport raised the matter but on that and other matters I ruled him out of Order. The right hon. Gentleman must not extend the explanation and carry on discussion on the matter.
§ Mr. Stanley
Then we will carry it on no further, except to say that we shall have an opportunity, I hope, next Session to discuss all these very important, very interesting and very controversial matters in a new setting when they will be more relevant. Meanwhile, I feel that we have no alternative but to support the Chancellor in what he is doing.
§ The Parliamentary Secretary to the Board of Trade (Mr. Belcher)
I will do my best, although it is rather difficult, not to transgress if I enter into a discussion on the many controversial matters mentioned during the last two hours. I could wish that more of the time had been devoted to dealing with this simple, straightforward issue of what form the import duty is to take if it is to be applied. The right hon. Gentleman the Member for West Bristol (Mr. Stanley) said he would like to know during the Committee stage the rate which would be included in the orders. That must depend on the circumstances existing at the time if and when an order is made. The very making of an order is bound to depend on what happens to the present adverse dollar balance. It may be that some of the matters referred to today, will influence the making or otherwise of this tax, and they will certainly influence the rate at which it will be imposed.
We were faced with the necessity— with which every hon. Member who has spoken agrees—of reducing the dollar expenditure on films. Last year some- 2309 thing over £17 million of dollars was paid out for the showing of American films in this country, and the flow in the opposite direction was exceedingly small. We could have gone straight out for a cut in the importation of American films and could have restricted the number coming into the country, but it has been stated quite correctly by several hon. Members this evening that in this country we just do not possess the studio space and the other things required to make the films to meet the needs of this country.
It would not be the desire of any hon. Member that we should, at this time, deprive our people of the opportunity to go to the pictures if they want to do so. That is not the kind of cut we want to impose on our own people. It has been suggested by hon. Members, including the hon. Member for Eton and Slough (Mr. Levy) that we could have had a direct footage tax, but the objection to the footage tax is that we may not be trapping the same number of dollars as we should if we dealt with the ultimate value of the film in the way we propose. We might have a film of short duration, costing little money. It might be what would be called a "money spinner" in this country. If we had a footage tax, we should have had as much as we could get, quite irrespective of the amount of money earned by the film. We should be restricted to that smaller amount. Obviously, of course, you may have a large and expensive film of the kind which we are accustomed to receive from Hollywood, which may turn out to be a "flop," and then you would be faced with the necessity of revising your values. The only alternative which commended itself to us was this scheme, which aims not necessarily at stopping American films from coming into this country, but at stopping American dollars from going out of this country to the United States of America in payment for the showings in this country.
There is another possible alternative to which I do not wish to refer at length. That is the expansion of the British film industry, and the showing of more British films in the United States of America. On that I would only say that I join with the right hon. Member opposite in deploring some of the suggestions which have been made tonight about a certain organisation, particularly the suggestion that the 2310 Board of Trade is too tender-hearted in its dealings with that or any other organisation. I do not think it is a question of being tender-hearted; I believe that all these organisations—it is not confined to one—which are doing their best to expand the British film industry, and particularly to expand trade with the United States of America, should be given the support of the Government Department responsible, without necessarily Government Departments indulging in tenderheartedness which, I can assure the right hon. Gentleman, they do not.
It seemed to me that one of the really important points which emerged from the discussion was that raised by the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) who opened the Debate, by the right hon. Member for West Bristol and by several other hon. Members who have spoken. That was the question of the passing on of the duty, and I have been asked to deal with that. To forestall any alarm which may be felt in this country and to make the position clear in America—it is important, because we do not want to do anything which will lose us the good will of the American film industy, particularly at a time when some organisations are doing their utmost to advance British films in that country—I would make this clear: If and when these higher duties have to be imposed, we should not hesitate to take any action to prevent them from being passed on by an increase of charges, to the cinema proprietors or to the cinema-going public.
The object of the duty is to save dollars, and if the cost of the duty were passed on to the consumer—to the proprietor of the cinema or to the person who goes there—obviously we would be frustrating our own object and would not be saving dollars. What we would attempt to do in the first place would be to get some price-freezing voluntary agreement inside the film industry. If we could not get a voluntary agreement, obviating the necessity for a statutory control of rentals, we would have to use such powers as we possessed. We possess powers under existing price control legislation, under the Goods and Services Act, 1941, and under Defence Regulation 55AB and I assure the Committee that if there were any evidence for the necessity 2311 of using those price control powers, we would not hesitate to use those powers to stabilise rentals at what we would regard as the proper level.
There has been some talk about the earnings of British films abroad and the possibility of producing a balance sheet. I do not feel that in connection with this particular tax, the permissive power for which we are seeking tonight, it is necessary or desirable for me to attempt to pose before the Committee a balance-sheet of the kind which has been suggested. In any case, I quite agree with the right hon. Member opposite, that even if those figures are possessed by the Treasury and by the Board of Trade, as, of course, they are. I do not know that it would be proper for me or for any other representative of the Government to pass on, willy-nilly, to the general public information which has come into our possession in confidence.
Then my hon. Friend the Member for West Nottingham (Mr. O'Brien), who has a very great interest in and knowledge of the film industry, expressed his apprehensions that perhaps the timing of this announcement may have been unfortunate. The last thing we would wish to do would be to interfere with the work of anyone who was attempting to further British interests on the other side of the Atlantic Ocean. But we are faced with this very bad adverse balance of dollars in the film industry. The payment out of the country is £17 million, and the amount coming in is very much smaller. Our friends must understand that this is not directed against the United States film industry because we do not like United States films, but is a matter of sheer necessity for this country to save dollars, which we hope will be saved by this method.
My hon. Friend asked that the Chancellor should consult with both sides of the industry on the operation of the tax. I think he has already had that assurance from the Chancellor, and I hope as, when, and if necessary the Chancellor will take the trade into consultation and endeavour to agree with them as to how this tax should be imposed, how much it should be, and any other matters of detail which are necessary. The Government are entitled to assume that the Committee are agreed, first, that it is necessary to do something about reducing this dollar ex- 2312 penditure, and, secondly, that while there may be several alternative methods of dealing with it, this method, while it may be novel and, therefore, must be regarded with the closest attention by those who give attention to fiscal matters, is about as practicable as any which could be advanced. I hope we are going to be given this permissive power this evening by a Committee which agrees, if not with all the details, with the necessity for it, and agrees that we should have that power.
§ Mr. Scollan
All that is sought in this new Clause ispower to alter or add to Section 10 of the Finance Act, 1935It is very difficult for the Committee to assess the exact value when we do not know exactly what is going to be put into operation. There are, however, two or three things which must be considered in connection with the American film industry and the dollar situation at the moment. An hon. Member on the Opposition side said that this was not the time to bring about pinpricking with the United States. I entirely disagree. I think this is the time when every section of any industry in the country that requires dollars should face the fact that food must come first. Every other interest must be subordinated to that, and that in turn must be transferred to the United States. It must be forced on them that unless this country gets some kind of relief from the situation which was outlined in the Debate yesterday, certain interests in the United States are going to suffer.
I deplore the fact that some hon. Members are prepared to put the interests of a particular section of the community here before the interests of the whole nation. Has not the whole Debate yesterday, and the whole of past experience, proved that we are facing a situation which has never faced any country before, and that the necessary relief and wealth of the nations devastated by the war are centred in one particular nation? These problems have to be brought home to the people in that nation. How can we bring them home? By telling them frankly and plainly that we cannot bring their films into the country and pay for them, but that we require from them something far more important. As a matter of fact, if this- 2313 country were in the normal prewar position, I would still support this proposal because of the question of the educational value of films. We pay great sums of money for the education of our children; they are taught to speak English in school—
§ 8.45 p.m.
§ The Temporary Chairman
The hon. Member is getting wide of the new Clause. I must ask him to keep within its scope.
§ The Temporary Chairman
Certainly. That is what the Committee is doing; but it is not a question of bringing in a matter of the kind which the hon. Member was raising.
§ Mr. Gallacher
On a point of Order, Sir Robert. In a case of this kind, when an hon. Member is arguing in favour of a tax on American films, if it should be necessary, is it not a good argument to say that we spend a lot of money on educating our children, and that it is very bad policy to spend money to destroy that education by buying American films?
§ The Temporary Chairman
The question before the Committee is that of putting a tax on films. That is the point to which we have to keep, and not proceed as though we were making speeches on Second Reading.
§ Mr. Scollan
I find myself in great difficulty if I am not allowed to discuss why we should or should not impose this tax. I am examining the reasons why a tax should be or should not be imposed. I have listened to hon. Members putting forward a case against any tax being imposed. I cannot understand how it is not in Order to put a reason why the tax should be imposed. The power which is to be given to the Chancellor, if this Clause is approved, is for the primary purpose of meeting the dollar situation, according to the information we have been given. The argument has been advanced against it that it will injure the infant industry of film-making in this country. I thought that my hon. Friend, when replying, might have told us, "We shall be very sorry if we injure the growing film industry of this country, but when we have Hobson's choice of food or films, obviously it must be food." That is the situation.
2314 On the other hand, is the proposal to be considered from the point of view of whether the loss of these films if this tax were imposed, would be a national loss? I am of the opinion that the country would benefit greatly if the cinemas were only to be open one day per week. I think that the sort of education provided by Hollywood films largely destroys the morality of the children. For that reason, we should advise the Chancellor to impose the highest tax he possibly can, even if times were normal. It is no use the Chancellor raising money and taxing us on everything else for the great educational scheme upon which we have embarked, and allowing someone else to come along and destroy it. That is what we are getting today. Even the English language has been largely destroyed. It is quite common to hear, "O.K." and "Oh, yeah."
§ Mr. Scollan
In conclusion, I say to the Chancellor that when he imposes this tax, I hope it will be sufficient to destroy the evils of the cinema and place the country in a far better dollar position than it is in today.
§ Clause read a Second time, and added to the Bill.