HC Deb 30 April 1948 vol 450 cc862-74

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Snow.]

4.1 p.m.

Mr. Wyatt (Birmingham, Aston)

On 11th March last, the President of the Board of Trade announced in this House what was in fact an excellent agreement with the American film interests in Hollywood. Not only did that agreement save us dollars whilst giving us as many films as we were getting before, but it offered a way of getting British films shown in America. Since that agreement was made there has been a great deal of uninformed criticism on this side of the Atlantic. It must be uninformed criticism because the agreement has not yet been published. There has also been a great deal of misunderstanding of the nature of the terms of the agreement. That is largely due to failure so far to publish the agreement. Bits of it have appeared in England and in America, and particularly in America.

Many American film journals have carried what purported to be the full text and the details of this film agreement. The "Motion Picture Herald" of Hollywood of 20th March published what it called "the full text," stressing the uses that could be made of unremitted sterling. They gave these as being an encouragement to spend without limit on the film industry in Great Britain. None of those publications of the text of the agreement in America had included the principles which are to govern the spending of the unremitted sterling. The provisions in today's "Board of Trade Journal" make it clear that the spending is not to go beyond the limits of fair competition or be otherwise harmful to the legitimate interests of the British film industry. These provisions have all been carefully left out in America.

Hollywood now seems to be settling down to a state of mind that the agreement heralds an invasion of the British film industry. One film paper has already said that 23 films are already planned for production in England at a cost of 30 million dollars. Metro-Goldwyn-Mayer are shifting over a number of films already in production from Culver City to Elstree. R.K.O. are trying to get the use of some of Mr. Rank's studios. United Artists are trying to get studios, while Universal films have made an agreement with Mr. Rank for the making of two films here. I understand that 20th Century-Fox are negotiating to buy British studios.

It must be made clear at once whether or not Hollywood is to be allowed to expand production here to an appreciable extent and how far they are to be allowed to expand their production. If that is not done there will be a great deal of bitterness later on. Our own British film industry is already in a somewhat precarious condition and if it is subjected to an invasion of this kind, we may see it collapse altogether. When questions have been asked of the President of the Board of Trade about the possibilities of an invasion of Hollywood into the film industry of this country, he usually answers that he would consider it unfair competition. But we obviously cannot keep Hollywood indefinitely out of empty studios or stop any increase in American film production by subsidiaries in this country of American companies.

We have to get some sort of agreed level at which American production would be allowed to operate each year. When we look at what the American film companies have been doing recently in England we see straight away that they have not done a great deal. In 1938 the only film made by American subsidiaries in England was one by Warner Bros. In 1947, there were only three, and they were by M.G.M. None were made here in 1946. When we are discussing the activities of American subsidiary companies it is well to keep those facts in mind and to see that their production does not get a great deal higher. I would suggest some seven or eight films a year as reasonable. We should not allow companies from Hollywood to invade our industry.

There are other possibilities arising out of the agreement which suggest that even worse things may happen. One of the things which the agreement does is to encourage the Americans to take British films in America because any sum earned by those films in America is allowed to be set off against unremitted sterling in new dollars equivalent to it, and to be transferred to America. Mr. Rank yesterday told the world that there are 28 ways in which American film companies could get their unremitted sterling out of England and into America. I do not believe that there are as many ways as that but possibly there are some ways. For instance, it is quite possible—I would like the President to clear this up—for a British subsidiary of an American film company to make a film here by using unremitted sterling. That film would count towards the British quota. The film could then be exported to America, and any dollars earned there would stay in America and none would come back because the distribution rights have already been bought with unremitted sterling in England.

Again, can an American film company bring over a complete team of stars, directors, and technicians and use British studio space, operating with unremitted sterling, and make a film and send it to America without any dollars coming back here or these dollars counting against unremitted sterling? If both those sugges- tions are correct, there are two large loopholes in the agreement straightaway, which will make it unlikely that the Americans will be as keen as they ought to be on pushing British films in America.

It appears from what has been published about the agreement that no unremitted sterling can be used for film production in England without the prior approval of the Joint Control Committee and it is important to know whether or not this is so. Much will depend on the composition of this Joint Control Committee and the way in which it works. Over the two year period of the first half of the agreement there is certain to be at least £10 million or £11 million of unremitted sterling lying about the country, and that money will be like the money in "Brewster's Millions"—it has to be spent within that period or it will be no good to anyone. Businessmen normally hate watching money disappear, and they will strain every nerve in order to get rid of it and get some value for it. Unless the Joint Control Committee operates at a really high level of statesmanship, every commercial trick imaginable will be tried to get the money out of the country. It is a very great potential danger to Anglo-American relations. First of all, it can embitter the people in this country if the spending is unfair to the British film industry, and, secondly, it can embitter the Americans if they feel that they have after all been tricked and cannot spend the money as freely as they would like. The Government should appoint at least one person to this Committee who has nothing to do with the industry but is of considerable distinction and will aim to see that the unremitted sterling is diverted into other uses than film production.

I hope that the President will make it clear that this unremitted sterling is only to be used as far as films in this country are concerned for buying the distribution rights of British films for circulation in America and not for the buying of studios and starting up new concerns in this country, although of course it can be used up to an agreed level of production in existing studios.

Already one way of buying distribution rights is being tried by an American film company. That is to use its unremitted sterling here for the purpose and then have a contract by which half the profits earned in America come to the British film company and are chalked up against unremitted sterling and the other half stays in America, which is a satisfactory way of dealing with it. It is very important that these matters of interpretation should be cleared up as soon as possible, and particularly that unfair competition should be defined quite clearly so that there can be no misunderstanding about it.

There is also a very important point on the agreement itself about which very little has been said, and that is the commercial uses to which the unremitted sterling can be put apart from things connected with the film industry. The President has already mentioned the hotel industry. Does that mean that the Americans can use their money to invest in real property now and realise their investments later on when the agreement has run its course and collect their dollars? That would be very harmful.

Meanwhile the British film industry has been getting into a very difficult state. Independent production has almost come to a standstill through lack of money. It is, first of all, important that this should be cleared up so that the British film industry may know where it stands. Secondly, it is important that the President of the Board of Trade should make arrangements for the British independent film producer to get finance. Both the ABC and Rank organisation do not care very much about these things because the agreement suits them. It gets them American films and it allows production in England with the co-operation of the Americans. They are not going to give money to the independent producer unless they can control the type of product. That is why we have things like "No Orchids for Miss Blandish" and "Good Time Girl."

Almost every independent producer would leave the Rank and ABC organisations if he could get his money elsewhere. One way in which the Government could raise this money is by persuading the F.C.I. to advance it for the reconstruction of this industry and by creating an instrument by which the money could be fed to independent producers. It is possible that that money may not be obtainable from private enterprise sources. If it is not, I suggest that the President should do the same thing by using the powers given him under Section 2 of the Borrowing Control Act to raise the money for a holding company which could do precisely the same work. There is no particular reason why an advance given to an independent producer should not be quite safe, because the President has a quota which he can fix at a sufficiently high level to make certain that any reasonable British film gets a showing, so that one's money is bound to come back providing the film is at all reasonably made

Earl Winterton (Horsham)

And it appeals to the public.

Mr. Wyatt

Certainly. There has been a great deal of worry and concern in film circles because of serious extravagance by producers. The problem can be met by a checking arrangement whereby directors work for deferred fees and share the profits of the films. This keeps costs down and is designed to make the films cheaper. The total amount of money that the President would be required to raise would not be more than £4 million. The fact of it being available might do away with the need for it, because distributors and exhibitors would see that producers could now get better terms and they would change their own. It is vital that these independent producers, who are capable of making films about England and the English way of life and who do not make imitation Hollywood products, should get their chance. There are strong grounds for supposing there is a popular appeal for this type of film in America, if shown with discretion in selected theatres so that it will earn for us valuable dollars.

My last point is on the question of studios. One of the highest costs in film production is that of rentals, and I suggest that the President should use his powers to take over at least one studio under the Emergency Powers Act. There is one empty now, the British National Studios. Let him take it over and let it out at low rentals which will help to bring down the costs of the others. Some of these studios are empty, because the cost of going into them is altogether too high. I would conclude by saying that it is absolutely vital that the President should see that the agreement is published immediately and that clarification is given on its most important details. He should see at the same time that some arrangements are made on behalf of the independent film producer, and if these things are not done immediately I am afraid that our relations with the American industry are going to be very strained through misunderstanding.

4.15 p.m.

The President of the Board of Trade (Mr. Harold Wilson)

My hon. Friend the Member for Aston (Mr. Wyatt) has raised a very important subject and one on which I agree with him right away that there is a lot of misunderstanding and indeed misinterpretation at the present time. First, I should like to agree with him that the publication of this agreement which was signed on 12th March, is certainly long overdue. The publication has been held up by the need for a settlement of details between individual American companies. Although there are no details left for settlement which can affect our interest in this matter, there are a number of individual interests over there to be considered. I have this week telegraphed to Mr. Eric Johnston and expressed to him the concern of hon. Members in different parts of the House about this matter and told him I felt it was essential to publish the agreement immediately. As the House knows, we have published in today's Board of Trade Journal a pretty full summary of the main terms of the agreement, including the three overriding principles to which my hon. Friend referred, and which he said had not been published in some of the American journals. I have received a message from Mr. Eric Johnston today in which he agrees that we should publish the full agreement right away.

I hope that will clear up some of the misunderstandings which are due, I think, to rumours of our failure to publish it earlier, although many of the misunderstandings are due to a campaign of misrepresentation in one or two sections of the Press, chiefly those controlled by "His Master's Voice"—I am not referring to the gramophone company—a campaign undertaken purely for political reasons. When one finds "The Express" and "The Daily Worker" agreeing on something, one has to look very carefully at their motives for that agreement.

The agreement does in fact save this country dollars immediately. Instead of paying out 50 million dollars a year—as we have been doing in recent weeks— from June onwards we shall be paying only 17 million dollars. There was no way in which we could have got that reduction from 50 minion to 17 million dollars except by compulsorily closing the cinemas and I am certain that the critics of the agreement would never go on record publicly and politically and say they were in favour of closing our cinemas. If we had waited I think that in course of time the general reluctance of the public to go on seeing re-issues of old films would have gradually led to a closing of the cinemas and it would in the end have stopped the dollar flow. But it would have continued a fairly long time and the unsettlement in the industry, with the prospective closing of the cinemas, would have meant that the first casualty would have been British film production.

At present, the industry is going through fairly serious difficulties and these difficulties have led to a number of studios not being fully utilised. Empty studios at this time are a great tragedy in the industry. In my view they are due to two main things. First, the unsettlement in the industry before the tax agreement was made. As long as there was the tax boycott, and the prospect of cinemas closing, there was no confidence in the industry about embarking upon new production. Second, the financial unsettlement to which my hon. Friend referred. He referred, and I very much agreed with him, to the need, if we are to get full production in our studios, to encourage independent producers to the full, the independent producers who, as he said, are portraying the British way of life on the screen. I know he was not referring there to "No Orchids for Miss Blandish." Owing to the inadequacy of the financial facilities available to independent producers, a number of our studios are at present empty because there were not enough productions ready for them when the studios became available.

I agree with my hon. Friend that some sections of the industry are today unsettled by a fear of an American invasion, to which he referred, which might possibly drive our producers out of some of the studios. I want to correct any impression there may be that there is no longer any need for all-out production. There is full need for all-out production by British producers. I wish to clear up one or two points on the American invasion to which the hon. Member has referred. He asked for details as to how the blocked sterling, which remains available to American producers after the transmission of the 17 million dollars can be spent. I would repeat the three principles of the agreement to which he has referred. These over-riding principles of agreement are: (1) That the expenditure of the sterling balances should not create any excessive additional pressure upon the foreign exchange resources of the United Kingdom and the Sterling Area; (2) That the expenditures for any of the purposes in Schedule A"— the schedule of purposes in connection with direct film expenditure, film making, and so on— shall not be such as to go beyond the limits of fair competition or be otherwise harmful to the legitimate interests of the British film industry; and (3) That the disposal or use of any sterling balances not expended in accordance with Schedule A"— that is, not spent on film purposes— shall be for purposes which would not damage the productive economy of the United Kingdom or Sterling Area. The first of these principles, that there should be no undue pressure on the dollar resources, was dealt with by the limitation of dollar outflow to 17 million dollars. The third one, that expenditure outside the film circuits, on hotels and things of that kind, should not he damaging to our national credit, is subject to the control committee which is being established, charged with the operation of the agreement. That control committee, of course, will consist of representatives of the British Government—the Board of Trade and the Treasury—on the one side, and the American motion picture industry on the other.

Although I understand the point made by the hon. Member for Aston, that it would be useful to have one or two high-powered persons independent of the industry on the committee, I think he would agree that, with this very difficult matter to work out, it is important that we should have someone who not only could represent the views of the British companies, but who knows the ins and outs of the film industry pretty thoroughly, because there are many things which will need careful watching. I propose to appoint one of my high officials to the committee.

So far as the expenditure of the blocked sterling is concerned, that will be subject to the control of the committee and it is, in any case, subject to the maximum expenditure of £2,500,000 in the first two years. We certainly should not like it to be spent on anything detrimental to our export trade. It was the second principle to which the hon. Member chiefly referred, that the expenditure in blocked sterling is not to involve production going beyond the limits of fair competition or otherwise harmful to the legitimate interests of the British film industry. The key to this situation is, of course, studio space. It will be our desire, and has been our undertaking in the agreement, to provide reasonable facilities for American film producers to produce films over here. They have always had these facilities in the past to make films in studios owned by British companies. These reasonable facilities will be continued and it is only right that that should be so. We have laid down—and this was contemplated at the time of the agreement—that we must work according to a programme, and we must have some idea of the total number of American films to be made over here, and confine it to that programme.

There have recently been some extravagant estimates made of the number of American films which are likely to be produced over here. In the discussions leading to the agreement, the figure of something like 12 films a year was freely mentioned by the American representatives and we would attempt to provide facilities up to some such figure. There have been one or two American producers over here trying—in my view attempting to beat the pistol—to rent, buy or lease studio space. We must regard this as contrary to the interests of British film production We have to look at the programme as a whole. We cannot allow studio space here and there to be taken up and then find the total adding up to too much. I have, therefore, informed Mr. Johnston that we cannot agree to the alienation of studio space until the Agreement is published, the control committee set up and we can see the American production programme as a whole. I have informed British producers that we cannot agree to them concluding individual agreements alienating studio space. I have told British film producers and Hollywood that if there is any question of anyone beating the pistol and doing it in an unplanned way outside this programme, I am fully prepared to take powers, if necessary, to prevent the alienation of British studio space to American producers until it can be regulated by this committee.

The idea of this blocked sterling was that it should be used not merely for American production over here but also—and this was a great feature of the negotiations—for the purchase of the distribution rights of British films for showing overseas, particularly in the United States. I hope that if any American producers have been having extravagant ideas of what they were going to produce over here, they will damp them down a little and concentrate more on the other side of the Agreement, the purchase of British films. If the boycott had continued we should have had little dollar earnings indeed. Such earnings were infinitesimal in 1947. There were heavy distribution and capital costs. Now the United States has a vested interest in pushing our films. That will not earn us dollars in the first year or two of the Agreement, but it will give British films a solid foothold in the American market, so that at the end of this period we can count on getting a really big dollar income from the American market. The net drain of dollars after the period of the Agreement must be much lower than it was before 1947. The best way of lowering it is to increase our earnings of dollars over there.

My hon. Friend referred to finance and to empty studios due to the unsettlement to which I have already made referrence, and due to the lack of projects ready for "shooting." I need not tell the House all the difficulties about financing independent production in this country, particularly when dealing with an industry which is at the same time an art.

Earl Winterton

Before the right hon. Gentleman brings out that point, I am sure he would assent to the proposition that it is desirable that the British and American motion picture industries and exhibitors on both sides of the Atlantic should, in view of the general political position, be on the best possible terms.

Mr. Wilson

I entirely agree, and I hope that the noble Lord will tell that to some of the Press which supports his party.

Earl Winterton

They do not support me on this.

Mr. Wilson

This industry is dependent upon public demand. It is no use financing productions which the public do not want to see. We are certain that there cannot be distribution guarantees. We cannot contemplate a Government subsidy for film production, and no one would want to see that. I can tell the House that our investigation of this financial problem is now nearly complete, and I am now in a position to say that the arrangements I am making, details of which I hope to be able to announce in a few days, using existing financial and distribution facilities in the industry so as to strengthen them and put them on a sound financial basis, will be such as to provide a means of guaranteeing to every independent producer that if he has a reasonable project and a reasonable budget—we must get costs down here—he will not be prevented from going on by lack of finance. How we are to do that is something into which we are going at the moment. We are going to bring financial resources into this industry to provide finance for the independent producer on a self-liquidating basis, circulating capital which is so much needed in the industry. From then on a good independent producer with a reasonable project need not be prevented from going into production by lack of finance. On that basis I wish to call on the industry to go all out with full production with full confidence that it will have full resources available.

The Question having been proposed after Four o'Clock and the Debate having continued for half an hour, Mr. DEPUTY-SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at Twenty-nine Minutes to Five o'Clock.