CINEMATOGRAPH FILM PRODUCTION (SPECIAL LOANS) BILL

HC Deb 02 December 1948 vol 458 cc2183-282

Order for Second Reading read.

3.55 p.m.

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

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

This Bill is a necessity—but, in my view, a regrettable necessity—in the film industry in the position in which it finds itself today. I am sure I do not need to spend a very long time in giving the background to the introduction of this Bill or in giving an account of the development of the films situation over the past year. The House well know that the film industry in this country, which was already expanding quite rapidly before the war, and which was at that time gaining a great reputation for quality, was very badly hit by the war. It has been the purpose of successive Governments in the past few years, during the war and since the war, to help the industry in every way possible in its recovery from the damage and dislocation caused by the war.

I am sure that we are all agreed in this House—indeed, the Measures passed by the House without any Division or, I think, any controversy, have shown—that we all consider it highly desirable to have a healthy and active domestic film industry in this country, able as quickly as possible to stand on its own feet financially. It is desirable for many reasons—first, perhaps, because the film industry can do much to portray the British way of life and to show our national culture and way of life to ordinary people in other countries in all parts of the world. But it is important also, of course, because of its contribution to the solution of our balance of payments problem.

Our cinemas were kept going, during the period that our own industry was unable to maintain the supply of films for reasons due to the war, only by large imports of American films involving a very heavy drain on dollars from this country. In 1946, for instance, the nett dollar remittances were at the rate of about 70 million dollars. No one in this country, of course, contemplated that this drain on dollars would or could continue on this scale, and the 300 per cent. ad valorem Films Duty, later replaced by the figure set out in the Agreement of 11th March last, limiting the total dollar flow to 17 million dollars, was an expression of the nation's dollar emergency.

I feel it right to remind the House that throughout the discussions which led to that Agreement I made it clear, as did other representatives of the Government in those negotiations, to the American representatives, that when the period of the Agreement came to an end we should not contemplate a volume of imports on the pre-1947 scale, and that the increase in home production which would be necessary to make us much more self-sufficient in the matter of films in our own cinemas would be encouraged by the Government to the fullest extent of our power. In fact, the Government have done everything possible to help the industry in the matter of studio repair licences and building licences since the end of the war. In spite of the very great shortage of resources, especially, of course, of steel, something like£1,500,000 has been sanctioned for this work.

Then in the matter of assisting, from the protective point of view, this House in March this year passed the Cinematograph Films Act and approved the quota provisions which were brought forward in July. I think it right that I should remind the House, and remind those concerned in the industry, of what I said on the subject of quotas which, I think, was endorsed and supported in all quarters of the House, on Second Reading of the Cinematograph Films Bill early this year. I said that the Orders fixing the quotas will aim on the one hand at ensuring that every worthwhile British film has a full opportunity of the widest possible exploitation in this country's own cinemas, but at the same time not imposing an undue burden on the exhibitors. I went on to say: I do contemplate an ascending level for the quotas, and they will be fixed from year to year with the most careful attention to the foreseeable output of pictures which will be available. If the producers are giving us the increased volume of production we hope for, it is the Government's firm intention that the quotas shall be correspondingly increased, and the producers can draw up their own production programmes on that basis, and with that assurance."—[OFFICIAL REPORT, 21st Jan., 1948; Vol. 446, cc. 235–6.] I feel that it is right to repeat that assurance today because I want the industry to be in no doubt about the fact that if the production of a reasonable quantity of films can be and is expected, then the quota Orders submitted to this House will take full care of those films, so far as securing their showing in the cinemas is concerned.

As the result of the measures which have been taken and as the result of the desire of the industry itself to extend production, the increase in the number of British films so far produced and planned has been quite remarkable. If we take the total number of registrations of British films of over 6,500 feet, in 1945 there were 39 registered throughout the country; in 1946, the same number, 39; and in 1947, the figure of registration was 47. I was told at a meeting of the Film Production Council on Monday last by representatives of the British film producers that this year's registration of British films of that size will amount to something like 70—a quite useful increase on last year's figures.

Although the number of films produced has been increasing, and is certainly running at a rate not very much lower than I forecast a year ago—and was then perhaps accused of being over optimistic—it is still a fact that the industry is being held back by a number of problems. In the spring, production was held back by unsettlement arising out of the American boycott of British films. There was at that time a fear that the British cinemas would be closed down, and this meant that there would not be an adequate market for the production of British studios, and the number of projects and the amount of finance coming forward would be affected.

The Agreement of 11th March, we hoped, sounded the "All clear" for production to go ahead. While there was a growing pressure from the industry to produce more, that desire was held back by lack of finance. The banks—as this House well knows—have always co-operated well in financing film production. They have generally provided a large proportion of the cost of production of a new film project against a distribution guarantee, and the main burden of film finance, in this way, has been nobly shouldered by the banking system. It is right that we should pay tribute to what the banks have and are doing in this matter.

There has been at all times some shortage of end-money to fill the gap between what the banks would do and meeting the full cost of production. In recent months, there has been a shortage of those individuals generally referred to in the industry as "angels," who could be counted on to fill this gap with the provision of their own money. With the shortage of end-money and the shortage of "angels" we have seen a growing problem for the independent producers. Every effort was made by the Government to encourage normal financial channels to make money available, but for various reasons—I think partly through past memories of unfortunate financing ventures before the war—the normal financial channels, including the Finance Corporation for Industry, did not feel themselves able to do what was required.

So, after months of negotiations, we were faced with the position in the summer that unless finances could be made available for the independent producers, there was likely to be an imminent breakdown of independent production. That is why I had to come to the House on 22nd July to announce interim arrangements which we were proposing to set up through the establishment of the National Film Finance Company Limited, pending the introduction of a Bill in this House, which I said we should do as early as possible in this Session. This Bill is, of course, the fulfilment of that undertaking.

The scheme set out in the Bill starts from three points: First, we consider it essential that working capital must be found to enable the industry to carry out the production programme of which it is capable. Secondly, I think it is necessary to affirm that the industry's financing must be on an entirely self-liquidating basis. There must be no question of a subsidy for film production. Thirdly, that the special emergency arrangements proposed here should be temporary, and that in a reasonable period when the industry has built itself up again and established confidence in itself, it should be able to float itself free of the special arrangements and revert to more normal methods of financing.

The film industry is, of course, engaged primarily in the business of popular entertainment—and when I say popular entertainment, I am not excluding, of course, the great educational and cultural aims of the film industry; but they are subsidiary to the main business of the industry. That means that the box office is from the point of view of the industry the final judge of art. I know that in saying that I shall be written off as a Philistine——

Mr. Oliver Lyttelton (Aldershot)

Only as a Socialist.

Mr. Wilson

I thought that was the kind of maxim which would have been more supported by the benches opposite than by my own. In saying it, I have the support not only of the right hon. Gentleman but also of such an authority on aesthetics as Tolstoy. What it means is that if art is to endure, it must finally acquire popular support. However esoteric some of its practices and indeed, some of its personalities, the industry must be regarded as an industry, and as an important one engaged in large-scale commercial enterprise, when we reckon that there are at present about 30 million attendances a week in this country at nearly 5,000 cinemas, and when we understand that some 8 million people go to the cinemas twice a week or more. The gross annual receipts of the cinemas are at present running at the rate of about£108 million a year—over£2 million a week. The yield of the Entertainments Duty alone is some£38 million. From those figures one realises that we are speaking of a gigantic industry producing entertainment.

The House is well aware of the broad construction of the industry. The industry is divided into the producers, the distributors or renters and the exhibitors, corresponding roughly to manufacturers, wholesalers and retailers. There is usually a close financial link between the producers and distributors and, in some cases, as in the big circuits, the link is a complete vertical integration from producer to the cinema screen. I know that it is possible to criticise the present organisation and to find in it dangers to the development of a lively and varied British film industry. Many of my hon. Friends have seized on various points in the past which they feel ought to be altered.

The whole structure of the distribution side of the industry is to be surveyed by the committee which I have told the House I shall appoint. This committee will survey the distribution and exhibition side of the industry against the background of the economics of the film industry as a whole. In my opinion, it is no good looking at this Bill and saying how it ought to be if the film industry itself were differently organised. This Bill is an emergency Measure; we must take the film industry as we find it, and produce a scheme and a Bill which solves the problem in the most satisfactory and the speediest way.

I now turn to the details of the Bill itself. The money that is being provided is limited to£5 million, and the duration of the scheme is limited in time. All loans must be repayable within five years, and after five years from the passing of this Bill new lending must cease. These limits were, of course, set quite deliberately. The industry must so manage its affairs that in five years' time it can raise money on its own credit in the normal way, just as any other industry needing large-scale finance must do. The Government have no intention of subsidising the film industry. I have said that on a number of occasions, and I hope that fact has been well marked in the industry itself.

At the same time, the Government do recognise that before the war there was a promising British film industry in the course of creation; that this industry has been dislocated by the war and by its immediate consequences; and that, therefore, there is this period of transition in which limited help on a self-liquidating basis is fully justified. I know it has been said in certain quarters that the Government have no business to risk public money on such an industry. If the Government intended to put public money in the industry over a long period there might be more in that criticism; but I am quite sure that the House will agree, surveying the industry with its present problems, and recognising the need for building up the industry to full production, that a Measure of this kind is necessary.

The financial scheme of the Bill is, I think, quite simple. A statutory Corporation is to be formed, having at its disposal£5 million. Within general principles to be laid down by the Board of Trade, the Corporation will have both the first and the last word on the question to whom it shall lend and on what terms, with proper regard of course for the purpose of the scheme and the use and security of public money. If there is one thing I do not want it is that the Government should have to come into the question of which companies are to receive financial aid of this kind, and, above all, which individual films are to be financed from this scheme.

I feel it right now to turn to one criticism which has been levelled at the Bill in certain quarters, mainly, I think, because of misunderstanding. It has been said in some places that this scheme, which was announced as being designed to assist independent production, is in fact providing finance where it is needed least, namely, to distributors.

Mr. Beverley Baxter (Wood Green)

indicated assent.

Mr. Wilson

The hon. Member nods his head. He, of course, sometimes reads the "Daily Express," which has been leading that particular line of criticism.

Mr. Baxter

The "Daily Express," for which I have the greatest affection, is not the keeper of my conscience, and I do sometimes think up things entirely by myself.

Mr. Wilson

I know. In this particular instance the "Daily Express" and the hon. Gentleman have come to the same conclusion, and since it is possible for two such eminent sets of brains to come to this conclusion independently perhaps it is right that I should now say why that conclusion is wrong.

Mr. Emrys Hughes (South Ayrshire)

Coincidence.

Mr. Wilson

It is true that the way in which the National Film Finance Company Limited has been conducting its business as an interim agency has been limited to the financing of production through distributive organisations. It has not been financing distribution, but it has been financing production through distributive agencies. It is also true that the Bill provides that this method of financing should be continued, except in those classes of cases to be approved by the Board of Trade. As I say, however, I want to make clear that we are not providing that the Corporation shall finance distribution as such. It will, in general, use distributive agencies only in so far as those agencies are themselves financing film production, and only in so far as those agencies require further working capital in order to carry out their job of financing further film production.

Mr. Baxter

If the loan is to be made to the distributor, and if the distributor has to give a guarantee as to repayment—because I gather it must come from the distributor—by that time the distributor is committed so heavily that he must really dictate what the picture is to be, and the independent producer ceases to be independent but comes completely under the direction of the distributor.

Mr. Wilson

Perhaps the hon. Gentleman will allow me to come to that point. If the facts are exactly as he states them, what he is saying is this: if money lent for film production is to be certain of return, then in fact it would not be possible to finance production direct, because on the argument he advances the distribution company, to be quite certain of returning the money, would have to have such a tight control over production. If that is so, it means that the hon. Gentleman has little faith in the independent producers to cover their own costs unless there is very tight control over them. Now, I must say that to some extent I share the hon. Gentleman's doubts about direct financing of film production. I do agree that it is essential to have some pretty tight control over individual projects if we are to be certain of getting our money back. Perhaps I could deal with that more fully in a moment.

The House will have noticed that the Bill provides—and it is our intention to make arrangements—for some direct financing of production by the Corporation. In a moment I shall tell the House the kind of safeguards I think are necessary if there is to be any direct financing of production by the Corporation. I know that there are some who feel doubts about the financing of production through a distributive company. I think the point about the distribution agencies—and here I am taking up the hon. Gentleman's interjection—is that they provide two essential services in the financing of independent production: first they provide, for the greater part, a distribution guarantee; secondly, they provide some degree of control over the costs of independent producers.

Perhaps the main reason for the reluctance of the City to finance film production has been the fact that in the past, once money has been lent for the production of a film, the lender has had no control over the ultimate costs. Costs have frequently, and in some cases largely, exceeded the original budget, and often the lender was faced with the alternative of either withholding additional support, in which case the production would have come to a full stop and all his money would have been lost, or of pouring more money in on top of the money he had already lent. Distribution companies, which are for the most part skilled in this job of controlling independent production costs, provide some form of control over the independent producer. Of course, the important thing is to ensure that they have sufficient control over costs without having an excessive degree of control over artistic freedom and the quality of production.

I know it will be the intention of the Corporation to ensure that any distributors to whom money is lent provide adequate guarantees to the Corporation of their system of controlling the budget, and a necessary step in the financing of a film, as such, is of course to minimise the risk to the distribution company's money, and therefore to the Corporation's money, and therefore ultimately to the taxpayer's money. I have already said that one of the main reasons for confining ourselves so far to finance through distribution companies is that the fact that the main distribution companies concerned—such as the British Lion Company, which was the first recipient of a Film Finance Company loan—normally deal with a considerable number of independent producers. Therefore, they are able to spread the risks inherent in film production over a large number of films.

To finance individual projects would involve not merely risks of high costs of production in individual cases, but also the risk of box office failure, even on a film whose production costs were not excessive. It is our intention that the Film Finance Corporation will work out as quickly as possible—indeed, the company are already engaged on this task—means of financing production direct, but from what I have said and from what the House knows of the film industry, I am sure that I shall be supported in my view that this is a matter which should be conducted with the very greatest care, the more so as public money is involved in whatever risk attaches to the direct financing of production.

I am sure the House will agree that we cannot afford to risk the taxpayers' money to the tune of some£100,000 to find out whether "Mr. Snooks" is a genius or not. That is a risk which we should not ask the Corporation to take, and, even when "Mr. Snooks" has been proved a genius, we shall need the most careful safeguards if public money is to be lent under the aegis of this Corporation for the financing of further productions by these particular geniuses.

There is one other thing which is essential if the industry is to be in a position to stand on its own feet, and that is reduction of production costs. That is something which has been said many times by leaders of the industry and by Members in all quarters of the House. I do not think there has been a film Debate in the past year when that has not been stressed by all of us. I have called on the industry for all the measures in their power to reduce production costs. This high level of production costs is of course, an occupational disease in this industry. It is a disease which, like the plague, has been caught to some extent from overseas.

But the British film industry faces a very different position from that of the American film industry. For one thing, the British industry is producing for a very much smaller domestic market. The American film industry itself is faced at the present time with very severe financial difficulties in spite of its large domestic market. The British film industry, with a domestic market only one-quarter of the size, is faced with the fact that unless it is prepared to gamble on getting a lot in from overseas showings, it must confine itself, for average film costs, to the level of the returns from the box offices in this country. I know there are those who say that the producers do not get a fair share of the amount of money that comes into the box offices. I think it was the father of one of our largest circuits who, before the war, said: "Fools make pictures for wise men to exhibit." Whatever fairness or truth there may be in this argument, these are matters which will be carefully surveyed by this Committee of Inquiry that will soon be commencing operations.

I am quite certain, whether we are thinking of the financing of production by the method set out in this Bill or not, that this industry can face the future with confidence only if it can get these production costs down. I do not want today to begin apportioning the responsibility for the high level of costs in the industry. We know that many of the levels are too high—the charge for script, the salaries of the staff and the executive, and so on. Many of these are so high that some say it is the industry, through Supertax, which is subsidising the Treasury and that the very heavy charges are going to the benefit of no one but the public purse.

It is generally said, and I am sure we all agree with this, that the industry requires far more careful planning of films before they get on the studio floor, to minimise the period they are on the studio floor and, thereby, minimise that very expensive part of the costs of production. It is equally true that there are restrictive practices in the industry on both sides which the industry and the country can ill-afford to see continued. This question of film production costs has been raised during the past few months in the National Film Production Council, and we are at present engaged in collecting the figures of costs for further examination.

In view of the situation in the industry, to which my hon. Friend the Member for West Nottingham (Mr. O'Brien) drew attention in this House not long ago, I felt it was urgent that we should call for an immediate survey of the production costs. At my suggestion, therefore, the two sides agreed to nominate representatives to a working party on film production costs, which will, of course, also include one or two independent members. I have asked them for an interim report not later than the end of January.

It is certainly the position that if this industry can reduce its costs without reducing its quality, we can look forward to an extremely rosy future for the industry, and to filling a growing proportion of the screen time in our home cinemas with British films, as well as to an expansion in our exports of films. New methods are being advocated in the film industry, methods which in certain cases are closely associated with those used in television studios that have shown one way of producing a very fine level of entertainment at a very low level of cost. I have made it clear to the industry that if the Government can give any assistance in the question of studio adaptation and, possibly, even in building new studios in order that these experiments can be further tried out in the interests of the industry as a whole, we shall be only too glad to give what help we can.

This Bill, like the last films Bill I introduced, is being brought before the House at a time when the industry is once again faced with production difficulties. A fair proportion—about 15 per cent. I am informed—of the studio space is at present unused, and there is considerable redundancy and unemployment in the industry.

Mr. William Shepherd (Bucklow)

Will the right hon. Gentleman confirm that he said 15 per cent., because, if so, it is a gross understatement?

Mr. Wilson

That is the figure given to me by the industry on Monday, but there are different ways of measuring it—allowing for films at present in the course of shooting that will shortly come to an end for which there are no replacements. I hoped that the measures taken earlier this year would have removed much of the unsettlement surrounding the industry. We hoped particularly that the ending of the American boycott and the more certain future of maintaining the home cinemas doors open would improve British film production.

Whatever reasons there are for causing redundancy in studios today and for the closing of studios, it is certainly not because of those frightening prophecies in certain sections of the Opposition Press at the time of the March Agreement. Those papers, and indeed many speakers in more than one party, foresaw a flood of Americans coming in by every boat and plane to buy or rent our studios. British film production would come to a full stop, because the Americans would be producing so many films in this country that there would be no studio space, no stars, no equipment and no facilities left for British film production.

In fact, one contributory factor to the present under-production in the industry is the fact that American production in this country today is below the level that was expected when the Anglo-American agreement was signed. I quite agree that no undertaking was given by the Americans as to the size of the production programme they expected to carry out in this country, and certainly there has been no breach of faith on their part in the fact that production is running at a lower level by the American companies in this country. I am glad of the chance which this Debate gives to correct the impression that the Americans let us down in this connection. The danger that most of us foresaw was the Americans producing too many films altogether. They are, in fact, producing fewer films than we then expected.

It is right to ask, what are the reasons for the present troubles in the film industry. The first is this problem of finance, and the fact that there are independent producers waiting to begin production who so far have no financial facilities to enable them to do so. This Bill, if agreed to by the House, will help to overcome that particular problem. Secondly, there is still a shortage of projects coming forward in certain of the production groups, and now I am told there is a great shortage of skilled producers in at least one group ready to take charge of production.

The third reason—and this is the particular problem of the major group—is that there is no falling off in the film volume intended to be finished, but these films are to some extent being produced in a smaller number of studios with a smaller number of technicians and at lower cost. It is, indeed, a healthy sign that the industry should be seeking to produce films more cheaply with smaller utilisation of studio space and at lower cost. I hope that the experiments now being undertaken to reduce costs will help to promote a further increase in production by that group, and, indeed, by the industry as a whole, and that the economics of the industry will be put on a sure footing.

This Bill is introduced at a time when once again we all rightly feel some concern on the production position iii the film industry. I am quite certain that, while this Bill of itself cannot hope to solve the problems of the industry, it is a necessary condition of those problems being solved if we are to look for a final and complete solution to the economic problems. The solution to those problems can only come from action taken by the industry itself, through the reduction in the costs of production.

The Government, I submit, in the various Measures taken over the past year or indeed by a former Government over the past five or six years have done everything that can be done to help the industry to increase its production and to put it on to a sound business footing. This Bill represents the last stage in that succession of Measures which the Government have undertaken. Now it is for the industry to take its own steps to reduce its costs and improve its economic position. If it will do that, I personally have no doubt whatsoever about the future prosperity of this industry and about the contribution it can make to help this country in her economic recovery.

4.35 p.m.

Mr. Oliver Lyttelton (Aldershot)

I am very glad that the President of the Board of Trade has in more than one part of his speech expressed himself as being rather shocked that the taxpayers' money should be committed to risks of this kind. Although those risks are not always expressed in the Bill, nevertheless they are inherent in the scheme. Government money is needed to fulfil the object which the right hon. Gentleman and the Government have in mind, namely, to finance independent production. In that, the taxpayers' money will be committed to the most hazardous part of the industry. That is more or less common ground. Production is the most risky part of the industry; very risky to the producer who has a chain of cinemas or a circuit at his back, and still more risky for the so-called independent producers who depend upon others to give them facilities.

We on this side of the House were in some doubt whether we should divide against the Second Reading of the Bill, but we came to the conclusion that we should not do so, because it seems to us that the objectives at which the Bill aims are in themselves desirable. In these Debates we always go over the question of the cinema industry being half art and half a commercial undertaking. We should all like to see the artistic value of the films raised.

At the same time it is very important—and here I was surprised to find support from the President of the Board of Trade, and I hope hon. Members opposite will forgive me for mentioning such an indecent subject—that the industry should make a profit and be thoroughly imbued with the proper profit-making motive. That may put me in the ranks of the Philistines. It will ensure that I shall not be included amongst the Socialists, who regard the profit motive as something rather naughty which ought to be mentioned only in a very thin House. I do not want to stress the point too much, but it is very important that the industry should trade at a profit.

Furthermore, in no industry—and this again is common ground—is there more encouragement for new themes and men with unusual and unorthodox ideas. For those who have been often to the films this appears even more necessary now than ever before. It is somewhat distressing, if there has been a successful film on one particular subject, to find that it is generally followed by a great many others of the same kind, because originality is not one of the highest qualities which the film industry displays. If the independent producer, or those who wish to enter the industry with new ideas will get this finance, then I would agree with the President of the Board of Trade as to the infusion of new ideas and new people, which is so vital to the industry as a whole.

On the other hand, if the independent producer cannot find the finance necessary, then production will get more and more into the hands of the hon. Member for East Islington (Mr. E. Fletcher) and the big circuits. He himself will agree how undesirable that is. One naturally wants to be engaged in the risky parts of the industry no more than is absolutely necessary. The hon. Gentleman prefers to concentrate on that part where the money is easy, and I sympathise thoroughly with him in that respect. We think it would be a pity if all film productions were gradually to be concentrated in the hands of the big exhibitors. When the President of the Board of Trade was giving an account of the various sections into which the industry was divided—the exhibitors, the distributors and the producers—he forgot the fourth, which is the hon. Member for West Nottingham (Mr. O'Brien). He is a very important part of the industry and I hope we shall hear from him later on.

We decided, as I have said, not to divide on the Second Reading because we think that the objective of trying to find some new source of finance for the independent producer is sound and is one which, on general lines, we would wish to support. On the other hand, we have some anxieties about the methods by which the Government seek to reach this objective. In some ways the Bill is a little timid. Indeed, the President of the Board of Trade appeared to be so depressed with his own Bill that he did not intersperse his speech with any of those little humorous touches to which we are accustomed from him. I beg him to cheer up a bit. The Bill is not as bad as all that, but I do not think that it is frightfully good as a means of achieving his object.

The teeth of the Bill are in Clause 2. I am afraid that I must go over some very familiar ground about the various chunks or sections into which the finance of films is divided. The mortgage or loan against the first half of the cost of production is not very difficult to finance through ordinary commercial channels or through the banks. If a film is to cost£100,000 the raising of£50,000 is not very difficult. The difficulty begins only in what I noticed the right hon. Gentleman described as the end-finance. That means the last half, the equity part of the film. It is against this background that we have to study Clause 2, and in particular Subsection (3), which says: The Corporation shall not"— and here follows a very important proviso— except in such classes of case"— one of the elegancies which come from my old Department— as the Board of Trade may approve, make a loan to any person unless he is carrying on the business of distributing cinematograph films

Mr. Wilson

I am sure that the right hon. Gentleman, with his well-known affection for his old Department, would not wish the Board of Trade or any other Government Department to have to approve individual cases of films.

Mr. Lyttelton

I agree. I was only for the moment saying that the words in which that intention was expressed were not particularly able. The operative words are in a proviso. Unless that proviso is going to be made very large use of, the Clause is not very good. I think I understand the difficulties of the Government. In trying to make finance available for the independent producer, the Government are in something of the nature of a dilemma. They could finance the independent producer directly and share with him, in some predetermined proportion, the risks and ultimately the profit which the production brought, and equally of course the loss, but if they took that alternative it would be necessary for the Government to set up some corporation of experts in the business by which it could judge the artistic merits of the film.

Artistic merit must come in, if I am to be seen in Bloomsbury again. The Government would have to know whether the artistic merits were such as to commend themselves to the public and to the box office. This would be a particularly exacting task because by no means everything that is artistically good is satisfactory in the box office and unfortunately, very few things which are a great box office success, would come up to the most desirable standard of the artistic. Therefore, an organisation to judge these things would have to be a very expert one and would have to be built up, if the Government took this alternative, from the grass roots. They would have to make the thing entirely new. It would be very difficult to find the personnel, which might come from that uncontaminated class with which we are familiar in Government Measures, those people who have no financial interest in or knowledge of the industry upon which they are shortly to advise the Government.

Rejecting that for a moment, it is clear that these experts would have to come from the film industry itself. I do not think that it is unnatural that the Government seem to have sheered away from that course, and have adopted another. In fact, they have gone so far that the Government are only going to help through the distributing companies. They are taking powers to charge a commercial rate of interest and exact security. The advantage which I see in this course of action is that the Board of Trade will have available to it—the right hon. Gentleman touched upon this point—an expert organisation with knowledge of the industry possessed by the distributors. Under this Clause, the job of the National Film Corporation—who are to be congratulated upon obtaining the services of Mr. Lawrie—will have been made as easy as possible. I think they have made it a little too easy. The Corporation will try as far as possible to lend money on good security to distributing companies and to use the knowledge of the trade possessed by the distributing concerns to decide whether to advance the money or not.

I should like the House to look for a moment at how this form of finance appears to the independent producer. I think it looks to him something like this: He says: "I seem to be in very much the same situation today as I was in before the Bill was introduced. I shall have to go to the distributor, including some of those hard-faced men below the Gangway on the other side of the House, representative of these great monopolistic combines, with my stories, my cast, my production costs, my ideas and my originality and genius, and see what they have to say about what I am proposing to do. I am going to be something of a suitor at the Court of King Arthur—or J. Arthur—once more. This new finance does not look to me very different from that of yesterday. I still have the same kind of trouble."

I think it will be a little worse than that and I do not think that I am overstating the case. I think the distributor will be even more inclined to take as little risk as possible himself and still less inclined to put up any money. I think he will start leaning back—instead of leaning over backwards—on the National Film Corporation, and will say, "There's a national agency to do this." I fear that the tendency will be for the distributor to be rather less co-operative in the financing of the so-called independent producer.

Clause 2 does not really face the problem. If we ignore for a moment the proviso to which I have just referred, what the Clause says is that the Corporation are prepared to do what a great many other agencies are prepared to do, which is to put up money, to exact security and to charge commercial rates of interest and to attach the assets of the distributing companies against the risks in producing which have to be run.

In fact, if it were not for that proviso, which I have already quoted, I should feel that the Clause would be quite inoperative. I do not think it is right to put the operative part of the Bill into a sort of contingency clause. If the President of the Board of Trade is not going to make use of his right to authorise "classes of case," the Bill will be largely a dead-letter.

However, to take an equity risk in a business like this is to hazard the taxpayers' money. Until the Government are willing and recognise that they must take some part of the equity risk in films, they will not give the aid which hon. Members in all parts of the House feel that at this moment and at least temporarily, must be given to the industry. It is rather intellectually dishonest to imagine that we are going to provide finance for independent producers and do it on a non-risk banking basis by exacting commercial rates of interest. The only thing in the Bill which slightly allays my anxieties is the proviso.

I am inclined to think that a better system would be to have an advisory body to advise the National Film Corporation on the nature of the advances it will make. That advisory committee might consist of one-third appointed by the National Film Corporation, including the chairman, and one-third each from the distributors and the exhibitors.

Mr. Gallacher (Fife, West)

I listened with very great interest to what the right hon. Member for Aldershot (Mr. Lyttelton) said earlier. He said that independent producers were not disposed to produce artistic films which were not good box office films. He is dealing with the problem of getting distributing firms to assist the independent producer to produce films, but the important thing for the independent producer is to get his films shown. Will the right hon. Gentleman say something about the problem of how to allow independent producers to express their genius in the way they desire and to ensure that measures are taken to show the films?

Mr. Lyttelton

I am indebted to the hon. Member for West Fife (Mr. Gallacher). On this subject, if on no other, we may have some ideas in common. I am suggesting that by setting up a committee which consists partly of National Film Corporation nominees, partly of the distributors and partly of the exhibitors, we may get a broader view of the value of a film than by doing it entirely through the distributors. That follows the view of the hon. Member for West Fife. That is the point I am trying to make. If we have an influential body appointed from those three sources, we ought to have some confidence that good films with new ideas would not very often be turned down. If the thing is done through the distributors and is on an interest and security basis, I do not have the same feeling of confidence.

Being very conservative-minded on the subject of public finance, I am rather shocked to think that it is necessary for Government money to come into the business at all. I am grateful to the President of the Board of Trade for emphasising the fact that he has no intention, at any rate on purpose, of subsidising the industry. Of course, he will do it by mistake, but he did not mention that. I do not quite know what a subsidy means, but it may be that it means lending money to people on very slender security which one afterwards loses. It may not be technically a subsidy but just a dreadful loss. However, I am glad to hear the right hon. Gentleman say that he does not intend to subsidise the industry.

Mr. Blackburn (Birmingham, King's Norton)

The right hon. Gentleman might remember that the Government get£41 million a year in Entertainments Duty from this industry, so that even if£5 million were to be lost—and I am sure it would not be—it would be only a small fraction of the amount of money which the Government get out of the industry.

Mr. Lyttelton

I was only dealing with the President's statement that he did not intend to subsidise the industry. If he makes a loan and afterwards loses it, he will reduce the amount of revenue which he is gaining from the industry. The point about the amount of Entertainment Duty is a valid one. It is one of the reasons why I feel that there is something to be said for supporting Government finance at this juncture. The Government are taking a lot out of the industry and there is something to be said for the Government giving the industry some help.

We must be honest enough to face the plain fact that if the finance is to be of use to the industry, the Government must take risks which the industry itself, the banks and the ordinary backers of films are not willing to take. Clause 2 as drafted, does not face up to the problem because, on the whole, it says that the corporation will take risks which anybody else would take, always excepting the proviso. As it is entirely a noncontroversial Measure, we should make some endeavour in the very short time available to us before the Committee stage to see if Clause 2 can be improved and to urge the Government to accept Amendments to bring that Clause into more realistic shape. At the moment, the teeth of the Bill are in the proviso, and that is not a good thing. The Opposition at least will try to introduce one or two Amendments of a constructive type to improve Clause 2.

I end as I began, by saying that although it is a pity that Government money should have to be hazarded for this industry, owing to the industry's special nature and to the special troubles through which it has gone, the Opposition believe that the objectives at which the Government are aiming are good. For that reason, with the exceptions I have mentioned, the Bill has our support.

4.57 p.m.

Mr. O'Brien (Nottingham, West)

The President of the Board of Trade should be congratulated on his very competent review of the present position in the British film industry. He is rapidly qualifying to become a member of one of the unions in the industry, and I think that honorary membership will be conferred upon him in due time. Both the President of the Board of Trade and the right hon. Member for Aldershot (Mr. Lyttelton), who is also qualifying as a film expert if not as a film actor, mentioned that it was a pity that the industry had to have this loan.

The regrettable necessity for the Bill which my right hon. Friend mentioned is really a disgrace to the industry itself. As has been stated, the annual turnover is between£100 million and£112 million. In recent years it has been even more. One would imagine that an industry with such a colossal turnover of business should, by now, have been able to find its own finance and manage its own affairs without expecting the Government to prop it up. I have no hesitation in saying that if in years gone by, sections of the industry had been less selfish and had used a little more foresight, there would be enough money in the British film industry today—when I say "the British film industry" I am not necessarily confining my remarks to production but am referring to the cinemas, distribution and production—to subsidise its own film production.

To think that nearly 5,000 cinemas are taking over£100 million a year and yet cannot themselves provide the money for production is lamentable and disgraceful. There are two exceptions to my condemnation—the Rank organisation and the organisation with which my hon. Friend the Member for East Islington (Mr. E. Fletcher) is associated. Out of their cinema takings they find money for film production, and they try to raise finance in other directions. The overwhelming mass of exhibitors, both large and small, do not contribute and have not contributed one farthing to the British film production industry itself, and that should be stated. I do not know whether there are any ways or means of obliging them to contribute to film production and assist in maintaining the industry from which they largely obtain their livelihood. Be that as it may, the fact is there.

Much has been said about costs of production and I welcome the proposals made last Monday to us at our meeting of the National Film Production Council at the Board of Trade. I also welcome the Presendent's decision to appoint a working party to examine costs. On the other hand, it is very easy for hon. Members to refer to the high costs. The high costs of production in the industry, as it stands today, is indefensible, but we cannot streamline film production like tractor production. We are dealing with an intangible, invisible something, an indefinable thing, and you cannot tell till the article is completely finished whether you will get your money back or not. That is not true of commodities as a whole. Until the finished article is sold, until the film is projected on the screen, the producer and the backer or the company concerned do not know what the result will be. That is the hazardous part of the industry.

If reducing costs of production means that the third-class passengers on the production train must be jettisoned and that the first-class passengers are to be left on, then we in the industry will object to that. If costs are too high then the reductions should be put on everybody. A number of people are already beginning to talk in the industry of cutting costs, in terms of cutting down the lower-paid wage earners. In the old days when things went wrong, they used to make economies by dismissing one or two of the office cleaners. That is not what we mean by costs of production. The unions concerned will participate in the working committee and genuinely and sincerely will go into this very serious question of the costs of production to try to eliminate extravagance, waste or unnecessary expenditure.

It would be ungrateful to look a gift horse in the mouth and, speaking for myself and, I believe, for the many thousands who work in the industry, I say we are glad that the Bill has been introduced because we know it will help the industry over many of its difficulties. I cannot say, however, that we thoroughly welcome it. We feel that the industry ought to be on its own foundations. In the long run, no amount of finance by the Government or no amount of pokering, will make the British industry solid enough to stand on its own feet. It must do that itself.

I look forward to the day when there will be no need for this emergency Measure and when we can look after our own affairs. I am afraid it will be a very long time coming. My right hon. Friend emphasised that there will be no subsidy, but I agree with the comment of the right hon. Member for Aldershot that there will be a subsidy. I cannot see how we can get the film industry out of its present difficulties unless we are prepared to be resilient in this matter and to face the fact that we might lose some of the money we are going to put in.

Mr. Blackburn

Re-allocation of Entertainments Duty.

Mr. O'Brien

I will go into that in a moment. There is not very much to be said about the Entertainments Duty that has not already been said. On the Second Reading of the Films Bill I drew attention to the fact that the Treasury were taking over£40 millions a year through this Duty. I suggested that some device should be provided to plough back into the industry some part of that Duty. That might be one of the methods of solving this difficulty.

One criticism I have to make, if it can be called a criticism, concerns Clause 4 of the Bill. I think the sum stated—£5 million—is inadequate. If we are going to do the job at all, we should do it properly. A sum of£5 million, in the range and number of films which have to be made in one year, is, in terms of the cinema industry, "chicken feed." It will make about 16 to 20 pictures of a moderate cost. That will not take the industry very far if we have to meet the quota and keep our pictures up to quality. Even by cutting unnecessarily high costs of production,£5 million will not do the job completely. I ask the President of the Board of Trade to consider whether that sum is really adequate to do the job he has in hand. If the job is to be done at all, let it be done thoroughly and adequately.

In the country at the present time there are about 27 studios, large and small. Of those 27 studios, 16 are closed. Another studio will be closing next January. Naturally, there is considerable apprehension among the various people who will be dismissed, and who are indeed already being dismissed week after week. The question of redundancy is causing considerable anxiety among not only the members of my own organisation, but among members of other organisations, too. It is very difficult to know what will be done.

If my right hon. Friend can think of some ways and means whereby he can assist in maintaining the employment of these people in the industry, that would be a very excellent gesture indeed, because one thing of which I am rather scared is this: many of these men are highly trained and highly specialised and once they are lost to the industry, I think they will be lost for good. We shall lose a valuable pool of trained labour, and when the industry begins to expand and these difficulties are over, we shall find ourselves in the further difficulty of not having the necessary specialists and qualified artisans to do the job. From our side we are trying to do what we can, but it is very difficult. The question of redundancy is causing considerable difficulty and trouble and the men and women who are involved, or who will be involved, are naturally suffering a considerable amount of agitation.

Finally, when we are thinking of costs of production, upon which the President said he would emphasise that films had to be cheaper without affecting quality, there is this difficulty. We shall not get a successful British film industry merely by making a series of small pictures. We must have an assorted bag. We shall have to make big pictures as well as small pictures. The smaller the picture, the fewer people are involved. If we regiment the industry in such a way as to turn out what, in effect, would be a series of second features, there is no possibility of the British film industry maintaining, let alone developing, the very high reputation which it now possesses of making first-class films. I do not mean that all first-class films must be very large and costly films, but a certain balance, a sense of proportion, must be kept in dealing with the question of the cost of production.

Many of the losses in the past may not have been losses in the sense which some hon. Members have from time to time suggested. For example, we all know the financial difficulties Sir Alexander Korda experienced over the last few years, with the companies which helped to provide him with production expenditure and costs. A lot of that money has brought results. We see the present Metro-Goldwyn-Mayer studios at Elstree, which were initiated by the Korda company some years ago. The Denham Studio is a monument to him and to that firm. He has also developed Worton Hall and now he is making Shepperton Studio one of the finest in the world. This fact should be borne in mind when we are talking about money being thrown down the sink. It has not gone completely to waste. The same thing can be said about the Rank interests.

We could stay all day talking about the independent producer. The President rightly drew attention to the fact that in some of the large concerns, such as the Korda and Rank groups, there are a number of first-class independent producers—for example, Emeric Press-burger, John Sutro, Herbert Wilcox and many others in the Korda group, and a number of young, first-class producers and directors in the Rank group, all of whom are independent producers. Without absorbing themselves or planning their resources in the way they are doing, they would not be able themselves to find by any means the capital to get on with their job.

I hope the President will review the only point of criticism which I make, that of the inadequacy of the amount; and that by the time the Committee stage is reached a number of us will have something more to say in detail about it. We welcome the Bill as an emergency measure. We are glad of the opportunity the Government are giving the industry to get over a number of its difficulties. We share the hope expressed by the President, that there will be no further need for this sort of thing in the years to come.

5.11 p.m.

Mr. Beverley Baxter (Wood Green)

I should like to reinforce what the hon. Member for West Nottingham (Mr. O'Brien) has been saying, that we all hope very much that in the pursuit of the very necessary objective of lowering the excessive costs of production, producers will not lower their sights too much and begin to make what the hon. Gentleman has called "second feature" pictures.

There has been a great deal of criticism of Mr. Rank, both in the Press and in this House. I have no doubt at all that much of it was merited but, nevertheless, we could not possibly judge in terms of pounds, shillings and pence the national achievement of a film such as "Hamlet." From the Empire standpoint alone—the pride and joy with which Canadians and Australians, for example, will crowd to see this film, to hear the English language, written as no one has been able to write it since, and hearing it nobly spoken—from an Imperial standpoint, it is of the greatest possible advantage of us. Therefore, while we must condemn unnecessary extravagance, let us not put a limit upon the imagination of those who are producing our films.

This is a strange Bill that we are discussing today. I speak with a little knowledge of the industry, for I resigned the editorship of the "Daily Express" with the idea of going into the film business and making an impact upon it. I did not succeed and, instead, it made a very serious impact upon me. After the rigid discipline of newspaper life—if you like, the combined rigid and vagabond discipline of newspaper life—I found in the cinema industry much legend and much peculiarity of judgment. I admit that in those days they were pioneers. There were some men of great ability. I think we owe something to the Ostrers for their courage in making films when other companies were willing only to buy them and let producers run the risk of going bankrupt.

I found it a weakness in the British film industry, as well as in Hollywood, to believe that if you pay£50,000 for something, that makes it worth£50,000; and I found that directors who were not extravagant were looked upon as being second-rate. Another thing I found was a strange respect for temperament. The director who walked off the set shrieking, "I can't stand it," or that "Life is impossible," was regarded as a genius. Everybody is delayed, they cannot go on, he may not come back for two days; if he does not come back for three days they think the whole industry depends upon him. If I went back into the film industry—which I shall never do as long as I live—I would lay down a rule that only genius shall be allowed temperament, and second-raters shall be allowed none whatever. That would save a lot of trouble.

The important matter of costs was referred to by the President of the Board of Trade, who is becoming a patron saint of this difficult and complicated industry. When the President is talking to producers, perhaps he might persuade them not to shoot one scene 18 times. Of all the vanities of directors, that is the worst—to sit there shooting a sequence of a minute and a half, over and over again whilst salaries are being paid in every direction to camera-men and all those who complicate the studio. Eventually the director sits and watches what are called the "rushes." The whole 18 or 12 of them are shown and he says, "No. 10." Everybody around him then tells him he is a genius for selecting No. 10. When I was in Hollywood during the past year I was told of a director who always had everything taken and shown to him 15 times over; so his salary went up and up. One day they became suspicious and showed him the same rush 15 times. He selected No. 7, then they fired him. That is the first wise thing I have heard happening in Hollywood.

The President of the Board of Trade this afternoon quite rightly said that one of the problems besetting the industry, and which has brought about its present difficulties, has been the failure to sell our pictures in the United States. That is perfectly true. In this connection, I am going to reveal to the House something which I think I have a right to reveal. Whenever I travel to foreign parts I like to see the most important people. When I was in Edmonton a couple of weeks ago I called on the Socialist candidate and had a talk with him.

When I was in Hollywood last year I went to see Mr. Louis B. Meyer who is, perhaps, the most powerful man in Hollywood. That was during the time of the boycott and the Anglo-American film difficulties. We both agreed it was an unhappy thing that American pictures were not coming into this country. I felt very strongly that way. I asked him how he thought the deadlock could be broken and he replied, "I suggest something like this: That we would accept 40 million dollars per year from England for our pictures. Of that sum 15 million dollars could be paid by the earnings of British pictures in America. In other words, we would take 25 million dollars, and the balance of the 40 million dollars we would have to make out of showing British films. Therefore, since it would be an inducement for us to do so, we should have to make a bigger effort than ever before to give British films a chance in the United States." I asked, "What about the balance of your earnings in Britain?" He replied that they should be frozen indefinitely for a long period of years.

That seemed to me not a bad proposition, so I asked whether I had his authority to put it to the Government when I returned home. He said he could not guarantee that but that he had talked sufficiently with the men in the industry and he thought I could assume it would be agreed to. When I came back I told the Chancellor of the Exchequer that I had something to report from Hollywood. I put the terms to him in the same way as I have explained them to the House today. I told him they were not necessarily final or official or that I had any rights or interests in the matter; that this was what had been said to me by Mr. Mayer, a man whose opinion and voice counted in Hollywood.

The Chancellor received me very courteously and talked it over, but intimated that the proposition was not good enough to be interesting and that something more advantageous would undoubtedly come later on. Within a fortnight the announcement of the settlement with Mr. Johnston was made—I claim not nearly as advantageous, because the funds here are not frozen. Whether they use them or not, we have left the Americans money here to use if they want to, and I do not think there is the same inducement to sell our films over there. Would the President of the Board of Trade say that that settlement was better than the one I have just outlined?

Mr. Wilson

I am sorry to interrupt the hon. Gentleman's speech, which we are all very much enjoying, but surely he will agree, if he studies the agreement of March last, that there was an incentive to push our films in America which is just as great as it would be under the proposal he has just mentioned. There is no carryover of frozen sterling, leading to an ultimate dollar drain, under the March agreement, whereas there would be, if that frozen sterling were unfrozen under the arrangement he has just described.

Mr. Baxter

Yes, the Americans can use their credits here now if they want to enter into production or for other purposes, but I maintain that the proposition I have outlined was the better one. I think it should be known that Hollywood was anxious to come to terms, and that the terms intimated to me by Mr. Louis B. Meyer formed a basis of bargaining. We must also assume that we could have beaten the Americans down very considerably from that point. If Mr. Meyer says, "That is our final figure", that is, in bargaining language, merely an opening of the overture to a settlement.

I now come to the Bill. As my right hon. Friend the Member for Aldershot (Mr. Lyttelton) has said, it really comes down to what is in Clause 2. It is a strange Bill. If the President had come here today and said, "The Government have decided that they must put up some money to encourage the independent producer, to encourage the man of daring and new ideas, the man without an established reputation," that would have put us on this side of the House in a very difficult position. It would have shown that the Government were intervening with public money in the very precarious but necessary art of film production. That must have been behind the right hon. Gentleman's purpose, but, having had that original and daring idea, he has run away from it. He is now saying to the distributors, "Here is some money for you at less cost than you can get it from the banks."

What is the position of the distributor? He is being offered a fund, I agree under direction, of£5 million from which he can borrow to finance film production by the independent producer. How much of that money will the distributor take for himself? Will he appoint someone to watch his interests? If he gives a producer a contract to make a picture, will he say, "You must take this official, or that executive, from my staff," or will he be entirely philanthropic? What security for the loan will the exhibiting company offer? Is it to be on the one picture which the Board will finance? Supposing that picture loses money, will the distributing company guarantee the loan on its other assets? The distributing company will be called upon to guarantee payment of the loan. On what will it guarantee it? Presumably, the money will be handed out to an independent producer——

Mr. Benn Levy (Eton and Slough)

Distributor.

Mr. Baxter

No, the hon. Gentleman misunderstands me. The£5 million is already there to be drawn upon. The producer gets the money to finance an independent picture, and he hands it over, in turn, to the independent producer. The money must be paid to the producer for making a film. [HON. MEMBERS: "No."] Well, I will put it this way: perhaps it is my fault; I may be putting my argument badly. The costs of production have to be paid. The producer must be paid for his picture. On what is the guarantee of the distributor to the Government? Is it to be on one picture? If not, is it to be on the general assets of the distributing company itself? I wish the Minister would make that clear, because it is important. If it is to be on the individual picture there is nothing more certain than that the£5 million will go down the drain, and be lost.

In conclusion, I agree that this Bill is not big enough to be of any importance. I do not like to see the Government entering into the film industry. From this faltering beginning they could find themselves having to go further into it to begin to control production policy, and then on to nationalisation—a rake's progress that will be logical and inevitable. The Government have said many times, "This is only a small Bill," which it is, but it travels in the wrong direction. I agree that the industry, with its vast income, ought to be able to finance itself. While the Opposition are not opposing the Bill, I believe it is inadequate, a mistake, that it will not help the really independent director and producer, and will certainly result in a loss to the Treasury.

5.29 p.m.

Mr. Bean Levy (Eton and Slough)

The hon. Member for Wood Green (Mr. Baxter) has had some personal experience of the film industry, and during the first part of his speech there poured out of his bruised heart a flow of reminiscences. I am tempted, having had some personal experience myself, to trade reminiscences with him across the Floor of the House, but I refrain because that would not be strictly relevant to the Bill. The second part of the hon. Gentleman's speech dealt with a suppositious Anglo-American agreement which has nothing to do with the Bill either, so I must leave that alone, too; but his last few sentences were, I think, relevant, and I hope to deal with them in due course.

My right hon. Friend the President of the Board of Trade has dealt very well in the past, and with a sure touch, with the film industry, and always to its advantage: and I have given him, to the best of my ability, consistent support. I must say now, however, that, having read the Bill carefully, I am about to desert him.

I entirely agree with the right hon. Member for Aldershot (Mr. Lyttelton) that, in so far as the object of this Bill is to help the genuinely independent producer, it is almost certain to fail of its objective. I applaud, as has already been applauded, the objective of helping the independent producer. It must be a prime objective in this industry, and I would quote the President of the Board of Trade who went on record as saying: We must solve the problems of finance and distribution outlets for independent producers. When all this is done we shall see some hope for the future of the industry. It is further important for two other reasons. First of all, the multiplication of production units, any tendency against the concentration of production in one or two hands, is the only real safeguard for free expression inside the industry. I am also concerned about this matter for another reason, namely, that the industry is on the rocks, studios are closing down and redundancy abounds. Even on my way into the Chamber this afternoon, I was stopped by three of my constituents, workers in the industry, who gave me the gloomy information that they had just heard that yet another studio, this time at Islington, is to close down after the New Year.

A figure has been given by the President of the Board of Trade in respect of studio space which is already lost. He did not, however, give the figures of unemployment in the industry. I am not quite sure what they are, but I do know that they are very heavy. At a time when the Government have succeeded in reducing national unemployment to the negligible level of 1½per cent., I believe the unemployment figure in this much needed industry which we are all trying to encourage is as high as 15 per cent., and still growing. I am quite convinced that only a proliferation of independent production companies can halt that deplorable trend.

I should like to join issue with my hon. Friend the Member for West Nottingham (Mr. O'Brien) on the question of what is an independent producer. He cited a number of producers who, according to a definition which I think we ought to accept, are not in effect independent producers at all. I personally prefer the phrase "free-lance producers" which was used by the Gater Commission in what I regard as a brilliant and most lucid Report. I ask the House to accept that definition because it clarifies the issue. The Report said: We prefer the term 'free-lance producers.' The distinguishing mark of those producers is that they are not self-sufficing. They do not own studios. They have no adequate finance for continuous production. They have no organised system of distribution and they own no cinemas. That is what I mean by an independent producer. Let us not, therefore, confuse and fog the issue by citing Sir Alexander Korda and Mr. Pressburger——

Mr. Wyatt (Birmingham, Aston)

Would my hon. Friend say that a man would cease to be an independent or free lance producer supposing he did not own the studios and all the other things which one is not supposed to own according to that definition, but somehow managed to make a profit and to maintain continuous production?

Mr. Levy

No, this definition would surely not exclude him. When the President of the Board of Trade first announced this scheme on 22nd July, I rose and asked him what steps had been taken to ensure that the finance provided through distribution companies will be advanced by them only to genuinely independent producers. I must say that my apprehensions were increased when my hon. Friend's habitual clarity deserted him and he answered some other question which perhaps he would have preferred that I should have asked. My fears have already been justified because, although this sum has been available for many months, so far as I know only two payments have been made. One is the lump sum of£1 million which has been made to British Lion in respect of a producer who, according to the definition which I have advocated, is not really an independent producer at all; and the other is the negligible sum of, I believe,£20,000 which was given to some small and genuinely independent producer.

Why has this happened and why is it likely to continue to happen? I think we can only answer that question by analysing for a moment the structure of the industry. In effect, there are only two major distribution companies. Technically there are three. There are three major circuits, two of which are combined under one owner, so that there are really only two major owners of the essential circuits. Each of those are served by their own distribution companies. Mr. Rank's circuits are served by G.F.D., and Sir Philip Waters' circuits are served by Pathe and British Lion. Therefore, we have this twin monopoly going right down through the distribution part of the industry. Now it is precisely these companies which are not particularly in need of cash.

Now this Bill, after all, is designed to assist independents: but these distribution companies are not disposed to help genuine independent productions so long as they have affiliates of their own which can produce the necessary negatives. When the 45 per cent. quota was announced, Mr. Rank said quite clearly, "I am able myself to provide the necessary films for the quota." Obviously, there is no incentive to Mr. Rank to go to the Film Finance Corporation and ask to borrow money in order to help along independent producers whose aid he does not need and whose competition he may, in fact, fear.

The A.B.C. is in slightly different case. It is true that their own productions are not sufficient to fill the quota, but even they obviously would prefer not to get their finances through the State Corporation when they can fill their quota through independent productions without having State finance, because the State Corporation exacts conditions which are more onerous than those to which they would otherwise have to submit. The Finance Corporation, quite properly, expects them to pledge their assets as security, and they do not want to do it. I think it is in the highest degree unlikely—this point was made by the hon. Member for Wood Green—that they will do so. So much for the big distributing companies. In addition, there are a number of small distributing companies, but they will be of no help because they have not got access to the major circuits, and without access to those circuits, they cannot really be of any assistance to the independent producer.

Therefore, I come to the conclusion that in all probability the Bill will be a dead letter. If we really want to face the problem of how to finance the independent production companies, and under what conditions, let us come down to the main difficulty. Why have the banks ceased to do it? Until we can answer that question, all talk of a Film Finance Corporation is completely wide of the mark. The reasons why the banks have ceased to do it is simply that film making is not a profitable undertaking. Let me give an example in simple round figures. A good film costs about£200,000 to make. It can cost a great deal more; it can cost£750,000. Films have cost even more than that, but let us say£200,000. At present it is rare for a film to gross more than£200,000; in all probability it will gross less. At best, therefore, the prospect is of breaking even.

But from that must be subtracted the exaction of the distributor, which is quite fantastically high. No immutable figure can be given; it may be 20 or 25 per cent., sometimes even 30 per cent. Let us take 25 per cent. as an average; from the£200,000 must be subtracted 25 per cent., leaving only£150,000. But there are further charges on top of that which the distributor makes. He charges an average of, perhaps, another£10,000 for duplicating the negative, for transport and for advertising and so forth. He does not carry them himself; he charges for them, and makes a small profit on that, too. That is a total of£60,000, and so the takings of the man, who at best can expect to gross£200,000, are reduced by the distributor to£140,000.

Now, that is the basic problem. Is it really very surprising that that is not the kind of proposition which looks particularly glamorous to a bank? Nor should it look particularly glamorous to my right hon. Friend and his Film Finance Corporation. Although I am desperately anxious that finance should be forthcoming to help this industry, I do say that it must be done on certain very specific and well-planned conditions, which are what I find absent from this Bill. The conditions which I should like to suggest are, of course, economies. Economy can be derived from two sources: first, by contracting very much the share of the distributor; and secondly, by cuts in production costs. The reason why the distributors' charges have become so fantastically high is very simple. It is because those charges are really an instrument of monopoly. A distributor, who exacts perhaps£40,000 or£50,000 for a picture which grosses£200,000, by handling 50 pictures a year grosses about£2½million. His costs are negligible. I do not know if they are£50,000 or£100,000. Let us assume they are even£500,000 for office costs and a few salesmen. That leaves a net profit of£2 million.

What happens to that£2 million? What really happens, of course, is that it goes towards financing the losses made by the affiliated producing company. The reason why it is an instrument of monopoly is that the independent producer does not have that advantage, and so he is broken, he is put out of business. To have a level and a reasonable charge all round would, quite obviously, be to the advantage of the independent producer, but it would not serve the monopoly.

This situation can be tackled in two ways. It would be conceivable to fix a statutory limit for distribution charges. I am told that 10 per cent., or at most 12½per cent., would be a generous figure for that purpose. I am not myself in favour of a statutory limit of that kind, because it might in practice be very easy to evade. There might be agreements "on the side" comparable with the agreements known as "key-money," whereby rent restriction regulations are evaded. What I myself would much prefer to meet this problem is to take the bull by the horns and use this£5 million to establish a State Distribution Company. This might very easily solve the problem. It would be a distribution company in competition with the others, not replacing them. It would ask a fair charge, say 10 per cent., and, after the picture had reached the profit zone, would share in those profits, so that it could finance pictures itself and take the necessary risks on an ordinary trading basis. They would not be very big risks; certainly they would be no bigger than the risks run by Mr. Rank, and might be a great deal smaller.

One objection which immediately springs to mind is that to which I called attention earlier: such a company might encounter the same difficulty the small distribution companies have in gatecrashing the three major circuits. That can, I think, be solved very easily by the adaptation of certain existing machinery. There exists at present, on paper, an arrangement by which each of the major circuits is under an obligation to accept and to show six independent films a year—a total of 18. As a preliminary stage, I should like to increase that number to 10 each, making the total 30. The reason why that arrangement, too, has been, in effect, a dead letter, is because it was based on the fallacy that a film could be made first and then shown to the selection committee, who would be asked, "Do you think that it is good enough?" Of course, if they said it was not good enough the money would be lost. The result, of course, was that nobody made films on such speculative terms.

The only way to solve the difficulty is to choose the films by the same method adopted by the existing distribution companies; that is to say, choose them on scripts, on directors and on cast. In precisely the same way, the 30 films I suggest could be chosen by the State Distributing Company, and there should be an obligation on the three major circuits to show them. Even that would be only 20 per cent. of all the films they show. If they demurred, as no doubt they would, it should be pointed out to them that it is a very low price indeed to pay for being allowed to retain their virtually monopolistic position; it is a very small concession to expect. So much for that form of economy.

That brings me to the second form of economy, economy in production. On that my right hon. Friend and nearly everybody else who has spoken bad something to say. In a previous Debate I quoted some figures. We all know that the costs of film making have risen enormously. As against pre-war, wages have risen by 100 per cent., actors' salaries by 160 per cent., the cost of studio rentals by 200 per cent., and overheads by no less than 1,100 per cent. It is quite clear from that where the main cut must come. My right hon. Friend said something of great importance when he pointed out that extravagance was an occupational disease and one which derived from across the Atlantic

The House may well have heard of an incident which I believe to be true, which happened in America during one of their periodic inquests on high costs. Mr. Louis B. Meyer was being examined on the subject, and it appeared that his salary was very, very high. He was asked: "Do you really think it is reasonable, Mr. Meyer, that your salary should be ten times the salary of the President of the United States?" Mr. Meyer is alleged to have replied: "Well, look at my responsibilities." There is a myopia which that story illustrates and which really does go right through the industry.

The first thing that this new State Corporation, or rather this new State Distributing Company as I would prefer it to be, should have is a right of very careful surveillance over the costs of the independent producers it supports, and there is no real reason why it should not do so. The House may be interested in a few other figures. I am told that in the Rank organisation as soon as the title of a picture is announced£25,000 is assigned immediately to the cost sheet in respect of overheads. In those studios alone the cost of idle time for artists under contract and for technicians, is, I am given to understand, something in the nature of£100,000 a year. That, I believe, is the admitted figure, though it is not a figure which is very readily admitted. Indeed that is the kind of cost which it is very easy to disguise, and I would not be surprised if the real figure were twice that. Seventy-five per cent. of shooting time is devoted to crude lighting. Discussions on the floor, quite apart from rehearsals proper—just argification—takes, on an average, two hours a day. The result is that the average day's work produces one-and-a-half minutes of film.

That is a terrible record and quite obviously there is room for very serious curtailment. The company should have surveillance. Overheads must pass muster, and here is another important point which I think should be introduced. Producers and directors should be on a profit-sharing basis. It is no use their taking a big fat salary fee and then living in a situation where any profits are only going to add to Super-tax.

Mr. Baxter

They would like to be on a cost plus basis!

Mr. Levy

Of course, and in effect many of them almost are. Anybody who can do anything towards time saving should, so far as possible, be relegated to the profit sharing basis and get his main pay—not all of it, of course he should have a decent living wage—but get his main remuneration after the profits begin to show. Studio rents must be controlled or redundant studios requisitioned and let at a proper charge.

Finally, I would add the warning which has been already repeated. When we are considering economies, let us beware of reviving the "quickie." There is a very serious danger of that. I believe the best way to avoid it is to follow a hint already given by my right hon. Friend the President of the Board of Trade. During the past few years there has been a great deal of research, largely on time and motion lines, in the industry. As a result there are promising plans for reducing the cost of a film. There is a system, of which hon. Members may have heard, known as the "independent frame" system. I do not propose to weary the House with technicalities, but it involves mobile sets; it involves the increase in use of what is called back-projection in its various forms; careful organisation of time and space and the maximum preparation before the film begins to be shot on the floor.

There are a few technicalities, but largely it is a question of common sense. It may need a certain amount of studio adaptation, but I am glad to understand that my right hon. Friend looks upon it with favour. I suggest that this distribution company which I am proposing, and which I hope is what the Film Finance Corporation will end in becoming, in addition to keeping close surveillance upon costs, should do everything it can to encourage this or some other new system. What is wanted is not merely cheese-paring, but basic reorganisation.

Sir, this occasion signalises the fact that private enterprise has brought one more vital industry to the verge of disaster, because it is a fact that the industry really is on the edge of a precipice and it may very well, as the hon. Member for West Nottingham said, fold up in the course of a few years. It is a familiar routine that at this stage, State help of some kind is asked for, and I am by no means averse from State help being given. But I do suggest, if State help is to be given, that my hon. Friend should not hesitate to exact the necessary conditions for the rehabilitation of the industry, and I therefore hope he will consider seriously the suggestions which I have put forward.

5.56 p.m.

Lieut.-Colonel Sir Thomas Moore (Ayr Burghs)

When my hon. Friend the Member for Wood Green (Mr. Baxter) was making his witty and attractive speech, he seemed to fear that the logical result of this Bill would be the nationalisation of the industry. Now we have the truth, not naively stated, but in forthright terms in the well-informed speech of the hon. Member for Eton and Slough (Mr. Benn Levy). He is all out for one object, to absorb the whole£5 million intended to rehabilitate the independent producer and use it to feed an industry which will inevitably drive the independent producer out of business.

Mr. Levy

If the hon. and gallant Gentleman thinks that the independent producer will be driven out of business he cannot have very much faith in private enterprise.

Sir T. Moore

But here we are considering assistance for the independent producer. Parliament has been asked to pass this money so that the independent producer can continue to function and get over his present troubles, which I will explain in a moment or two. The hon. Gentleman would leave the independent producer to fade out completely, despite all his efforts to overcome his temporary difficulties——

Mr. Levy

Healthy competition

Sir T. Moore

The whole fund is to be devoted to this new nationalised industry and the hon. Member would leave the independent producer without any assistance to tide him over existing difficulties. I feel there has been a somewhat harsh attitude adopted towards the industry generally during this Debate. That follows a certain sequence of events. In the Scottish Grand Committee the other day I had to intervene on the part of the film industry, to prevent an immense burden of water rates being imposed on cinemas that was not being imposed on offices and shops. We also realise that there is a savage burden of£41 million put on the industry in Entertainment Duty. Yet, according to many hon. Members, the industry is hardly worth helping. I hope to show that there is plenty of life and vitality in the industry, provided it gets a fair show.

As I said before, I must confess my interest. I am a film fan. I have my weekly day of self-indulgence. On Saturday afternoons I inevitably go to the cinema. Therefore, I wish to see the cinematograph industry in a prosperous condition, so that it can provide me and the other 30-odd million people of culture with adequate entertainment and relaxation, and I hope that my efforts this afternoon will be of some assistance. I might add, in defence of my intervention in the Debate, that I was for eight years a governor of the British Film Institute and, therefore, I have some knowledge of the eccentricities of the various participators in the film industry—the distributors, the exhibitors and the producers.

I honestly believe that the industry deserves our support. It may have made mistakes, it may be making them even today, but it deserves our support for no other reason than that it is giving entertainment and relaxation to three-quarters of our population. As many hon. Members have said, I do not think that the assistance that has been outlined by the Minister today is enough. Five million pounds, as a distinguished ex-Minister once said, is chickenfeed—a meaningless symbol. The money may not be wanted, but the industry should feel that it has at its back sufficient funds from which to draw in order to enable its development to follow its proper and full course.

The hon. Member for Eton and Slough gave certain information to the House. I agree that his speech was well-informed. He has been well briefed, apart from his natural knowledge of the subject. But I wonder whether the House realises that if anyone goes into his favourite cinema and pays 3s. for his seat, 1s. 3d. goes to the Government in taxation, 1s. 3d. goes to the middleman—that is the distributing class—and 6d. out of that 3s. goes to the producer. How can the producer possibly carry on under such circumstances? As the hon. Gentleman said, from a different angle, a British film must be of more than average quality to give a revenue of£200,000. We must remember that that amount is payable by the exhibitors to the distributors.

Then, of course, we go on to the fantastic tale described by the hon. Gentleman. The distributor first takes his 25 per cent.—£50,000—then there are further charges for advertising and so on of another£10,000, leaving the unfortunate producer with£140,000. We know that during the past few years there have been very few worthwhile British films that have not cost from£200,000,£250,000 to£300,000. Therefore, the producer today is left with certain alternatives. He can go into bankruptcy, he can go out of business or he can get some assistance of a substantial character in the way that has already been suggested. I ignore, I think wisely, any reference to the American market as a source of revenue, because on the whole it must be regarded as a hazardous source.

That brings me to the question of finance and to the purpose of this Bill. Hitherto, finance has been secured by backing from the banks of up to 75 per cent. which is always a first charge on the returns. Usually the remaining 25 per cent. has been found by the producer himself or his friends or by going to the City.

Mr. Blackburn

May I say, with great respect, that those figures are far too optimistic? Certainly banks are not willing to advance up to 75 per cent. on films. They have not done so, and they are not doing so today.

Sir T. Moore

I said "hitherto." They are not doing it today, as I was about to say if the hon. Gentleman had curbed his impetuosity. Under the present stringency in the financial world those facilities are now being denied. Therefore, the fund, even in its limited capacity and with its limited power of assistance, is undoubtedly a useful asset to enable the gap to be filled which now yawns in front of both distributor and producer alike, but, especially the producer. I am satisfied that the intentions of the Government are fundamentally good and that they intend to be beneficial. I complain that the result will not be as good as the Government would like. "I will give my reasons for that belief. I am sure that no one will assume a business risk in making a film—unless, of course, it be the distributor—who must pay the interest on the loan he gets from the Corporation. No one will assume that business risk.

I do not think the distributor will now do it, for two definite reasons. One is that he does not want to tie himself up too much with the producing side. The other is because he is unwilling, even if he is able, to satisfy the interest demands of the Corporation which will advance the money. I believe that it is the opinion of the British producers—it is certainly my opinion—that the Government cannot succeed in their intentions unless there is sufficient flexibility introduced into this Bill to absorb the loss as well as the profit on any picture that is made. That is the unwise rigidity of the present Bill. We must have flexibility.

I suggest that rather than try to alter too drastically the terms of the present Bill, the simplest way is that instead of the loan being made to the distributor, it should be made to the producer, so that he would have something with which to bargain with the distributor. That would not require a very great alteration in the Bill, but it would place the producer in a position of independence instead of his present position in which he is entirely in the hands of the distributor. It would enable him to bargain with the distributor and so get reasonable terms. As has been admitted by every hon. Member who has spoken today, the charges made by the distributor are grossly out of proportion. The charge of 25 per cent. should be reduced by a half. That would still show a profit to the distributor. Of that I am satisfied.

If my proposal to give the loan to the producer instead of the distributor were accepted, then we should eliminate the present evil necessity of the producer submitting his script, his stars and his whole production budget to the distributor for vetting before he can go ahead with the picture. I do not consider that there is any great advantage in the change produced by the Bill, because now the unfortunate producer or distributor, or both, will have to go to the Board of Trade instead, and produce his script, stars and his budget of expenditure. I have the greatest possible regard for the Civil Service—I always have had—but I cannot see them being experts in the cash value or the box office value of a star, or the attraction of a script.

Mr. Blackburn

The hon. and gallant Member, who has been a little sarcastic about my previous intervention, is, after all, a Conservative Member of Parliament. Surely, he is not suggesting that we should loan£150,000 or£100,000 to an independent producer without any budget being produced to anybody and without any check at all as to the costs of production?

Sir T. Moore

I do not mind it being submitted, but I object to it having to be submitted to people who, through no fault of their own, are not in a position to judge whether it is right or wrong.

Mr. Blackburn

Who will do it?

Sir T. Moore

I am glad to see that the Board of Trade has set up a committee of inquiry into the whole question of costs. It may be that a standing committee to which these matters could be submitted would be of value.

Mr. Blackburn

Would the hon. and gallant Gentleman say who in his opinion ought to supervise the expenditure of this public money? Who ought to authorise its being spent and approve the budget?

Sir T. Moore

The Corporation must naturally, and according to the Bill, approve the loans that are being made to the distributors. However, I am suggesting, first of all, that the loans should not be made to the distributors but that they should be made to the producers direct, and that then the producers should possibly go, if it is necessary that they should—I am not arguing it one way or the other—to someone who is in a position to decide whether the script, the stars and the production budgets are right or not.

Mr. Blackburn

Who is the "someone"?

Sir T. Moore

I have suggested that a permanent committee of the Board of Trade consisting of experts in the industry might be advisable. That is my suggestion. As I was about to say, if my suggestion were adopted it would absorb the present empty studio space which has been stated to be 15 per cent., although, according to my information, it is very much more. That is the first thing. Secondly, it would fulfil the exhibitors' quota—or very likely would—of 45 per cent., and thereby free us from this necessity of spending dollars on American films. Thirdly, I believe it would restore confidence in the financial integrity of the industry, which is now badly shaken.

There are one or two further points I think the Government ought to bear in mind. There is the point I have already made that distribution charges could be easily halved. That is number one. I think that the existing three circuits are a danger, because with their own distribution and studio economies they make difficulty for the independent producer. I think they need to be watched by the Government. Perhaps, something ought to be done about them, but I am not in a position to suggest what. Then I think that there should be, for reasonably good British films, an equal opportunity with American films of being shown to all the English-speaking peoples. If the exhibition of films is limited there is inevitably waste, and it is partly due to that waste that the film industry finds itself in its present financial troubles.

I would recommend certain hon. Members to read a letter published on 27th July last from Mr. Maurice Ostrer in which he set out the problems of the industry fairly clearly and logically. If there could be made—and this the right hon. Gentleman has already done something about—a trading, reciprocal arrangement between American producers and ourselves, that would be the way by which a successful and profitable British film industry could be secured. If something on these lines is not done I believe, as the hon. Member for Eton and Slough has said, that the industry will head for disaster. Something bigger than anything yet devised must be done to prevent that tragic result.

6.14 p.m.

Mr. Eric Fletcher (Islington, East)

I do not think it is necessary for me, in view of what the right hon. Member for Aldershot (Mr. Lyttelton) said, to remind the House that I have had numerous associations with the film industry, of a professional character rather than of a financial character, for a great many years. At the moment I am closely associated with the Associated British Picture Corporation, Ltd., of which I was very happy to find that the right hon. Gentleman, who is such a well known captain of industry, spoke in such admiring terms for its prudence and efficiency in this industry. It is because I have a certain knowledge about various sections of the industry that I venture to intervene in this Debate, in the hope that I may be able to present certain information to the House of value in considering a very complicated subject. I would hasten to say that any views I put forward or suggestions I make are proposed on my own responsibility.

This is, indeed, as other hon. Members on both sides of the House have said, a very serious matter. The President of the Board of Trade, in introducing this Bill, recognised that it is an innovation of an unusual kind to ask Parliament to vote expenditure of public money in a hazardous venture of this kind. It is put forward on the grounds of the national necessity of sustaining the British film industry. I think we all agree that it is a very important and laudable object that the British film industry should be sustained. My right hon. Friend also claimed—and here I disagree with him—that the Government have done everything possible to help the industry. It is perfectly true that during the last three years or so this Government have devoted a great deal of thought to how they could assist independent British film production; but the methods of assistance have not always been the best conceived, and have not always been the best calculated to assist.

Let me remind the House of what has happened in the past, to show how difficult the subject is. Two or three years ago it was said that British independent film producers were handicapped because they could not get facilities for having their films shown on British screens, and the leaders of the three circuits were invited to agree that 18 films made by independent producers should be shown in addition to the quota films if they passed a quality test. That undertaking was freely given, but the sad and significant fact is that not a single film produced by an independent film producer has ever been submitted to the selection committee for approval.

Mr. W. Shepherd

I thought two films had been submitted but that they had been withdrawn.

Mr. Fletcher

I do not appreciate that distinction. I understand two were submitted but were withdrawn. Why, I do not know. They were never effectively submitted to pass the test. When the quota was increased the undertaking previously given was given legislative sanction in the Cinematograph Films Act of this year, which imposes on the circuits—I think, quite rightly—the duty to show 18 independently produced British films in addition to the quota of 45 per cent. It is now quite apparent that independent British film production is not handicapped through any lack of facilities for showing British pictures.

It was then thought that it was handicapped by lack of studio space, and the Gater Committee was appointed in the summer this year to advise my right hon. Friend whether the Government should build a film studio to assist independent British film producers. The grotesque feature of this committee was that the assumptions it was asked to make were out of date before the committee began to sit. Not only was there no lack of studio space, but studio managements were anxious to get any available tenant to hire their studios.

Mr. John R. Thomas (Dover)

My hon. Friend says that there was anxiety to get producers for the film studios. Would he tell us what price was quoted to independent producers to hire them?

Mr. Fletcher

I think the best thing to do is to quote the actual report on that subject. It says: Every studio manager whom we visited informed us that he had plenty of studio space available, and that he would welcome applications from free lance producers. Furthermore, we are assured that there is ample studio space for the production of films up to, and even beyond, the present quota.

Mr. Thomas

That does not answer the question, at what price.

Mr. Fletcher

It does not deal with price. Presumably, if people have studios empty week after week, they are glad to take any reasonable price rather than keep them empty. The fact is that there is a large number of empty studios, and a large number of technicians in the film industry unemployed. Therefore, as my hon. Friend the Member for West Nottingham (Mr. O'Brien) and others have said, the industry is indeed facing a very critical and serious situation, which may have far-reaching consequences on employment.

I believe that the British film industry could make a notable contribution, both to our national economy and in spreading British culture throughout the world if energetic and drastic action is taken now. The right hon. Gentleman has now discovered that the real difficulty is lack of finance, or rather, lack of people willing to take the risk of providing money with which to make British pictures. The inescapable fact is that independent British producers do not make pictures or get financial backing because they cannot show a profit. The circuits are only able to make pictures because they can subsidise the losses on production through their distributing organisations and their theatres. It is no wonder that the bankers and insurance companies are unwilling to lend money for this hazardous enterprise. They do not forget the experience of the Prudential and other companies before the war, and the immense losses that were then suffered.

We ought to examine why it is so difficult, if not impossible, to make any profit out of British film production today. Without wishing to weary the House, I should like to give Members certain figures on the subject, and then make some suggestions. This is not only a matter in which all sections of the industry have to play a part in securing a reduction in the cost of production; when all sections of the industry have done that, there is still a further part which the Government could play by way of making to British firms certain rebates of the Entertainments Duty which is at present borne by all films, irrespective of whether they make a profit or a loss.

As hon. Members will appreciate, however optimistic a producer may be when he starts to make a film, he cannot tell until some time afterwards whether it is going to be a success, whether he is just going to get his money back, or whether it is going to be a failure. We have heard a good deal about the difficulty of defining independent producers, and of the criticism of the respective amounts received by the producers and distributors. But what is sometimes forgotten is that the term "independent" is an elastic one. The only person who is really independent in this matter is the filmgoer, who is free to choose whether he will see a particular film or not.

I think it is generally known that the average cost of a feature film today, which can have any hope of being shown extensively abroad and of competing with American films in the world market, is at least£150,000. I do not know whether it is equally realised that the average net returns to a film producer in the United Kingdom are between£110,000 and£120,000. Nor do I know whether it is generally realised that to enable a producer to recoup that amount of money, the public have to pay something like£600,000 at the box office. In other words, if we take an average British film for which the public pay£600,000, the Government first of all collect by way of Entertainments Duty£240,000. Of the remaining£360,000 the exhibitors get their share.

Mr. Lyttelton

How much?

Mr. Fletcher

It varies. In a normal case, it would be about£216,000. That is much more than the producer gets, for the reason that the exhibitors have to meet the upkeep of the cinemas, and satisfy the increasing demands from members of the union represented by my hon. Friend the Member for West Nottingham. The distributors have to bear the cost of making prints and advertising. The net result is that the producer gets about£111,000. I will give the House the actual figures in the case of one of the most successful British films shown during the last 12 months. I refer to the film "My Brother Jonathan." I understand it earned in this country the second highest amount of any British film during the past 12 months or so. It cost£198,000 to make, and the public paid over£1 million to see it, of which£416,000 went in Entertainments Duty. The producer's ultimate share of the takings was£192,000, which represented a loss.

Mr. John R. Thomas

How much of that came from the United States?

Mr. Fletcher

None of that came from the United States. I am trying to show the House the difficulty with which the British film producer is faced at the moment in getting back from the market in this country enough with which to pay the cost of production. One has, of course, to bear in mind that if the film is reasonably successful, the producer can hope to get£20,000 or£30,000 in markets outside the U.K.

Mr. Levy

May I ask my hon. Friend a question? These figures are extremely interesting; this is not a hostile question because they confirm what I was saying earlier. In the case of the film he quotes, is my hon. Friend able to give, not only the figures received by the producer and by the Exchequer, but also those received by the exhibitor and the distributor? What I should like to hear more particularly is what is the rate of profit (a) for the exhibitor, and (b) for the distributor?

Mr. Fletcher

I think I can give some of the figures for which my hon. Friend asks. They are very relevant to the whole question of the proper allocation of proceeds as between the various sections of the industry. I very much hope that is one of the earliest questions to which the committee which the President of the Board of Trade is shortly setting up will devote its attention. These are the actual figures—the public paid£1,041,000, the Revenue received£416,000 by way of Entertainments Duty, the various exhibitors throughout the country who showed the film received£375,000, the distributors first spent£20,000 on prints and publicity, and received£37,000.

Mr. Wyatt

The renter?

Mr. Fletcher

The distributor is another term for renter. The producer received£192,000, very nearly the cost of production.

Mr. Levy

So the£20,000 spent by the distributor went to the producer?

Mr. Fletcher

The£20,000 was the expense of distributing the film.

Mr. Wyatt

The£37,000 received by the renter was clear profit?

Mr. Levy

What is the£20,000?

Mr. Fletcher

I cannot go into this in too much detail without deviating from my theme. The£20,000 was the actual expense borne by the distributor in advertising the film and making the prints, and so forth.

Mr. Lyttelton

I am sorry to interrupt this internecine strife. Is the hon. Member going to give the costs to the exhibitor, as he has given the distributor's costs? He has only given the cost of distribution, I think for an obvious reason.

Mr. Fletcher

I do not know why the right hon. Gentleman should jump to any conclusion. This is a very complicated subject and I hoped that the House would endeavour to understand it. When one speaks of an exhibitor who gets receipts out of a film one is speaking of a whole number of cinematograph exhibitors throughout the country, all of whom, in the aggregate, receive something when a particular film is shown either by a circuit, or in an independently owned theatre. It is quite impossible for me, or anyone else, to know how much profit is made by any particular theatre in any part of the country.

Mr. Wyatt

Surely it is not impossible in this case? My hon. Friend will agree that in this case it is not impossible for him to know how much profit every cinema exhibitor made out of this film, because this film was controlled by his own company and he must know the terms of contract made with the exhibitor.

Mr. Fletcher

I am sure my hon. Friend does not forget the fact that the film is not only shown in theatres owned by a circuit, but also in a whole range of theatres throughout the country.

Mr. Wyatt

Exactly, that is my point. But the contract was made by my hon. Friend's company.

Mr. Fletcher

The film was shown first on the A.B.C. circuit in such theatres as they own. It was then shown in a wide range of other theatres.

Mr. Blackburn

If I may say so, my hon. Friend is making a contribution of immense value, which I think everyone appreciates, but it was generally considered—although I now realise that is wrong—that one could divide cinema theatres into three categories, one-third of which are owned by Rank, one-third by my hon. Friend's company and one-third by the rest. I now understand that that is entirely untrue. Would my hon. Friend be good enough to say what are the proportions owned by his company and by Rank?

Mr. Fletcher

Those figures are a matter of record and have often been quoted in the House. I think their only relevance is that in considering the risk undertaken by a company which makes a film, hazardous as the whole business of making films is, if it were not for the existence of the circuits able to give a booking of a certain size and thereby ensuring initial revenue to a film, it would be even more difficult for any producer to make a profit. It is only because a producer has an opportunity in the first place of getting a circuit of theatres to show his film, that he is able to start off with a chance of making a profit on his film.

Mr. John R. Thomas

I am sorry to interrupt this very interesting speech, but is it not a fact that if an independent producer wants to sell a film to a circuit, he will have to agree, as part of the condition of the contract, that the film is produced in the circuit's studios?

Mr. Fletcher

Oh, no. As far as my experience goes, that is by no means the case. The circuit with which I am familiar have been doing their best during the last year or two to encourage every independent producer to make worthwhile films for exhibition in the A.B.C. circuit, irrespective of where the film is made. The A.B.C. circuit by that method, owing to the fact that until recently they had no substantial studio space of their own, have been able to afford very considerable facilities to a large number of independent film producers.

Mr. W. Shepherd

How many?

Mr. Follick (Loughborough)

My hon. Friend referred to the very good film "My Brother Jonathan." Was that film shown in the United States, Central America, the Balkans, France, Italy and Germany, or was it so good that it was only shown in this country.

Mr. Fletcher

The film is being shown abroad and every possible effort is being made to obtain the maximum revenue from it outside this country. Unfortunately, as everyone knows, it is very difficult at present to show British films in America. There are opportunities for showing British films in other parts of the world, but they have to compete both with American films, on which more money is spent, and various other films. But every British film producer hopes to make perhaps£20,000 or more from exhibition abroad, though all of them are not so successful.

Mr. Blackburn

I should be grateful if my hon. Friend would be good enough to tell us what percentage of the picture theatres in this country is owned by his company and what percentage by Rank.

Mr. Fletcher

There is no mystery about that, but it is really quite irrelevant and I have answered a number of questions.

I was trying to show the real difficulty, under present conditions, of making British pictures at a profit. I have quoted the figures of one of the most successful British-made films of recent years, but I could quote dozens of British films which have cost about£150,000 to make and which have been financial failures. It would be invidious to mention the names of any particular films, but I could give the names of films which have been well received, well made and well produced, featuring perhaps one or more well-known stars, and costing£150,000 and producing for the Revenue£200,000 or more in Entertainments Duty and yet resulting in a net loss to the producer, whether independent, or associated with a circuit.

That is the trouble, and the Government are introducing this Bill because money is not forthcoming from the usual channels for taking the risk and gamble which are inevitable in present circumstances when one embarks on making a film and, to a lesser degree, if one embarks on a course of film production. Continuity reduces the risk. That is the tragic fact which faces the industry.

I agree with the right hon. Gentleman when he said the Government were in a dilemma about this Bill. It is based on the assumption that money will be lent where there is a reasonable expectation that a film can be produced on a commercially successful basis. It is difficult to satisfy those requirements. In fact, those who put up the money for this kind of venture must take a risk, and therefore it is true to say that either the Bill will be so cautiously interpreted as not to make the finance available where it is wanted, or else the Government will be embarking upon a serious risk of losing public money.

I submit that there is an alternative method by which the Government could assist this national industry. First, I entirely agree with what has been said by other hon. Members, that the fundamental question is to reduce the cost of production without affecting the quality. That is a task to which all sections of the production industry can contribute—the management, the producers and directors, the artists and the technicians.

Mr. Wyatt

The exhibitors?

Mr. Fletcher

All sections engaged in production can assist in reducing, that cost. I also agree that the distributor can assist by reducing the cost of distributing. It is a fair criticism that, as the industry is organised today, the distributor may get an unduly high proportion of the resulting proceeds, and speaking for myself I think the cost of distribution could well be reduced, but that could only provide for the producer of an average film a sum of£6,000 or thereabouts—a sum which is not negligible, I agree.

Over and above that, however, it is essential that there should be a concerted, serious, co-operative effort by everybody in production to reduce production costs, which means eliminating extravagance, which means producing pictures more quickly, reducing some of the time-wasting which the hon. Member for Eton and Slough (Mr. Levy) mentioned. It also means an attempt to get the highly paid artists and producers to reduce their fees, sometimes very large fees, at any rate until the production company has recouped its cost of production. In addition I think the Government could more usefully assist this industry by granting a rebate out of the Entertainments Duty to British film productions which happen to make a loss, provided certain conditions obtain.

Let me remind the House that when a British film is made, it may make a profit, it may make a loss, but in any event it earns for the Revenue£200,000 or so. My suggestion is that, in the case of any film which makes a loss, the producer should have the right to claim a rebate out of the Entertainments Duty it has earned to make good that loss provided, first, that the film has not cost more than a given figure, say,£150,000, and provided that the costs of production have been independently checked and approved; secondly, provided that the film producer is in continuous production and is using the money to make further British films; and, thirdly, provided that there is no single item in the cost of production in excess of a certain sum. What that sum should be may be a matter of argument; perhaps it ought to be£5,000, perhaps less. I believe that if some such plan could be adopted—and suggestions have been put forward to my right hon. Friend—there would be a more satisfactory system of Government assistance than by the method provided in this Bill.

Mr. William Ross (Kilmarnock)

Is my hon. Friend referring to all British films or only to independently produced ones?

Mr. Fletcher

I am suggesting that the rebate should apply to all British films——

Mr. John R. Thomas

Whether they are good or bad?

Mr. Fletcher

Where they make a loss. In reply to the last interjection, the whole difficulty in film production is who is to decide whether a film is good or bad. A great many good films do not make a lot of money. At the moment we are committed to the scheme put forward in this Bill, and I urge that if Government money is to be spent in this way we should have an assurance from the Government that the sums provided under this Bill for British film production should be published and known, and that there should be disclosed the cost of production of all films which are to be assisted in this way.

I would go further. It would be healthy for the industry if the costs of production of all British films had to be published; certainly, where public money is involved, it is essential. Also I think it essential to publish all items in excess of a certain amount. In view of the admitted national interest in this industry, it is desirable that far greater publicity should be given to showing the public how the costs of production are made up, and where the money goes which the Government are being asked either to find or to guarantee.

In that way the Government could give a measure of assistance to the industry and if at the same time the industry was stimulated to help itself in eliminating extravagance and rationalising its methods, I am confident that the British film industry can be sustained and can make a valuable contribution, not only to our national economy but also to our national culture. The quality of British films and their character has now been established, and all that is needed is to give them the conditions which will enable them to compete in world markets.

6.48 p.m.

Mr. Walter Fletcher (Bury)

We all know that a famous King of England died of a surfeit of lampreys; I hope this House will not suffer the same fate from a surfeit of Fletchers.

It has been a curious feature of the Debate that an attack has been made on private enterprise in the former film industry because in previous years it has not been able to provide sufficient funds to be in a position to supply the necessary films wanted in this country. Those who have used those accusations then go on to contradict themselves by saying that the enormous burden placed on the industry in past years in the way of Entertainments Duty should now be reduced, and that there should be a rebate. Do not hon. and right hon. Gentlemen who have talked like that, realise that it would be different if this industry had not been taxed almost more than any other industry in this country, if right at the start there had not been an Entertainments Duty which, on the figure given for the film of "My Brother—" Jolson, was it not? [An HON. MEMBER: "Jonathan."] I thought it was Al Jolson. In the case of that film, something like 40 per cent. was taken in Entertainments Duty; there was then the enormous slice which the renter took out, and then out of whatever balance there was left the profit was made, and that was taxed. Is it to be wondered that the industry in past years has not been able to provide those reserves with which now it could make the films that are so badly needed?

The trouble with this Bill is that the Government are going into this industry not because they want to, but because they feel that they have to do so. That is not a wholehearted approach. When dealing with this enormous industry which is in real jeopardy, it is like sending a small lifeboat to rescue the "Queen Mary"—and a lifeboat not very well equipped for the job. Basically, the best that one can say about this Bill is that it is a pump-priming Bill. That is the only thing one can call it. The mention of special loans in its Title immediately gives one the idea of something in the way of debentures. The essence of the financial side of this Bill is that it is risk capital, and very greatly risk capital. It has been pointed out by several hon. Members that the banks and insurance companies have ceased to put their money into the business, because for various reasons it is a commercial risk. The Government, therefore, are trying to give the industry this pump-priming, which is just another chance to get it on its feet, but the industry will not be able to exist on further injections of Government money, because the Government will not be able to do it. At this particular time the Government are putting in debenture capital, when it is essentially risk capital.

Those are the risks at the present moment, when great pressure is brought on the industry from overseas and when a considerable attack is being made on it from America, for various reasons. It is at that moment that this capital is being put into the industry really as a lifeline, and I hope that fact will be realised. At this moment, the risk is very great. I am not saying that the return on that risk is necessarily going to be in the way "of a direct pecuniary gain to the Government, though it may well be that there will be an advantage in stopping unemployment and providing a breathing space for the reorganisation of the industry, which is tending to be so monopolistic.

Three years ago, I made a speech in this House pointing out that the forming of trusts in the Rank organisation, and, to a lesser degree, in the Associated British Pictures organisation, was a very great danger. The danger was not that it would succeed, but that it might fail, and that, with so much power in their hands, that might do great harm to the industry. That danger is even more present today than ever before. The risk capital which the Government are putting in, may avert some of the dangers arising from these causes. Everyone with any knowledge of the industry in the past wishes the Bill well and hopes that it will succeed, but it must be seen in its proper light—that of an effort being made, I think quite insufficiently and also open to criticism in its form, to save an industry when it is in much greater jeopardy than it has ever known before.

In the administration of this Bill, I hope that the idea that, because this is public money, the policy has to be one of playing for safety first, will not be over-estimated. The real truth is that this money had better be written off by those who are providing it, and, whether they write it off or not, the Public Accounts Committee, later on, will have the task of seeing where it has gone. They should not look on it as being safeguarded, as it would be if it were going into some form of industry where there is not this enormous risk of guessing what the public will like. The cards are stacked against this industry at the present moment, and the very fact that the Government are going to find this money, is a considerable proof of that.

The statement has been made that about one-third of seating capacity is in the hands of the big circuits and the rest in the hands of independent cinemas, but when we come to the distributors, the signs are by no means healthy, but very much the opposite. I still say that the greatest possible danger, in spite of the safeguards put in by the Government, is that the two big organisations will have too much influence and far too great a say in what is produced and what is distributed.

Finally, one can only say that this is a brave attempt to find a solution for a problem that has been growing and increasing in difficulty, and which is likely to become even more difficult in future. It is being made in a rather doubtful form, and it would be very well if it could be regarded not as a "safety first" device, but essentially as a risk in attempting to rescue the industry. We hope that, in the administration of this Bill, the risk of public money which this House is asked to approve today may possibly have the good result which everybody who knows this industry has very much at heart.

6.56 p.m.

Mr. Gallacher (Fife, West)

I am not going to make a speech on the production or distribution of films, of which I know very little, but I know the sort of people who go to the films and I know the conditions under which many of the cinemas are run. The big question always has been how to get the films of the independent producers into the cinemas, and until that question is tackled we are not going to get a solution to this problem.

The hon. Member for East Islington (Mr. E. Fletcher), who has a fuller knowledge of the business than I have, said that the film "My Brother Jonathan' drew in over£1 million, and the hon. Member for Bury (Mr. W. Fletcher) said that the big circuits hold one-third of the seats. That does not mean one-third of the cinemas, because the big circuits have big cinemas with very many seats, while there is a large mass of cinemas with smaller seating accommodation outside the big circuits, and they are not getting the opportunity of showing films. They have been brought up on the sensational and cheap American films, with, once in a while, an occasional so-called epic. We should encourage the showing of films in such a way as to develop conditions for tackling the big problem before us, and that problem is how to ensure that the films of independent producers will get a fair chance.

Let us take the case of the film "Hamlet," a masterpiece in the way of film production. How many hundreds of cinemas in this country will be quite unable to show that film? I should like to have an estimate of how many cinemas in this country will be able to show it. There are many films which come from independent producers, and if we had some organisation, or subsidies if necessary, directed towards ensuring that these films would be available to all areas of the country, however small the seating accommodation of the cinemas or however poor the area, it would do a great deal to build up a new taste and culture among our people, while at the same time establishing more firmly the independent producers.

6.59 p.m.

Mr. Edgar Granville (Eye)

I agree with the hon. Member for West Fife (Mr. Gallacher) that in these discussions on the film industry we are apt to forget that it is the ordinary film-goer whose interests we are really discussing, though, in regard to this Bill, there may be losses and it may also be the case that we are discussing the taxpayers of the country. There is a tendency to forget that in these days of austerity, very large numbers of people go to the cinema, and that they go there first and foremost to get entertainment. I think that is one of the important things which we ought to bear in mind where the Government in some form find the money.

When the President of the Board of Trade introduced this Bill, he said that he felt "some concern" about the industry. I think that he was not showing his usual enthusiasm for this industry, certainly not the same enthusiasm which he showed when he first came to the Despatch Box and initiated debates in this House on the film industry. He has introduced a Bill which is an attempt, as the right hon. Member for Aldershot (Mr. Lyttelton) said, in a very interesting speech, to assist the independent producer through the distributor. It would seem that there is no doubt—and I agree with the right hon. Member for Aldershot—that there are bound to be losses. I think that the right hon. Gentleman had better face up to it that this is a very speculative industry, and that in putting up this£5 million for five years for the more speculative section of it, they are going to incur losses.

The hon. Member for Eton and Slough (Mr. Levy), who speaks with considerable knowledge of this industry, said that this was the pass to which private enterprise had brought the industry. I was amazed. I should have said that there was hardly any private enterprise at all in the film industry at present, and that its production and exhibition if not its distribution, were on both sides of the Atlantic almost an entirely monopolistic basis. What I am anxious to see is whether there is to be any protection at all for the little man—the individual producer—in the operation of this loan against the practices of the big monopolies. The Liberals will look at this point carefully in the Committee stage.

The President of the Board of Trade said something about the balance of payments, and that this was an important factor which his Department always had to keep in mind. What he did not say was whether the so-called dollar experiment, in which we have already advanced large dollar facilities to the large picture organisation in this country in an endeavour to capture the American market with prestige pictures, has been a success. Probably this Bill is not the occasion for the right hon. Gentleman to deal with that in detail, or to present a balance sheet, but this dollar question is an important factor. I should like to ask him if that experiment is still going on. Are we still endeavouring to capture the American market with prestige pictures and the investment of a large amount of dollars for exploitation, expenses and so on? Has that been proved a failure? Are we getting increased revenue from the United States? If this grandiose attempt has failed, can the right hon. Gentleman tell us who advised his Department that this tremendous speculation was likely to be a success in earning dollars?

The right hon. Gentleman said that we had to cut costs of production in this country. It has been said for the last 20 years that we have to cut the cost of individual picture production. I am glad that the right hon. Gentleman touched on some of the fundamental matters which affect anyone who wants to produce a picture in this country, and which were referred to by the hon. Member for East Islington (Mr. E. Fletcher) in a very informative speech on costs and profits. In the United States, when they produce a picture, they can break even on the cost of production on their home market, with a population of 140 million. They make their profits here. In this country, if we are to break even on our home market, our costs must be based on a cinema-going population of 48 million.

The hon. Gentleman gave as an illustration the film, "My Brother Jonathan," the cost of which he showed was£198,000. The total revenue was over£1 million. If that shows one thing, it shows that the right hon. Gentleman's argument this afternoon was perfectly right. If we spend over£150,000 in this country without the assurance that we are to get some export markets on the Continent or with the U.S.A., and get a substantial amount from these overseas markets, then every penny we spend over£150,000, on the basis of the cost given by the hon. Member for East Islington, is a certain loss. That is why I emphasise to the right hon. Gentleman that while it is important to know the cost of individual picture production here, what is far more important is to know what chances there are of recouping on picture costs of over£150,000 from overseas markets. It is the expansion of markets abroad, rather than cutting costs to the home markets that matters. What we come down to in the end is this: Are we really going to make some reciprocal arrangement with the U.S.A. for the film industry? Government Departments have tried it. All kinds of negotiations have been going on. Mr. Eric Johnston has been going to and from the United States. There was a cold war after the Quota Bill was introduced here. Is that cold war still going on?

Let us be clear about this. The film industry in this country has made tremendous efforts to capture the remunerative markets in the U.S.A. and for one reason or another, either because of their control of the organisation in renting or for a hundred other reasons, which they can simulate, everything has been put in the way of giving British pictures in the U.S.A. a fair showing. How long will that go on? That is the real problem which has to be faced in the film industry in this country. We can cut costs, keep overheads down and try to frame various methods of production and star system, and do all these things, but I believe that in the end, the prosperity of the film industry here is to be secured on an international basis and by international co-operation rather than by domestic reductions.

The Government are now going to put up£5 million for the industry and I think that the House will give the Bill a Second Reading, but the right hon. Gentleman has had some experience of the industry since he went to the Board of Trade and I should like to know before we sanction this, whether he is satisfied that the industry is really putting its house in order. I read a statement in the Press only a few days ago by a well-known film producer, Mr. John Boulting. He has a good reputation as a successful film producer in this country and I should like to know from the President of the Board of Trade whether his statements are right or not. He said: This is the eleventh hour for the British film industry. So far as the distribution and production sides are concerned, we are carrying far too many passengers, people drawing very large salaries for doing virtually nothing. There are too many banquets, too many champagne-soaked conventions, too many luxurious offices, too many ornate brochures, too much tasteless advertising, and too much undiluted, unprofitable and unproductive nonsense. We must prune from the top—not sack a few studio hands. Films are not born or made in Claridge's or the Savoy. Producers should unite to market their pictures abroad. We are being asked tonight to pass a Bill which is to make available, with the necessary Clause 3 provisos,£5 million for a period of five years. Is this an accurate description of the condition of affairs in the film industry of this country? If it is, then there is a great deal of work to be done by the committee which the right hon. Gentleman has announced is to inquire into the renting, and so on, in the film industry. In the end, the problem can be solved only by international co-operation, which means, so far as this country is concerned, co-operation with the United States of America. There is an atmosphere of almost funereal gloom over this House in discussing the film industry tonight. I do not believe that to be warranted by the condition of the film industry. If the right hon. Gentleman is to make a fresh start—and I beg him to do so—I suggest that the most effective way of doing so would be to endeavour to get the two sides of the industry on each side of the Atlantic to work together, within the provisions of the arrangement which has been made by both Governments.

7.11 p.m.

Mr. J. P. W. Mallalieu (Huddersfield)

The hon. Member for Eye (Mr. Granville), like almost every other speaker in this Debate, has put his finger on what seems to me to be the basic difficulty of the British film industry. Given its present production costs and its present limited market it cannot get adequate returns for the film it produces. The hon. Member for Eye, unlike almost every other speaker, set out to try to solve that problem from the international point of view. I very much agree with him. Instead of putting the main emphasis, as most people have done, upon the desirability of cutting costs, the hon. Member put his main emphasis on the other side of the problem, that of expanding the market. That is obviously of enormous importance.

It is a point which has been raised in this House time after time—the various ways and means by which we can break into the American market, the South American market and the rest. None of the proposals which I have heard put forward, certainly not the proposals in this Bill, would do as much good to the British film industry as a proposal which was discussed in this House 12 months ago for a footage tax to be put on or taken off upon a reciprocal basis. That is to say, a tax would be imposed upon films imported into this country at the rate of so much per foot, but for every foot of British film which, for example, the Americans agreed to take and to give a reasonable showing in the United States, so much footage of American films would be allowed into this country free of tax. I believe that that would be the most direct method of meeting the main point stressed by the hon. Member for Eye.

Although the hon. Member began by rather writing down the idea of cutting costs as being important, he came back to it emphatically in the end with that rather startling quotation from one of the Boulting brothers, and he emphasised the point in his own words. One of the good things that has come out of this Debate, and which may come out of this little Bill, is the renewed emphasis that is being placed upon this question of costs. It is a difficult problem in the film industry, where one is dealing with "artistic temperament," but I think that we are inclined to take this artistic temperament much too seriously. I was very much on the side of the hon. Member for Wood Green (Mr. Baxter) when he was "debunking" that temperament.

The idea of the average film producer is that he simply has not time to be bothered with money; it is too sordid a question to discuss. Certainly he does not give a rap what he does with money so long as it is someone else's, but I have noticed that most film producers are extraordinarily careful in the matter of their own money. They never risk it in these productions to begin with; and they take very good care that when they get hold of somebody else's money their company's pay roll is padded out with every conceivable sort of friend and relation. Look at the credit titles on a film. One will find that the costumes are by uncle, the decor by auntie, the script by the son, and so on all the way down. That kind of thing is widespread in the film industry. I do not intend to say that the industry is a racket or a jungle in the City sense of the term. I do not think it is, but it is a kind of fairyland, a wonderland in which everything is just a bit larger than life—even innocence—and where even the artificial palms have a very real itch.

I believe that one of the fruits which can come out of the operation of this Bill is that someone will be forced to put cost accountants into this industry in a very big way. I do not think it will be for the Board of Trade to do that. I am not quite sure whether it will be wholly a matter for the new Corporation to do that job. It is a little difficult to find out what Clause 3 means. I find it difficult to see exactly what is meant by that important proviso, the qualification which the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) said was the teeth of the Bill. If it means what I think it means, it certainly is the teeth of the Bill.

I believe that it will be necessary for the Corporation, certainly for the renters who are to borrow this money from the Corporation and then transfer it to the producers, to send in cost accountants. I believe that these cost accountants can do a first-class job in the film industry without in any way spoiling the quality of the films. I believe that unless that first-class job of cost accounting is done, all this money will not merely be lost but wasted, which is far worse. I would not mind it being spent without there being any return if it would put the film industry on its feet, but it will not do that unless some way can be found of getting the industry to adopt really businesslike methods.

One or two queries seem to emerge prominently in connection with this Bill. I am not quite clear at what stage of production the money is to be paid over to the producer. First, let us take the main idea, that the money shall be paid from the Corporation to the renter. At what stage does the renter pay the money to the producer? Does he pay it in return for a finished product? Does he see a film, and say, "I will take that, and you shall have the money for it"? If that is the case, it is no use whatever to the independent producer. The moment at which the independent producer requires financial help is when he has an idea, and perhaps a script prepared, and is waiting for facilities to "shoot" the film. He wants the money at a very early stage. If that money is to be given via the Corporation through the renters to the producers at that early stage, it will be essential to have not only cost accountants but cost accountants of a very peculiar and able kind, who will be able to see or to judge not only whether the proposed producer is reasonably competent himself but whether his production schedules themselves are businesslike. I should like to be informed by the Minister who is to reply at what stage it is proposed to pay the money to the producer.

I wish to support the point which was made by the right hon. Gentleman the Member for Aldershot and by the hon. Member for Bury (Mr. W. Fletcher) at an earlier stage in the discussion of the Bill, that the Corporation must take part of the equity risk. But if it does that, it will be the Corporation, as opposed to the renter, who will have to look very seriously at the businesslike qualifications of the man to whom it is lending out the money. Money cannot just be lent out in a wholesale fashion to anyone, least of all to people in the film industry. It can only be lent out under certain very strict qualifications. I believe that the desire expressed by hon. Members opposite, which I share, that the Corporation should take some share of the equity risk will inevitably force that Corporation to have some very direct say, not exactly in what is produced, but in the way it is produced. We shall be forced, through the operations of this Bill, more and more to take a direct interest in the production of films themselves.

Mr. Baxter

It seems that the picture the hon. Member is drawing is becoming more and more complicated. This Bill is apparently out to help the independent producer, but let us consider his independence under this scheme. First of all, there is the distributor. He is to conduct an inspection because it is he who is to advance the money. Then there are to be costing accountants, and now the Finance Corporation itself is to have something to say. And so we have these three masters on the back of the independent producer already.

Mr. Mallalieu

I am afraid that the moment you borrow money your independence has gone. I am concerned that, as guardians of the public purse and because we are intensely interested in the future welfare of the industry, we shall see that the money is well spent, which means spending it differently in the future from the ways in which it has been spent in the past. It would be a good thing if the Corporation finds itself dragged into film production questions. It is no use, as my right hon. Friend suggests, leaving the industry to get on its own feet. The industry is conditioned against businesslike efficiency. There is, however, a chance, with a new body coming in with ordinary outside business ideas and composed of reasonable men, to set the industry, not on its own feet, but on entirely new feet, and to bring into the industry the kind of efficiency which has been so lacking in the past, which has led us to produce this Bill.

7.24 p.m.

Mr. Erroll (Altrincham and Sale)

We have naturally been interested in the speech of the hon. Member for Huddersfield (Mr. J. P. W. Mallalieu), particularly as he referred to producers being so lavish with other people's money. We have noted a similar tendency among other people, particularly the present Government, who thoroughly enjoy spending other people's money by loans to everyone and in other extravagant ways. I am opposed to the principle of this Bill because it demonstrates a growing tendency of the Government to enter more and more into fields of venture which properly belong to private enterprise. There is an increasing tendency among men, perhaps of no political faith, to imagine that the Government of the day should take on what might be called the risky jobs, or the jobs too big and venturesome for private enterprise.

We have seen, for example, the development of the Brabazon aircraft by means of very large Government grants, the Development of Inventions Bill that sanctions the Government to spend money on inventions which have very little commercial prospects—I think it was my right hon. Friend the Member for Aldershot (Mr. Lyttelton) who, during the passage of that Bill, referred to the road to Carey Street being paved with good inventions—inventions which the Government are now going to buy. I was not particularly happy about the Cotton Re-equipment Bill, under which a large amount of money is to be pumped into an industry which is at present booming and ought to be able to attract all the necessary capital. I am still not convinced that£1 million is necessary for a National Theatre. I also hear that we are to have the National Institute of Agricultural Engineering receiving a grant from the Government at a time when not merely is the agricultural engineering industry booming, but when farmers are also doing very well.

We now have a Bill under which£5 million is to be given to the film industry. Members have rightly referred to the risky nature of the film industry, and therefore it is surely an appropriate field for private enterprise and for the free play of those forces which enable private enterprise to work. The quota of British films has been fixed too high, in my opinion, if, indeed, the British film industry cannot supply the films that are required. On the other hand, having fixed the quota too high, I should have thought that with an assured market there would be no difficulty in financing the film industry. But it seems, owing to the rigid state into which the industry has got in regard to production, distribution and exhibition, it is impossible to show even a good film for more than the normal period of one week in a cinema outside the West End, or to vary the charges of seats to recoup expenditure on a really expensive film. Thus, we see a number of factors which should be flexible becoming rigid, making it impossible for private capital to come into the industry.

The real reason why private capital is reluctant to enter the industry is because of the present state of the economy; because it is not worth while taking the risks we are all agreed are necessary and inevitable in film production. Cheap money has undermined much of the financial structures of the City's lending institutions. We have capital control and high taxation on all profits. If we are to have risks and the risks are to be taken, there must be adequate reward for success, but, as it is, the Government take all the reward out of successful risk-taking and make sure they still have their cut when losses are incurred through the savage imposition of the Entertainment Duty.

The Government get it both ways; they take the money out of successful ventures and a percentage out of unsuccessful ventures, and then Members opposite come along and blame private enterprise, saying what a state private enterprise has got the industry in to. It is the Government that have got the industry into this state by their financial policy, and this will not be the only industry to go this way if they continue as they are doing.

It is a further bad sign that the Corporation to be set up under this Bill will be giving loans that must be repaid, instead of entering into the equity of film production. The Government seem to have a great preference for loan capital in all forms of industry. It is easy for a well-established firm to get a bank overdraft, or to raise debentures, or to persuade the Capital Issue Committee to grant the issue of preference shares, but the Government seem to regard ordinary shares, which provide a share in the risk, as something immoral. The Government are determined to saddle the film industry with loans which must be repaid within a comparatively short period.

Clause 2, for example, provides that such loans must be repayable to the corporation within five years from the date when the money is lent. Many successful businesses in this country could never have survived if they had to repay all their loans within five years. That is a very onerous condition to impose upon a risk-taking enterprise. What we really want, if we must have Government interference, is for them to take a share in the risk. It is no use if they make themselves super-bankers, offering the equivalent of a bank loan on suitable security for redemption, as is being done here. If the security for repayment is really good enough for a Government loan, it would certainly be good enough for the banks and insurance companies which, we are informed, are reluctant to make the necessary advances at the present time.

I should very much like to vote against this Bill tonight, because I believe it is wrong in principle and wrong for the industry, but I recognise that we have reached the stage where the short term problem bedevils the long term problem, and if we are to look only at the long term problem the industry might die in the meantime. Something must be done now, and be done quickly, and, therefore, I feel that we must accept the arrangements which the Government propose, unsatisfactory though I believe them to be.

We have to remember the importance of satisfying the British public, who like to have their programme changed every week or oftener. We have to remember that going to the pictures is a well-established institution which is not to be broken up lightly, and must properly be catered for even at the taxpayers' expense. We must also remember the world wide reputation that British films are creating for themselves and also their propaganda value, because every British film shows something of our way of life, our gentle courage, our powers, and the many other characteristics which steal out unconsciously from our best films to make a great impression abroad.

Then there is their cultural and artistic value and how they produce in all parts of the world a growing understanding of what we think is beautiful and fine about our people, our country, and our cities. I feel that the Bill must go on and the loans too, despite the vagaries of the economy. Nevertheless, I hope very much that this will be the very last Bill of its kind.

7.33 p.m.

Mr. Wyatt (Birmingham, Aston)

I am afraid that I find it very difficult to make head or tail of the speech of the hon. Member for Altrincham and Sale (Mr. Erroll). He thought it was very unjust of the Government to tax the industry so heavily that it could not make any profit and equally unjust to return some of that taxation in the form of a loan. At one stage he wanted the Government to assist this private enterprise industry and at another stage he wanted them to leave it alone altogether. That has frequently happened in the past. Hon. Members opposite are anxious for the Coal Board to make a profit in one year, but they say it is unreasonable for the Government, while loaning this money, to ask this industry to make a profit in five years. The whole speech is such a mass of inconsistencies that I am sure the hon. Gentleman would not want me to deal with it in great detail.

Mr. Erroll

Surely the Corporation are asking for the return of the loan within five years, not just for the interest on the loan?

Mr. Wyatt

Surely the hon. Gentleman understands that when a film is made it is, in itself, a product. Once it has been shown for five years, it is bound either to make a loss or a profit. All that it is going to sell, it will sell within that period, so that it is not unreasonable to ask for the return within five years of the money loaned. The other contention of the hon. Gentleman was that the Government put the film industry into its present plight. I am sorry that the hon. Gentleman was not here when his hon. Friend the Member for Wood Green (Mr. Baxter) described his own experiences in the film industry before the war. It is a well-known fact that the present difficulties have nothing to do with this Government, nor did this Government introduce the Entertainments Duty. Mismanagement in the industry brought it to its present pass.

The President of the Board of Trade ought to be congratulated on the enormous interest in this industry which he has taken during the last one and a half years. He has evinced a greater interest than any previous President of the Board of Trade, and it shows his great awareness of the importance of this industry in our national life. I understand and sympathise with him in his desire, when first approaching the industry to put money into it, to try to find some commercial means of assuring the money which, after all, is public money, and to be able to have some chance of getting it back. I understand for that reason why he chose to begin his operations by lending money through a distributor who had some tangible assets, and whose assets could be called in should there be a severe loss. But I think he himself fairly speedily realised the limitations of that method of trying to finance independent film production in this country. The part of this Bill, which the right hon. Gentleman described as being its teeth—and I want very much to agree with him—and the whole purpose of the Bill, is expressed in a half-hearted Subsection, which has to be dug out in order to discover exactly what the Bill is driving at. I and other hon. Members hope that will be put right.

I hope the right hon. Gentleman is going to act with much more speed in this matter than he has shown up to now. This crisis for the independent producer in the film industry has been going on for well over a year, and many complaints have been made about it in this House. We have never got the thing going properly yet, and I should like to quote what the President of the Board of Trade said in the House on 30th April of this year, which is now some eight or nine months ago: 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…will be such as to provide a means of guaranteeing"— these are the really important words— 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. Further on he said: On that basis I wish to call on the industry to go all out. …"—[OFFICIAL REPORT, 30th April, 1948; Vol. 450, c. 873–4.] Unfortunately, in those eight months this has in fact not happened. The independent producer has not been able to go all out, and was entirely led up the garden path by this encouragement given to him on 30th April, that if he had a reasonable project and object he could go straight ahead and not worry about the provision of finance. In effect, all that happened as a result of the establishment of the Film Finance Corporation was this very substantial loan to British Lion, which has been passed on to London Film Productions and two petty little loans of about£20,000 each to some minor distribution companies, which turn out two-reel comedies or something of that kind. None of the other independent producers have had money at all.

We ought to examine the situation for a moment so that we can see on what sort of line this new Film Finance Corporation will now proceed. It was quite right in the first instance for this money to be lent to British Lion, because it was essential that London Film Productions with its 14 or so associated producers, should be capable of meeting the competition which we have to meet, and if we are to keep going a film industry at all. It was quite right to do so, and I have no complaint about it whatever.

What is not sufficiently appreciated, and certainly was not understood at the time, was that the close link between British Lion and London Films, which is another name for Sir Alexander Korda, is such that money given to British Lion has gone only to Sir Alexander Korda and his associates in London Film Productions. The people who are on the Film Finance Corporation and who have lent this money to British Lion have no control whatsoever over the distributor to whom they have lent the money and over what he is doing about regulating all the independent producers to whom he is lending money.

I do not want to go into a lot of figures, but I would ask permission to mention one basic figure with regard to the position of London Film Productions. I have a list of nine of their most recent and best known films, made in recent months. The list includes "Fallen Idol," "Winslow Boy" "Anna Karenina" and "Bonnie Prince Charlie." Those nine films cost£3,825,000 to produce. This is a conservative estimate. As everybody knows who has had anything to do with the film industry, there are many different ways of turning out the cost of a film, depending on which end of the balance sheet one wants to be at the moment. One cooks the cost to some extent in that direction. I have this figure as a reliable one of the cost of those films.

Mr. Emrys Hughes

Would the hon. Member tell us the item for "Bonnie Prince Charlie."

Mr. Wyatt

The item for "Bonnie Prince Charlie" is£675,000, or thereabouts. This means——

Mr. Blackburn

Grossly unfair.

Mr. Wyatt

It is no good my hon. Friend saying that this is grossly unfair, because more than£1 million of public money has been given to this company to spend and we are entitled to know in what manner this money has been spent. It averages£425,000 per film to produce. We have already had it demonstrated to us very satisfactorily by my hon. Friend the Member for East Islington (Mr. E. Fletcher) and by others, that no film in this country is able to return a revenue of more than about£200,000, and it has to be a pretty good film to do that. We therefore start off with an average cost of more than£420,000 per picture. In order to make a profit on those nine pictures each of them has to make more than£420,000, or twice as much as it is possible to make in this country. It might be possible to do this if one has an extremely good film or if it were easy to sell one's films in America. It is not, and it has not been so for some time. It is therefore utterly ruinous for the film industry to continue on this sort of path and to continue this crazy spending on the production of films when they cannot get the money back.

Mr. Blackburn

On a point of Order. Is it in Order, Mr. Speaker, for an hon. Member to produce figures of fantastic sums which have not been expended at all, without producing evidence to support his own statement?

Mr. Speaker

The hon. Member for Aston (Mr. Wyatt) is responsible for his own arguments. I cannot make them for him.

Mr. Wyatt

If my hon. Friend does not like these figures, may I point out that I gave one figure in response to a question by my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) who asked me how much "Bonnie Prince Charlie" cost. I said that it cost approximately£675,000. An announcement issued by London Film Productions said that the film had cost more than half a million pounds. There cannot be a great deal between my figures and those which London Film Productions themselves are willing to admit. I have already said that I have not the slightest complaint about this money having been lent in the first instance to London Film Productions, because it was vital to keep Sir Alexander Korda and the 14 or so independent producers in production, to meet our quota and to keep the British Film industry going. It is essential that the Film Corporation should have some control over the way in which this money is spent, when it is lent out either to a distributor or to a producer. I have given the figures to show how foolish it is to suppose that an industry conducted on its present lines can possibly hope to recoup its outlay.

It is a very bitter thing for many independent producers, quite good independent producers, that, so far, they have not had any money at all from the provision made by the Government but only those associated with London Films and others. I welcome this Clause, which will enable money to be lent directly to independent producers.

Sir T. Moore

It does not say so in the Bill.

Mr. Wyatt

Indeed, it does.

Sir T. Moore

No, it gives authority.

Mr. Wyatt

It says quite clearly in the Explanatory Memorandum: To make loans to be employed in financing the production or distribution of cinematograph films, to be lent direct to producers. There is no dispute about that. The President of the Board of Trade himself said it this afternoon.

We need to examine the problem with which we are faced. When we look at the film industry, we see that we are concerned only with three main groups of independent producers, of whom there is not an awful lot anywhere. First of all, I should put those headed by Sir Alexander Korda, as being those who should be entitled to receive the money. I should next put those producers associated with Pilgrim Pictures, another film company, which has such people as the Boulting Brothers and Peter Ustinov. We can deal with those separately if we wish to. They are a convenient group. The third group, an equally important group of some seven or eight independent producers who have recently formed their own producers' association, and who have done a number of outstanding productions, have frequently not had a chance, after making a very successful film. Take a producer like Derek de Marney, who made a film called "The Gentle Sex." He has hardly had a chance to make a decent film again, because nobody has ever given him the money to do it with, and he had to meet great opposition from the rest of the industry.

Mr. Baxter

What about Michael Balcon?

Mr. Wyatt

Michael Balcon at present cannot be classified, in regard to the lending of money, as an independent producer at all. I agree that he is an independent producer, but he has money, because he has a contract which enables all his films to be shown and distributed, and enables him also to retain control over them. If he were to be in need of money or wished to have it, he would obviously be able to claim it in his own right.

Mr. Levy

The reason why I raised the question of the importance of a definition of the independent producer is because of the problem just raised by the hon. Member opposite. It is precisely what was likely to arise, and I would therefore ask why the hon. Member was not willing to accept the definition of the Gater Commission and to exclude independent producers who are only nominally independent but are virtually integrated in one of the three major circuits.

Mr. Wyatt

The reason why I include Sir Alexander Korda, and all the important independent producers and others grouped with him, is that although up to now they have been very closely linked with the British Lion organisation, they have not owned their own cinemas. They have not been able to support their distribution and production end with exhibition in cinemas in the same way as the Rank and A.B.C. organisations. I said that Sir Michael Balcon is an independent producer and if he wanted some money from the Corporation, he would be fully entitled to claim it in his own right, but the circumstances are such that he does not require it.

Mr. Levy

Does not my hon. Friend see that that is a very dangerous doorway? It is a means of supplying the major companies with finance through the back door of quasi independent companies.

Mr. Wyatt

I see what my hon. Friend is getting at. Obviously so long as Sir Michael Balcon's own contracts, as they are today, are closely associated with one of the big organisations, he does not need it and does not qualify for it. I am assuming a state of affairs in which he has broken away. It is only fair to Sir Michael to say that he is a person of complete individual integrity so far as his unit is concerned.

It is becoming almost dangerous to allow this money to be lent through the distributor only. I am not at all sure that the lending through the distributor should not be curtailed so far as possible because of the inability of a distributor to have control over the producer in the way of costs. If the two are very closely associated, it might lead to a control of the wrong sort, if a mutual shareholding does not exist. What is far better—I recommend the Board of Trade to experiment with this proposition—is to lend the money against a definite film or programme of films, so that they know exactly against what they are lending their money, and to lend it on a "vetted" cost system. They ought to have the budget before them.

It is nonsense for my right hon. Friend to say that we must not interfere in any way in the sort of film which is made, because that might imply some sort of censorship. If we are to lend money to the film industry, we must have some idea to whom we are lending the money and what films they are making. A previous speaker has emphasised the importance to this country of the impact abroad of films made here. If we are to have the frightful films sometimes financed by the Corporation, we might as well pack it in. I would rather the money went straight down the drain. We must have some idea of what is being financed and why it is being financed.

I agree with hon. Members who say that, provided a decent and honourable film with some prestige is made, it does not really matter if we lose some money; at any rate, it is better to lose money on that kind of film, than on a cheap and shoddy product. The Corporation might so organise itself as to be in a position to examine films produced or proposed by one of the groups I have named, either acting individually, or together in the case of the seven or eight independent producers. It might be easier to deal with them as a group, because they would be better able to put forward a programme of films, and that is better to back financially than one film at a time. Programmes should be put up by the three groups and the Corporation should lend money against the programmes when they have approved them. That does not imply censorship in the making of the story; it merely means that we have some idea of the sort of film to be made and some idea whether or not it is likely to be a successful and decent production.

Mr. Baxter

Is it the opinion of the hon. Member, as it is mine, that since the Film Finance Corporation, which has the Government's money, is not going to share in any way in the profit of the picture but only in the loss if the loan is not repaid, it is really the Government's intention to lose£5 million? If so, the country ought to know.

Mr. Wyatt

It is quite possible—I admit it freely—that we may lose£5 million. However, I do not believe it is necessary that we should lose it if the financing is done wisely against programmes of films. If one film makes a loss, we are likely to pick that up on another film, particularly at the present quota level which enables us to show a film much more easily in England. In any case, if we have "vetted" the cost to make sure that a reasonable budget is adhered to, we ought to be able to set the thing in motion sufficiently well with£5 million and recoup the money.

Mr. Baxter

We shall share in the loss.

Mr. Wyatt

Even so, I would rather accept the proposition that we are to lose£5 million over the next five years than not have a British film industry at all through not lending the money. I am sure that the hon. Member for Wood Green (Mr. Baxter) agrees with that.

The Film Finance Corporation ought to insist that the producers who come for loans should, after a reasonable period, be compelled to show that they are really serious in their intention to cut the costs of their productions. We have an utterly ludicrous situation now in which very few producers have any interest in cutting the cost of their production. If one gets a producer's fee of£20,000, it does not matter whether the production costs——

Mr. Blackburn

The hon. Member is talking like an ignorant person.

Mr. Wyatt

It is different if there is a profit-sharing basis between producers and directors and budgets are compared and a serious attempt is made to economise. I was pleased to hear my hon. Friend the Member for Eton and Slough (Mr. Levy) emphasise the virtues of the independent "frame" system which is sufficiently well developed to reduce the cost of a film from£180,000 to about£100,000. That is a practicable sum for a film in England because a profit can be made on it in this country. When the television facets of the system are developed, it may be possible to reduce the cost still further. We must face the fact now that we shall never get any of the frozen sterling out of the Americans. I admit that I thought we would do so at the beginning, but it looks clear now that we shall not get any of it. We must be prepared for the fact that the Americans are going to try to hold up British films probably for some time and we must meet our own needs ourselves and fill our own quota off our own bat.

7.59 p.m.

Mr. Emrys Hughes (South Ayrshire)

The hon. Member for Aston (Mr. Wyatt) dropped the question of the cost of film production just when it began to become most interesting. I wish he had pursued the question of the cost of "Bonnie Prince Charlie" a little further and given us a few of the details.

Mr. Blackburn

What does the hon. Member for Aston (Mr. Wyatt) know about it?

Mr. Hughes

I do not know what information he has about "Bonnie Prince Charlie" but he gave the cost as£675,000. That seemed to me a very large sum, and I should have liked an analysis of how it was spent. That£675,000 seems an enormous sum, as if the film cost a great deal more than the Jacobite Rebellion itself. I am sure Scottish Members will begin to look up at that rather extravagant estimate. If this is the sort of thing private enterprise is doing, the sooner we get it nationalised the better.

I am glad to welcome this Bill because it shows an attempt to put this industry on an intelligent basis, but I am not so sure that the President of the Board of Trade has made the necessary arrangements for the export market which will guarantee the success of this loan and ensure that we get back the capital, the sinking fund and everything. Look what happens in the export market. I think it was the hon. Member for Wood Green (Mr. Baxter) who said what a success "Hamlet" had been. I saw it in America and I am sure it is very much appreciated by the American public. It is an extraordinarily good film, but what guarantee is there that "Hamlet" will be permitted to be shown at Singapore?

I read an American film paper in New York and saw in it some very sharp criticisms of the Government of Singapore because not only had they banned American films but, impartially, they were banning British films. One does not object to the censor of Singapore banning, say, American comic strips or American sensational films, but when we read in the American Press that the censor of Singapore has banned "A Tale of Two Cities," I do not think that is the sort of encouragement which should be given to the British film industry. When I pursued the matter a little further, asking why "A Tale of Two Cities" came under the censor's ban, I was told it was because it contained scenes of revolutionary violence.

Mr. Baxter

It does, too.

Mr. Hughes

And it does, but I would remind the hon. Member for Wood Green that it also ends up with a very dramatic act of self-sacrifice on the part of the leading figure. If it is to be said that the new Film Corporation is not to make films containing scenes of violence, what about "Bonnie Prince Charlie"? If that is applied to all Dickens' works, I shudder to think what will happen when they come to Robert Bums and Walter Scott. I put a question to the Under-Secretary about the banning of "A Tale of Two Cities" and he has promised to get a list of the other films which have been suppressed. I asked him what were the qualifications of the censor and he said that the censor had been employed as a film censor for 13 years previously. I am almost driven to ask the question where this gentleman served his apprenticeship in film censorship; whether it was on this side or the other side of the Iron Curtain.

It is no good bringing in a Bill and being prepared to spend and invest this large sum of public money on British films, if this is the way they are going to be treated. I assert that if we are going into the export market there should be some real co-ordination between the best producers, the best artists and the best people who understand this industry. The stupidity of encouraging the censorship of films when we are putting British money into their production, is too ridiculous for words.

We have heard tonight stories of unemployment in the film industry and in that connection I want to ask one concluding question. The film industry has largely been concentrated around and about the film studios of London. I want to know where Scotland is coming into this, and whether Scotland will be sure of getting its share of the money which is being spent.

Mr. Scollan (Renfrew, Western)

Can the hon. Member tell me whether he has any idea of the cost of "Whisky Galore"?

Mr. Hughes

It is not a bit of good putting those questions to me.

8.5 p.m.

Mr. Wilson

I did not expect to be called at this point and I can reply only by leave of the House. If, as I trust, I may have that leave, there are many points from the Debate to which I should like to reply. I am sorry that we have not had a concluding speech from the Opposition, but the Debate this afternoon has, I think, shown a great degree of unity in the House on the need for this Bill. I think hon. Members in all sections of the House have welcomed the Bill. For the most part, I think they have regretted the necessity for it. They have certainly shown unity on the need to cut the productive costs of the industry; there is no doubt about that, whatever the minor issues—and I submit they are minor issues—which have divided us.

Certainly what has been said has cut right across all party divisions. This is, indeed, not a party issue and, speaking quite frankly, may I say that I have been not only encouraged but to some extent surprised by the line which has been taken by hon. Members and right hon. Members opposite in welcoming this Bill. I had expected that they might show some of the concern which they expressed when I announced this scheme on 22nd July. At that time, they seemed somewhat shocked by the suggestion that the Government should provide money for the use of this industry.

I think today's Debate, taking place, as it has done against the background of present conditions in the film industry, has shown that hon. Members in all parts of the House have felt that this is an industry which all desire to see re-establish itself. It is an industry which is going through a very difficult time and if there is anything this House can do by special loans of this kind, then the House, from all sides, would wish to take whatever action is open to it.

I was a little intrigued to hear the right hon. Member for Aldershot (Mr. Lyttelton), the hon. Member for Bury (Mr. W. Fletcher) and one or two others forecast with a great degree of certainty that this would involve a loss of money. The general tenor of what they said was that we must say goodbye tonight to the£5 million. I do not share that view myself, but I have noted the views which have been expressed and perhaps we shall all wish to refer to them on subsequent occasions when it becomes necessary for this House to hold an inquest into the financial results of this scheme. I see the hon. Member for Bucklow (Mr. Shepherd) is here and I am sorry that I had to get up so soon, for I am quite sure that I am voicing the sentiments of all when I say we should have liked to have heard what he had to say. That also applies to my hon. Friend the Member for King's Norton (Mr. Blackburn), whom I particularly wanted to hear, although we had the benefit of hearing him on this subject on a previous occasion quite recently—12th November.

If I may deal now with some of the general points raised, I should say that I was surprised to find this welcome for the Measure from the other side of the House. I think that if there was a criticism from the right hon. Member for Aldershot, and the hon. Member for Bury—and, indeed, from one or two others—it was that if the Bill had a fault it was that it was too cautious. The criticism was that it did not go far enough in dealing with the serious financial problem in the film industry.

The right hon. Gentleman the Member for Aldershot said that the Opposition did not propose to divide the House. I hope that nothing I may say in winding up this evening will alter their decision. The right hon. Gentleman did, however, express certain anxieties. First of all, he referred to what he called the contingency Clause; that is, that part of Clause 2 which says that, except in such classes of case as the Board of Trade may approve the Corporation is to loan to distributive agencies. This phrase "classes of case" is not an elegant phrase, I agree, but as I indicated in an interruption of the right hon. Gentleman's speech, the phrase was used rather than the word "cases" to indicate that the Board of Trade will lay down the general principles under which the Finance Corporation can finance production directly and not through distributors.

We were particularly anxious to use the phrase "classes of case," however ugly it may be, rather than "cases"; otherwise it would mean that every individual case would have to be submitted to the Board of Trade, that every script would have to be seen by us, and that we should have to pronounce whether Mr. A. or Miss B. would be suitable stars for a particular script. We might have had some rather difficult and, perhaps, embarrassing Questions and answers in this House about the Board of Trade's refusal to approve finance for a particular set-up, such as, for instance, "No Orchids for Miss Blandish," or a Question criticising the Board of Trade for providing finance in another case. I am quite sure no one in this House would want that to happen.

I agree with the right hon. Gentleman's remark that, if we are to finance production direct, it would be necessary for the Film Finance Corporation to set up a new organisation, with a great knowledge of the trade behind it, to vet individual scripts and projects and to decide not only whether the film could be made within the budget proposed, but also whether it would be likely to have the box office reception for which its sponsors hoped. I am in entire agreement with the right hon. Gentleman on that point. That is why, in the meantime, we are using those organisations already existing in the industry and which already have been set up by the distributors.

Another argument of the right hon. Member for Aldershot was referred to by a number of my hon. Friends, including the hon. Members for Eton and Slough (Mr. Levy) and Aston (Mr. Wyatt). The right hon. Gentleman asked how the individual producer looks at the position. The right hon. Gentleman said that the independent producer says that this is no change from yesterday and that he is still in the hands of the hard-faced distributors. But the way in which this Measure will operate is this: today there are very many genuine independent producers already in association with distributors, already able and willing to produce, who would be able to make more films, who are in the position that the distributors would be willing to finance the production of their films, but have not the capital to do so. Therefore, by introducing a broader basis of capital under the distributors, we shall get production which otherwise would have come to a stop. By the word "distributors" I mean, of course, only those distributors who exist for the purpose of financing independent production.

Both the right hon. Gentleman and the hon. Member for Bury said that we are taking the safe risk and not the risk which needs to be taken, that we are not financing the equity part. I think those: remarks were due to a misunderstanding. I do not want to mention individual companies but I must refer to British Lion because they have already been mentioned and, so far, have been the recipients of one large loan. British Lion, of course, are themselves undertaking the equity element in film production for a very large number of independent producers. The right hon. Gentleman referred to a figure of 50 per cent. In most cases, however, the banks are willing to put up to about 75 per cent. The highly risky 25 per cent. which remains is the amount which British Lion and other distributors are financing.

Mr. Blackburn

May I say, with very great respect, that I think it has been agreed in the Debate that today the figure from the banks is nothing like 75 per cent. I do not think they are willing to give even 50 per cent.

Mr. Wilson

I will come to the point about the banks. The position, however, is that until very recently they have been paying figures something like those. The equity element which is shouldered by bodies like British Lion and other distributors will be met indirectly by the Government in that the Government, through the Film Finance Corporation, are putting British Lion and others in a position to take on that equity charge.

When the right hon. Gentleman—and, I think, the hon. Member for Eton and Slough—said that Clause 2 will be a dead letter apart from the contingency Clause—the "classes of case"—I think they ignored the fact that the£1 million already advanced to British Lion under the scheme has enabled a lot of independent producers to carry on who would otherwise have had to stop production entirely. But for this Measure and the money which has been lent, there would have been a total stop in production by many independent producers. I think the most important question which was asked by the right hon. Gentleman and by a number of my hon. Friends was whether we intend to use the contingency Clause. Certainly, we intend to do so; but we should all agree that we must be very careful in its use and must spend a little time in drawing up the conditions for the finance of either individual production projects or of production companies. I think we shall need some kind of organisation of the kind referred to by the right hon. Gentleman.

Mr. Levy

And with most rigorous conditions for the distribution companies as well.

Mr. Wilson

Yes, with rigorous conditions for the distribution companies. The terms under which the Financial Corporation lends money to a distribution company is a matter for the Corporation, but I am certain that in lending this money it will stipulate that the advance is made under the conditions of some treaty with the distribution company providing that the company itself will exercise a very close watch and very close surveillance over the independent producers who are financed by it. If, however, the Film Finance Corporation as I hope, is to finance individual projects or production companies, it will need to have even more and closer guarantees itself, and will need to set up this organisation.

My hon. Friend the Member for West Nottingham (Mr. O'Brien) like the right hon. Gentleman, expressed his apologies that he would not be able to stay late this evening. I should like to thank him for his comments on the Bill and on the costs working party. One very important point he made was referred to by other hon. Members, and it is right that I should reply to it. He said that the figure of£5 million is not enough. I, personally think it will be enough to do the job; but if it is not, and provided the scheme is working satisfactorily apart from its inadequacy, I shall certainly be prepared to consider coming to the House with an amending Bill to increase that limit, as I did recently for the Export Credit Guarantee Department. In the argument about the inadequacy of the£5 million the hon. Member for West Nottingham made his calculations on the basis that it will finance only 15 to 20 films a year. Such calculations are based on a fallacy. We do not envisage that each film will be financed 100 per cent. by money from the National Film Finance Corporation. We expect and trust that banks will continue to play this vital part in financing production which they have traditionally played. In normal circumstances this would mean that not more than 25 per cent. of the cost would be borne by the Corporation.

Mr. Baxter

But then the Government come in with the top 25 per cent. That is like a second mortgage. It now seems that money is getting more insecure than ever.

Mr. Wilson

I was about to proceed to the question of direct finance to the producer when the hon. Gentleman stood up. We shall have to be very careful in the Corporation about the return of this money. In so far as finance is through distribution agencies, they will themselves be responsible for a substantial part of this end money of 25 per cent. It will come from the resources of the distribution company. It is a question only of providing working capital for the distribution company. That alone will be the function of the Corporation. Therefore, my hon. Friend was miscalculating when he suggested that the average financial assistance for production in respect of each film would be anything like 100 per cent. of the cost of the film.

I could not agree with him more when he said that in the effort to reduce costs we must not lower our sights too much. The hon. Gentleman said that we must produce—and I agree—representative films, both great and small. We must at all costs avoid a return to "quota quickies," or small-feature films. We must keep up our traditional standard. I am certain that we can maintain our traditional quality and produce a reasonable number of epic films at a somewhat lower cost than they are being produced today.

The hon. Member for Wood Green (Mr. Baxter) gave an interesting and amusing account of his experiences in the industry. I agree with what he said about shooting scenes as many as 18 times. I think there is far too much seeking after perfection in the shooting of sequences, many of which never even get on to the screen. As I have already said, I believe the film industry can get considerable help from the newly developed experience of our television studios. In film and television studios there are different forms of work. I am not suggesting that people do not work hard in film studios—they do, and they work very long hours—but in a television studio the degree of control which has to be exercised by the producer must put a tremendous strain upon him, because he has to run the show for two or three hours and then perhaps repeat the process a few nights later. Somewhere between the level of costs in our television studios, which provide excellent entertainment of first-class quality, and the costs of film studios there may be found a level which will correspond to something like the economic realities of the situation.

I will not follow the hon. Member for Wood Green into his discussion of the film finance agreement which was suggested to him in Hollywood. I feel that in the present agreement there is as much incentive for the American industry to push British films in America as there might have been under the proposals put to him. I was interested to hear the hon. Gentleman say that he thought the suggestions made to him would have formed the basis of a good agreement. I would refer him to the "Daily Express,' for which he expressed great affection, at the time when the agreement was published. If they found fault with the agreement then, how much would they have found fault with the kind of scheme which the hon. Gentleman has put forward today?

Mr. Baxter

I neglected to say that Mr. Meyer indicated that while the balances here could be frozen, they could be written off altogether eventually. That is an important point which I did not make clear.

Mr. Wilson

We were a little more careful to make certain that there was no doubt as to what was to happen to those balances at the end of the agreement.

My hon. Friend the Member for Eton and Slough drew a fair picture of the present state of unemployment and redundancy in the industry, speaking with first-hand experience and knowledge of some of his constituents' experiences in film studios. I agree with a lot of what he said, but I hope he will forgive me if I do not agree with what he said about independent producers. He was defining independent producers as the Gater Report defines free lance producers. I believe he said that producers associated with the British Lion group today are not genuine independent producers.

The definition of independent producers is an interesting question, but I do not think it is very important at the moment, because if we are to define independent producers in such a way as to exclude many of those associated with the British Lion group, we must ask ourselves whether it is not just as essential that they, too, should he kept in production, in the same way as any others whom we would call independent producers. If we define independent producers in a certain way, and say they should get first priority, we may spend a lot of time in dealing with them and condemn to idleness and inactivity those many important producers who are associated with distributing companies of one kind or another.

Mr. Levy

I entirely agree that definition is necessarily arbitrary. It has to be, but by my right hon. Friend's definition he decides how the money is to be distributed. The purpose of this Bill is not to put money into the pockets of the three major circuits. If it were so, I would not favour it. If the rather nebulous definition of independence which my right hon. Friend is putting forward were to be accepted, then G.F.D., for example, could nominate various producers who produce their films, and say they were independent and claim the money.

Mr. Wilson

If the financial position of G.F.D. became such that the production of those producers who were associated with them was drying up, it would be important to decide whether money should be made available to them, too. The money which has gone to British Lion has not gone to swell the revenues of the big circuits. British Lion are not in the circuit. They have producers, but were not able to continue production until money was made available. I entirely agree about the question of definition, but I suggest it is more a matter of timing.

The first thing was to deal with those independent producers who came to a full stop this summer. Although the problem bristled with difficulties the easiest thing was to make money available so that they could carry on production. If that had not been done then unemployment and redundancy would have been vastly greater than has been reported to us today. We should try to get away from the definition of independent producers, because the more we pursue that form of definition the more we shall get to the point where the independent producer will be defined as a producer who is not producing, so that he is no longer worth financial assistance. I do not wish to be unfair, but there is some danger of getting to that point in the argument.

I agree entirely with what my hon. Friend said about production costs. On the average, they should not exceed the probable net earnings of the films that are being produced. In this we have to allow for market output. The question of the distributors' "rake off" is, of course, fundamental, and because of it I do not think we shall get a real settlement on the financial side of the industry or any real economic stability in it until we have the report of the Committee that has been set up.

Mr. W. Shepherd

Can the right hon. Gentleman say what steps are being taken, in connection with the£1 million loan to British Lion, to ensure that the amount spent on any one film does not exceed the amount that can be recovered from the home market?

Mr. Wilson

That, I think, is a question which lies within the competence of the company and will lie within the competence of the Corporation. I would not like to try to answer it off-hand without notice tonight. I will not say it would be possible to give the answer to the question, but I will try to get the answer and perhaps at a later stage it will be possible for me to give it to the hon. Gentleman, but I am doubtful of the details one can give.

Sir T. Moore

Would it be possible to make a stipulation that a distributor's charges should be reduced by half, as suggested by many hon. Members this afternoon, before a loan is issued to a distributor?

Mr. Wilson

The question of distributors' charges in these cases, where the Corporation finances the distributor, is a matter which I am sure the Corporation will have very much in mind. One cannot tackle this problem of distributors' margins solely in relation to those distributors who get their money from the Finance Corporation, as other distributors are getting a particular percentage, or return, on films they handle. It may be that if one distributor's percentage is excessive, the other distributor's percentage should be considered excessive also. I do not want to prejudge the issue, because it is being considered by the Committee, and I would prefer to see what comes out of the inquiries made by the Committee.

The hon. Member for Bury made some kind remarks about the Bill. He called it "a brave attempt," which, I thought, was his kind way of saying that it was misguided. He also said he thought it was too small. Like the right hon. Member for Aldershot he also felt that tonight we should take an affectionate farewell of the£5 million. I do not share that view. Perhaps if I say why, I may also answer the hon. Member for Eye (Mr. Granville), who commented that I did not show my usual enthusiasm for the industry when I spoke this afternoon. It is a sad occasion because the industry is in the position that it cannot raise its finance through normal channels, whatever the reasons. The reasons may be many of the things mentioned by the hon. Member for Bury wartime difficulties, Entertainments Duty, and many other things.

Certainly high production costs are one of the elements in the situation, but I feel tremendous enthusiasm for the future of the industry and I hope I can reassure the hon. Gentleman. I do not think it requires a subsidy. In any case, even if it did, it would be quite wrong for anyone to come here and vote a subsidy for what with the best will in the world must be called an extravagant industry. I am sure the House would want to think several times before voting money on such levels of extravagance as we have to admit the industry has.

I believe that the industry will survive the challenge which is being made by the American industry. I do not think any of us should be under any illusions about the challenge which is being made. It is a challenge which is being fought with all that the American industry can bring to that fight. While I agree with a number of hon. Members who have said that the real future of the film industry, in its world setting, is one of closer cooperation between our film industry and the American film industry, I think it is unfortunately the fact that at present there are not the conditions between the two industries for that close co-operation we should like to see. I will do everything in my power to encourage that close co-operation, but our American friends must recognise the present situation of this country in regard to dollars. They must also recognise—and I am sure they will when they come to reflect on it—that we cannot sit down and expect to see a thriving, healthy, active, virile young industry confined to the size and proportion of screen time it was enjoying at the end of the war.

Mr. Granville

Does that mean that if we are prepared to give them fair opportunities for showing their films in this country, they should give our films fair opportunities of being shown in America?

Mr. Wilson

Well, they are tree to show their films to the extent of up to 55 per cent. of our screen time over here. I wish that we had anything like that percentage of their screen time, although I recognise that theirs is a much bigger market. One of the big difficulties between our industry and theirs—and I speak carefully—is the very poor showing which the Americans have made to carry out what was one of the essential things underlying the agreement of last March, namely, their aim to push the showing of British films to the maximum possible extent in the United States. We have to agree that the past few months have not shown that that has been very successful or that it has been pressed very hard. I know that there are difficulties; there may be faults on both sides; but I am quite sure that our industry, and indeed our people, will feel more confident about the future of Anglo-American co-operation in the film world if they can wholly feel that the American film industry and exhibitors are working a little harder to give our films the showing which I am sure they deserve.

I wish to assure the American industry that the Bill which we are discussing tonight is not one of the campaigns in the cold war to which an hon. Member referred. We do not recognise any cold war with the American film industry. We recognise certain difficulties which I hope will, given a sense of co-operation, be overcome. This Bill is not meant as any part of a campaign against American production; it is regarded by me, as I think it is regarded by this House, as an essential element in the programme of the revival of our film industry which hon. Gentlemen in all parts of the House have said today that they desire to see.

I wish once again to reaffirm my belief in the future of this industry. It can, I am quite certain, not only survive but expand the quantity of its production without any lowering of quality: but a first condition of that must be a determined attempt on the part of both sides of the industry to reduce costs of production. The steps which are already being taken to that end, and the measures which I am sure the Film Finance Corporation will insist upon in any loans it may make, will, I am sure, give us that reduction in costs which we all desire to see. I therefore trust that with such Amendments as the House may feel right to make at a later stage, this Bill will shortly become law, and I know that I can speak confidently tonight of my expectation that it will get an unopposed Second Reading.

8.39 p.m.

Mr. Blackburn (Birmingham, King's Norton)

I hope that the House will forgive me for speaking for a few moments, and in so doing ignoring entirely what the President of the Board of Trade said earlier this evening. I would first say, however, that I believe that what he has now said is absolutely true. I think that the House generally throughout the Debate has only wished he would go further, has approved of what he has already done and has only asked for more. That wish has come from the Opposition as well as from our own side of the House.

The main principle is a perfectly simple one. It is that we must have our own film industry and no one else's. Today we have got some one else's film industry. Here, in Britain, we do not produce half or anything like half the films which are shown in our own cinemas. I am a little surprised about the Debate, if I may say so to the President of the Board of Trade, that there has not been more indignation shown upon this subject. It is a little unfashionable today to be pro-British, but I say without any hesitation that I am exceedingly pro-British. I consider that 75 per cent. of the films shown in this country ought to be British films. I say that this House of Commons ought to revolt against the present situation in which most of the films in this country are either American or some other kind. I am horrified at a film which is being shown in this country called "Noose," which is a British film, but which tries to make out that London is like Chicago. The whole purpose of this film is to make out that we have gangsters here and to represent this country as being like America.

We have an excellent film industry here. We have the best technicians and the best producers in the world. We have people who can do everything that is required. My hon. Friend the Member for Eton and Slough (Mr. Levy), with whose remarks I agree generally, can write excellent plays, and excellent films as well. Not that I desire to sell his merits to the film world generally because he can do that far better than I.

Mr. Wilson

And we have the best stars.

Mr. Blackburn

Yes, and the best stars. I agree that we have the most wonderful actors and actresses and stars. I should confess a modest interest myself, and I should confess an interest which we all have, namely, that if this profession dies and the film stars die out, then we, as politicians, will inevitably be the most conceited people left in the world.

I would ask this question. We are talking about£5 million. What is£5 million compared with the£41 million which is taken by the Government in Entertainments Duty every year. I approve generally of the remarks made by hon. Members opposite.£5 million is a relatively trivial sum. I do not think that money of this kind will be lost. I have a personal friend, who has no interest one way or the other, who is associated with the investigations made by the bank, on behalf of my right hon. Friend the President of the Board of Trade, into the activities of one of the recipients of this Government money. In his opinion, the bank has been five times more difficult and five times more cautious than a private enterprise bank which formally financed the Corporation. In his opinion——

Mr. Wilson

I feel that I must correct any impression which may be gained from my hon. Friend's remarks. Any investigations which may or may not have taken place are not the investigations of the Board of Trade but of the Film Finance Corporation. It is no part of the duties of the Board of Trade to carry out such an investigation.

Mr. Blackburn

I appreciate the point of my right hon. Friend, and what I say is that these investigations did take place as a result of the corporation that my right hon. Friend set up.

We should preserve a sense of proportion. I am not at all sure that this Debate has revealed any real sense of proportion. Are we to have our own film industry or not? That is the issue. So far, we have been talking in trivial terms. May we lose£5 million of public money? I agree that is a very serious matter, but I am sure that that money will not be lost. I say that this House of Commons ought to have been British today and ought to have registered a definite statement that we are determined to see that 75 per cent. of the films shown in two years' time in this country are British.

Mr. Levy

How?

Mr. Blackburn

I am going to say a few words about that in a minute. I do not wish to go into details about that although I could very well do so, but I believe we should determine that today.

After all, what is our dollar situation? Every day every member of this House is receiving a loan from the United States which we shall never repay. We are getting£300 million a year—at the least£15 each a year. Every hon. Member is getting£15 a year as a gift—if we like to use that term—or a loan, which we shall never repay. I ask whether that is a desirable situation? Let us go a little further. It is to the great credit of the President of the Board of Trade that he has reduced the sum enormously, and negotiated what I am sure is on the whole a very good agreement—I hope he will forgive me for discussing it—but we are still paying 17 million dollars a year to the United States for American films. I ask the House, can we afford to pay 17 million dollars a year to the United States for American films?

Why should we not produce the films ourselves? I am sorry to be so innocent and to appear, as it were, to be a newcomer to this subject asking simple questions; but my own constituents ask these questions. They say that they would rather have more fat to enable them to cook their meals, instead of American films. I go further and say that this is a subject about which nothing like a sufficient sense of urgency has yet been created. We must fulfil our 45 per cent. quota and we must improve it very rapidly indeed. I regard all these proposals as chicken feed in comparison with what we as Members of the House of Commons ought to insist upon. We must have our own film industry.

I should like to develop the argument from another point of view. The party opposite and my own party all have interests in a lot of newspapers. We spend a lot of time making remarks here and we look in the morning to see whether our remarks have been quoted in the newspapers. [Interruption.] I am speaking for many people other than myself—many more. Of course one looks in the newspapers that one buys to see whether or not one's remarks are quoted. But far more important than the newspapers in influencing public opinion is the film industry. It is five times more important. Every investigation into this matter has shown that the film industry has a more profound effect here inside Britain, throughout Europe and the world in influencing public opinion than any other medium we have got.

I am exceedingly proud of what the British people have done during the last three years. Politicians are a little apt to call upon themselves the glories of what the ordinary people have done. [HON. MEMBERS: "Hear, hear."] That applies to both sides of the House. I am exceedingly proud of what we have done. It is vital that we should have a British film industry which is virile, which can maintain itself, which can be the leader of the European film industry and which can show to the peoples of Europe and America what manner of people the British are.

I apologise for not offering these remarks earlier. Nevertheless, I think that I ought to offer them now. I believe that the whole approach to this subject is utterly wrong. We ought to regard this industry as a first priority. I do not treat the British film industry as being a small thing to which half a dozen Members of Parliament should pay a little attention during a day. It is an absolutely vital industry. If we exclude our Defence Forces, I can imagine nothing more important for this country than that we should have the best, and most prosperous British film industry and the most exportable British films. That ought to be the determination of this House. If there was a sufficiently adventurous spirit in this country, it would be the determination of everybody who pays attention to this matter.

I now pass to the remarks of my hon. Friend the Member for East Islington (Mr. E. Fletcher). Producers must get a fair chance. Today they are starved. My hon. Friend the Member for East Islington is a man of great importance in the film industry today, as everybody knows. I had a little quarrel with him because he did not answer my question but, whether he answered it or not, there is this to be said. We have had many monopolists on the other side of the House. This is the first occasion in my view on which somebody who has a big interest in an industry has come to this House and has honestly confessed and told to the House the figures upon which the future of the industry is based. He has come absolutely frankly and honestly, and put vital figures before us. He said, quite rightly, that the minimum cost of a British film is£150,000. He also said that in order to get that money back we certainly must get back£110,000 in Britain.

In order to get£110,000 in Britain, we have to get£600,000 back as money at the box office, of which the Government get£240,000. What does this£600,000 mean? How much does the ordinary Englishman pay to go to the cinema? Probably a couple of bob at the very outside.

Mr. Carmichael (Bridgeton)

Scotland pays less.

Mr. Blackburn

My hon. Friend says that Scotland pays less. Well, let us say 1s. 9d. For the producer to get back his money, he has to make£150,000 net himself and has to have£600,000 paid at the box office. According to the hon. Gentlemen opposite, seven million people must see the film first. I say that this is a fantastic number; it means that one person in four of the film-going public must see the film, if the producer is to get his money back. That is the consequence of the figure given by my hon. Friend the Member for East Islington.

I want to turn to the remarks made about London Films. Some of those remarks were made by the hon. Member for Aston (Mr. Wyatt), and I very much regret them. I was personally responsible, together with the right hon. Gentleman the Member for Bassetlaw (Mr. Bellenger), for introducing the hon. Member for Aston to the Labour Party, and I was personally responsible, along with the right hon. Member for Basset-law, for introducing him to Birmingham. I think it is a little unfortunate that he chose to stab in the back the right hon. Member for Bassetlaw when he was Secretary of State for War. I have warned the hon. Member for Aston that I was going to make this personal attack upon him. I thought it was also a little unfortunate that, on the first occasion on which I wished to interrupt him, he refrained from allowing it to be done. May I say this about London Films? I have nothing particular to say in favour of them; they are the same as anybody else. There has been some talk about "Bonnie Prince Charlie." I would say to the President of the Board of Trade that it is very easy to kick a man when he is down, and that has been what has generally happened, but it is not a particularly good thing to do, and it is against British tradition and British spirit.

I would remind the House that we have had all this nonsense about "Bonnie Prince Charlie," which may do very well in Scotland, but I want to ask why the House of Commons should accept the judgment of the critics in advance of everybody else? I think Sir Alexander Korda is also entitled to be heard, because he now has two films, "The Fallen Idol" and "The Winslow Boy," both of which are highly successful films. Again, these criticisms of the general extravagance of the industry are utterly monstrous, and I am glad to say that the President of the Board of Trade has never lent himself to them, but has produced an entirely balanced approach to the problem, and has done all that he could to help those who are trying to produce for the benefit of the industry.

It has been suggested that the Government ought to prepare to face the loss, but that is a most unrealistic approach to the problem. It is not a question of loss at all. The figures which have been quoted about the banks producing 75 per cent. of the money for a film are absolutely ridiculous. No bank today would produce 25 per cent., let alone 75 per cent., of the money for a film, except against absolute security. The whole of this talk on the financial side of this industry in the House of Commons today, apart from the speech of the hon. Member for East Islington, who certainly knows what he is talking about, has been utter nonsense.

There is only one really stable element in the industry today and one company handling large sums, and that is the company with which the hon. Member for East Islington is associated, and I am proud to be an hon. Member on the same side of the House with him. He and the company with which he is associated are performing great services. They are a sheet anchor. I wish they would finance more independent films. I also wish it had not been necessary for my right hon. Friend to introduce this Bill today. Nevertheless, I am sure that my hon. Friend the Member for East Islington, after the wonderful appeals that have been made from all sides of the House, and in view of the unanimous opinion of the House that we must have a viable film industry, will be far more sympathetic to the claims of independent producers in the future when they ask him to lend them a little more money. I am sure he is only too willing to take all that into account.

With regard to costs of production, I entirely agree that they are far too great. I suggest to my right hon. Friend the President of the Board of Trade, who is a man with far too great responsibilities to be able to devote sufficient of his own time to this subject, that he ought, because it is of such vital importance, to call all the industry together. He ought to call Rank, my hon. Friend the Member for East Islington, London Films, Michael Balcon, all the gentlemen who have been mentioned, all the independent producers and exhibitors, and the trade union of my hon. Friend the Member for West Nottingham (Mr. O'Brien).

Mr. Wilson

The last thing I want to do is to interrupt my hon. Friend in his oratory, but perhaps it might save a little of his time if I remind him—perhaps he missed it this afternoon—that I did, in fact, meet all sections of the industry last Monday. We discussed very fully—and not for the first time—the question of production costs. For the reason my hon. Friend mentioned—that I have not the time—we agreed to set up a working party to go into the whole thing. I would, therefore, suggest to my hon. Friend that he leaves it in their hands for the moment.

Mr. Blackburn

I am entirely willing to do that, and I am grateful to my right hon. Friend for his intervention. I would point out, however, that it is important that this committee should be presided over by somebody very high-powered, preferably somebody outside the industry, and not merely a civil servant. If that is accepted by my right hon. Friend, then I have nothing more to say. [HON. MEMBERS: "Hear, hear."] I am afraid that I am being encouraged to go on a little longer. I will finish by saying to the hon. Member for Bridgeton (Mr. Carmichael) that he, as a pacifist, will never emulate Bonnie Prince Charlie.

Mr. Carmichael

I only rise to keep the records of this House correct. I would advise the hon. Member for King's Norton (Mr. Blackburn) that I am no pacifist. I do not say that in any threatening manner, but merely for information.

Question put, and agreed to.

Bill read a Second time.

Bill committed to a Committee of the Whole House for Monday next.—[Mr. Snow.]