CINEMATOGRAPH FILM PRODUCTION (SPECIAL LOANS) BILL (Hansard, 8 December 1948)

The Deputy-Chairman
The first four Amendments to this Clause, in the name of the hon. Member for West Fife (Mr. Gallacher) are out of Order, hut his fifth one is in Order.

§ Mr. Gallacher (Fife, West)
I was most concerned, Mr. Bowles, with those first four Amendments.

The Deputy-Chairman
The Money Resolution is very tightly drawn. It refers only to the production and distribution of manufactured films, and not to their showing, so that the hon. Gentleman could not even make a speech about their showing on the Motion "That the Clause stand part of the Bill."

§ Mr. Gallacher
I beg to move. in page 1, line 17, to leave out: on a commercially successful basis.' The production and distribution of films on a commercial basis will, I am sure, prove a big handicap to the production of the type of films we wish to encourage. As the Bill is drawn, distributors will be concerned more with box office successes than with the character of their films. The Money Resolution does not ensure the showing of all films, and good producers with good ideas, men who are often talked of as pioneers in new methods of expression and direction, will be severely handicapped. The making of loans to pioneers cannot possibly be regarded as a successful commercial undertaking, so it would not be a bad idea if the Government took back the Bill and prepared an entirely different scheme which would encourage the independent producers of very desirable films. While trying to cut down costs as much as possible, we should ensure, too, that once the films have been produced they will be shown. What is the sense of getting a distributor to encourage an independent producer to produce films when no provision is made for those films to be shown throughout the country?

§ Mr. Emrys Hughes (South Ayrshire
The hon. Member for West Fife (Mr. Gallacher) has put his finger on a very important point, and I hope the President will agree to the deletion of the words suggested in the Amendment. Some good films might not be produced if commercial success is to be the fundamental idea behind this Bill. For instance, a film shown in the House recently was a very good one which should have been shown all over the country. It was called "The World is Rich," and it showed Sir John Boyd Orr explaining his world food plan and putting the case for the International Food Organisation. It would not 399 have competed with "No Orchids for Miss Blandish," and would not have come under the definition of "a commercially successful basis," as mentioned in the Bill. I ask the President not to subsidise sensational films, but to encourage educational and cultural films.

§ Mr. Edgar Granville (Eye)
On the Second Reading of this Bill the President of the Board of Trade stated that it was not the Government's intention to subsidise this industry, and we have to accept that fact. Therefore, while we all sympathise with those films which may not be regarded from the box office point of view as being commercial successes, nevertheless this Amendment cannot be made. I do not know if the hon. Member for West Fife (Mr. Gallacher) had the feeling that Russian films shown in this country have not proved to be box office successes and, therefore, not commercial successes——

§ Mr. Gallacher
The whole idea of the Bill is to encourage the independent producers in this country. If I had paid more attention to the Money Resolution I would have had an Amendment down to allow independent producers to get their films shown in the cinemas of the country with the distributors getting their share through the Entertainments Duty.

§ Mr. Granville
The whole object of the Bill is to try to encourage the independent producers. An Amendment, which we will later consider, in the name of my hon. Friend the Member for Eton and Slough (Mr. Levy), safeguards the position of the independent producer. When we come to distribution, in the long run the independent producer, if he is not to be completely State subsidised, will have to depend upon the box office for the success of his picture. The best security that can be given to him is a fair crack of the whip from Wardour Street, the distributing organisations and the great cinema circuits. If they are prepared to consider each film on its merits, the independent producers' position is safeguarded. It is impossible, therefore, to make this Amendment and equally impossible to remove the commercial test.

Mr. McKie (Galloway)
As we have had three speeches from varying political 400 points of view, including two from Scotland, it might perhaps be appropriate if a Conservative member from Scotland put his point of view. I appeal to the President of the Board of Trade more on the lines of the appeal of the hon. Member for Eye (Mr. Granville). I hope the President will turn down the Amendment. I have considerable sympathy with some of the points which he made. I want to safeguard the position of the independent producer as much as he does, but we are dealing with public money, and I have not the same complete disregard for public funds as the hon. Member for West Fife. When the Government subsidise an industry it has to be shown how far the subsidy is successful by the results which will be produced. The President of the Board of Trade—and I am glad to see he is agreeing with me—would agree that it is far wiser to leave these words in the Bill.
The hon. Member for West Fife (Mr. Gallacher) knows perfectly well that it is the box office which at the end of the day will show whether a film has been worth seeing or not.

§ Mr. Gallacher
No.

Mr. McKie
The hon. Member says "No." We are in Committee, and it is open to him to follow me and point out where I am wrong. I thought he would have agreed that the success of a film must be judged at the end of the day, ipso facto, by how many people desired to see that film by purchasing tickets at the box office. The hon. Member went on to plead for the necessity to encourage the independent producer. I agree with the President of the Board of Trade that we have to be governed by the public interests in how we expend public money. I have not had the opportunity in London during the times when the House is not sitting of seeing——

§ Mr. Gallacher
If an independent producer had an idea and was capable of producing what was recognised to be a really valuable educational and cultural film, but it was quite obvious that it would not be a commercial proposition, would the hon. Member for Galloway (Mr. McKie) say that in no circumstances should he be allowed to assist in the production of such a film?

Mr. McKie
Certainly not, but here we are enunciating the general principle 401 that we are dealing with public money. Therefore, it would be unwise, the draft of this Bill having incorporated these words, for the President of the Board of Trade to withdraw them. When I was interrupted I was about to say that I had not had the opportunity of seeing a film which was produced with a tremendous outlay of money, and which deals with Scotland, entitled "Bonnie Prince Charlie." It received a bad Press though I am told that the photography was very good. Undoubtedly it must have resulted in a considerable loss of money, and as far as the West End of London was concerned it was not showing well. I use that by way of illustration to show what can happen. I hope the President of the Board of Trade will suggest to the Committee the propriety of leaving these words in the Bill and turning down the Amendment.

§ The President of the Board of Trade (Mr. Harold Wilson)
This Amendment aims right at the heart of this Bill and I hope it will be rejected. The essence of this Bill, which was agreed to in all quarters of the House on Second Reading, is aimed at providing temporary assistance to this industry in order that as quickly as possible it may put itself on a sound commercial basis. If at the very outset of the Committee stage we try to destroy that idea, then this Bill is not only doomed to failure, but, in consequence, the film industry as a whole is going to be very seriously affected.
I have a certain sympathy, as has the hon. Member for South Ayrshire (Mr. Emrys Hughes) and the hon. Member for Eye (Mr. Granville), with the idea put forward by the hon. Member for West Fife (Mr. Gallacher), when he referred to the difficulties of independant producers, among whom there are certain types of genius, who have some new idea and cannot get facilities for production for that idea. However, as I said on Second Reading, I am quite sure we cannot use public money for the purpose of finding out whether a particular producer is or is not a genius. In any case, I am sure public opinion would not countenance the expenditure of the taxpayers' money on an industry with a non-commercial basis when the industry is well known to have such high-class, and, in some cases, such lavish standards of expenditure in certain directions.
402 The hon. Member for West Fife said he felt there might be desirable films of great cultural value. Of course, it is just possible that some other members of the Committee and I would not agree with him as to what is a desirable or a cultural film. In any case, I do not think it would be right for a body set up with public money, voted by this House, to concern itself with deciding which are desirable and cultural films to be subsidised in this way. The hon. Member for South Ayrshire referred to an excellent film, "The World is Rich." That film has been produced. No one could say that it was not produced because of lack of money. As the hon. Member says, the big problem was the failure, not to produce but to get a showing.
4.0 p.m.
Any kind of subsidy on the lines suggested by the hon. Member for West Fife would not solve the problem of the exhibition of a film when produced. If there is to be a future for that type of film, and I join with the hon. Gentleman in hoping that there is a very big future for it, the problem is not that of providing finance upon a non-commercial basis, but of getting a fair show from exhibitors, and a fair return from them for the right to show the film. To go into that question would mean going into a matter which we shall perhaps discuss on an Amendment in the name of one of my hon. Friends, in connection with a committee of inquiry. I am sure that it would be wrong for me to recommend to the Committee to accept this Amendment. I hope therefore that it will be rejected.

The Deputy-Chairman
This Amendment is out of Order, and will not be called.

§ Mr. Benn Levy (Eton and Slough)
On a point of Order. If the Amendment is out of Order, may I be given the reason? I understand that the reason why the previous Amendments were out 403 of Order was that they dealt with exhibition. This Amendment does not do so.

The Deputy-Chairman
It is out of Order because it is outside the Title and scope of the Bill and outside the Money Resolution, and it seeks to encourage a company to enter into the business itself. A public charge is asked for in the Bill for the purpose of subsidising the production and distribution of films. The hon. Gentleman's Amendment is as completely out of Order as were the the others to which he referred.
Motion made, and Question proposed, "That the Clause stand part of the Bill."

§ Mr. Gallacher
I am sorry that the Minister did not accept my Amendment. I insist that it is a mistake to tie the hands of the Corporation and of the distributors. I am not suggesting that the distributors and the Corporation should subsidise film production, but surely if a film is being produced, the distributors and the Corporation must be satisfied that it would be desirable to have that film and to encourage it and to ensure its showing. Why should their hands be tied and they be prohibited from assisting a case of that kind? I cannot understand the attitude that has been adopted in connection with this matter.
I am certain that if they were given a greater measure of discretion and were not tied down by the box office they could easily get films that were worth showing. It is easy to get films that are not worth showing from the standpoint of morals, education and culture, and which should be prohibited. but which are a big box office draw. That is because of tastes that have been deliberately cultivated by certain sections of the film industry. We should remember that hon. Members on the other side of the House have never been very interested in free education for the people or in anything of that kind. [HON. MEMBERS: "Oh."] Oh, yes, there is a long history of struggle about the people getting education, and it has been a struggle against representatives of the other side.

The Deputy-Chairman
The hon. Member is going very much too wide in his argument. The Clause deals simply with 404 the finance related to the production and distribution of films. The hon. Gentleman must not re-argue his Amendment.

§ Mr. Gallacher
I will only say in conclusion that this is a further indication of how a valuable means of education can be held back by Tory commercialism.

§ Mr. Levy
On a point of Order. As the Amendment in my name has been ruled out of Order, I take it, Mr. Bowles, that I shall be in Order in speaking on the Clause and in pointing out some of the shortcomings in the Clause which it was the purpose of the Amendment to correct.

The Deputy-Chairman
So long as the hon. Gentleman confines himself to what is in the Clause, he may say that there are shortcomings and then he will be in Order.

§ Mr. Granville
Do I understand that you have ruled out of Order the Amendment in the name of the hon. Member for Eton and Slough (Mr. Levy)?

The Deputy-Chairman
Yes. That Amendment has been ruled out of Order and the Ruling has been accepted by the Committee. We are now discussing the Question "That the Clause stand part of the Bill."

§ Mr. Levy
During the Second Reading it was pointed out that one of the shortcomings of the Clause was that the purpose of helping the genuine independent producer would not be achieved. That was felt to be the case because certain conditions are imposed which make it necessary for a distribution company to pledge its assets before it can proceed. For that reason it was felt that they would do anything they could to raise money by other means and to dispense with that necessity. My own feeling has been that the terms imposed are not sufficiently stringent to safeguard public money. For that purpose I have on the Order Paper certain Amendments which call for more stringent conditions to make it still more improbable that the Bill will not achieve its objective and will become a dead letter. It would not be in Order for me to refer to the corrective which I have in mind.
There is an additional difficulty, which is to define what is an independent producer. During the Second Reading 405 and before, it was clear, as my hon. Friend the Member for West Fife (Mr. Gallacher) has said, that the Bill has been put forward with the design of helping the independent producers and it has been accepted as that, for very good reasons. It has been generally felt that this is the kind of industry in which a monopoly or a near-monopoly is highly undesirable and that by helping independent producers we tend towards some mitigation of the existing quasi-monopoly or near-monopoly situation. I do not think that it would be contended in any part of the Committee that a monopoly, either private or public, of a means of self-expression such as this, should be encouraged. One of the reasons which commended the Bill to the House was that it tended to mitigate the monopoly situation.
I therefore attempted to define what was an independent producer, or rather I borrowed a definition which was put forward by the Gater Commission. It was a strictly limited definition, and my right hon. Friend had no difficulty in subjecting it to a reductio ad absurdum. He said: 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."—[OFFICIAL REPORT, 2nd December, 1948; Vol. 458, c. 2275.] I cannot deny that it could be done, but any alternative definition on which the right hon. Gentleman might venture—he is being understandingly prudent in not doing so—could equally be reduced to a reductio ad absurdum. We are reaching the position where any of Mr. Rank's producers might be defined as independent producers so long as they had an independent right to choose their own directors. Surely, the definition ought to be one who is not integrated either de jure or de facto into one of the two major combines. Surely that is a sensible definition, although I agree that it cannot be a legal one. If we have that difficulty, it is a difficulty which can be got round by a method which I am prohibited from mentioning.
There is a further reason. At present, film-making is not a profit-making business. It has been demonstrated on all sides of the Committee that one makes a film with very small prospects of getting one's money back, but so long as it is 406 not a profit-making business, the £5 million which the Bill proposes to lend will either not be used, for the reasons I have given, or, as the right hon. Member for Aldershot (Mr. Lyttelton) implied, it may be lost. Surely therefore, it is very important that we should have adequate safeguards. I do not see any other method of applying those safeguards except through the means of the second Amendment in my name on the Order Paper, in Clause 2, page 2, line 38. That is a very second best and rather unsatisfactory method of doing it. I am in very great difficulty——

The Deputy-Chairman
Perhaps I may help the hon. Gentleman out of his difficulty. Some of his speech is more appropriate to the second Amendment, and he would not find himself in so much difficulty if he spoke on that. He has been rather wide on the Question that the Clause stand part.

§ Mr. Levy
I am grateful for that suggestion, Mr. Bowles, and I should like to take advantage of it.

§ Mr. William Shepherd (Bucklow)
There are one or two points I should like the President of the Board of Trade to clear up. I want, first of all, to know whether there is in existence or in contemplation a limit on the amount of money which could be loaned to one distributing company.

The Deputy-Chairman
That subject can be taken much more conveniently on the Question that Clause 2 stand part.

§ Mr. Shepherd
I have one or two other points which, I hope, come under this Clause. I want to ask the President of the Board of Trade whether a cooperative of exhibitors would qualify for financial assistance if it were established in the form of a distribution company similar to those operating at the present time. I think there is a solution to the problem of the film industry if the independent exhibitors get together and form their own renting organisation. If that happens, would they be able to receive assistance under the Bill?
I also want to know the attitude of the Government or the Corporation towards the circuits. Is it possible for circuits to get loans under the Bill? Let us take the case of the organisation of the hon. Member for East Islington (Mr. E. Fletcher) 407 which owns 447 cinemas, as against the Rank organisation's 550, and makes little or no contribution towards the production of films in this country. Could that company borrow money in order to play the part which it ought to be playing in producing films, or must it continue to try to give somebody else the sticky end and grab the profitable end itself. My last question relates to Members of Parliament. I notice that, apparently, Members of Parliament can be directors of the Corporation. At least, there is no specific exclusion. Is it in order for Members of Parliament to be directors of the Corporation?

§ Mr. Rankin (Glasgow, Tradeston
I have two points to put to the President of the Board of Trade which follow, to some extent, a case which has been put forward. An hon. Member has deplored that there is no provision for the production or distribution of cultural and educational films, which, I think, would be welcomed by the hon. Member for Galloway (Mr. McKie). I am sure that if the delights of Galloway were transferred to the silver screen it would result in a repopulation of an area which, I am certain, would be welcomed by the hon. Member who at present represents that part.

The Deputy-Chairman
No, the hon. Member for Galloway (Mr. McKie) cannot interrupt. The hon. Member for Tradeston (Mr. Rankin) has himself already been out of Order.

§ Mr. Rankin
I will leave that point. All I want to be assured about is the wording of the Clause. We can read it in such a fashion as to enable us to say that provision should be made by the National Film Finance Corporation for the production and distribution of films of this nature. There is nothing in the present wording to prevent the Corporation from carrying out the type of work about which the hon. Member for West Fife (Mr. Gallacher) has spoken. As I read the Clause, they have that power, provided that it can be carried out on a commercially successful basis, and there is no reason to assume that it could not be. I suggest that the Clause enables that to be done.
408 The second point relates to the granting of money by the National Finance Corporation when money cannot be obtained from any other appropriate source. If an independent producer comes forward with a proposition for which he has been unable to get financial backing from what is called "an appropriate source," would the Corporation use that as an argument for saying that they in turn could not provide money for the purpose? As the words stand, that argument might be used against an independent producer. Will my right hon. Friend give us an assurance that that type of argument will not be used?

§ Mr. Eric Fletcher (Islington, East)
May I raise a point of general interest in view of the discussion initiated just now by the hon. Member for West Fife (Mr. Gallacher)? I think the President of the Board of Trade was perfectly right in resisting that Amendment, because it is the underlying assumption of this Bill that the public money which will be advanced to this Corporation will be used on a commercial basis. In view of the discussion, I think that this Committee and the public ought to know from the President of the Board of Trade rather more than we know at present about the matters in respect of which this Corporation will have to exercise its judgment. As I understand the wording of the Clause, the Corporation will have the right to lend sums of money to persons engaged in film distribution to enable those persons to have a sufficient amount of credit to finance production or distribution.
There seems to have arisen from this discussion a misapprehension in the minds of certain hon. Members, and I am raising this matter in order that the President of the Board of Trade may correct me if I am wrong. As I understand the language of the Clause, it will not be for the Corporation to say. "We think that such and such a projected film will be a good film—or will be a commercially successful film—or will be the kind of film which we think ought to be made." If that is the duty which is being cast on the Corporation, we should know, because it is a pretty thankless task since the ultimate arbiters of public taste are the public themselves; they will be the final judges whether whoever decides to make films, A, B and C has exercised his judgment correctly.
409 As I understand it, all the Corporation has to exercise a discretion about is whether the people to whom it will lend the money are people whose prestige and reputation are such as to make it seem a reasonably prudent course to lend money to them. This is important because questions will no doubt arise hereafter as to how far questions can be raised in this House with regard to the administration of this money, and with regard to the exercise by the Corporation of its judgment.

§ Mr. Gallacher
The hon. Member has great experience and he says that the people must be the final judges. How is the distributing agency to form any opinion as to whether a film to be produced by an independent producer will or will not be commercially successful?

§ Mr. Fletcher
Does the hon. Member mean before the film is made or after?

§ Mr. Gallacher
Before.

§ Mr. Fletcher
Obviously one cannot tell before a film is made how it will be when it is made.

Mr. McKie
I should not have risen but for the intervention of the hon. Member for Tradeston (Mr. Rankin). I shall only refer to the first part of his speech, Mr. Bowles.

The Deputy-Chairman
The first part of the hon. Member's speech was out of Order.

Mr. McKie
With great respect, Mr. Bowles, the hon. Gentleman was allowed to say certain things before he was called to Order.

The Deputy-Chairman
It was ruled in the pluperfect that the hon. Member had already been out of Order.

§ Mr. Blackburn (King's Norton)
There is a point of considerable substance here which may be overlooked, and which turns upon the definition of the persons who may receive money. As I see it, this Bill only gives the Corporation power to advance money in respect of one film. That seems to me to be a mistake, and I cannot believe that the President of the Board of Trade intended it or that the Committee intended it. This Clause says the money can be given to persons who, in the judgment of the Corporation, while having reasonable expectations 410 of being able to arrange for the production or distribution of cinematograph films on a commercially successful basis…. I understand that so far it has been the practice of the company to follow this. In other words, the Corporation will not grant money to an independent producer who comes forward with one film only. I should like clarification of this matter. If I am wrong, I shall be only too delighted to know. Our main object is to try to give the small man a chance, and it would be ridiculous if we gave a man a chance only if he proposed to make more than one film. If the object of the Clause is, as we all agree, to give independent producers a chance, the smaller the independent producer the better, and if he makes only one film, then on certain conditions as to cost, that ought to be possible.

§ Mr. S. O. Davies (Merthyr)
Once this Corporation is established, what powers will Parliament have, through the President of the Board of Trade, over its activities? Will Parliament be free to seek information and to discuss the administration of the Corporation?

The Deputy-Chairman
I think the speech of the hon. Member will come better on Clause 3.

§ Mr. Davies
I thought that since we were discussing the Corporation on Clause 1 and, as it were, bringing it into being, I should be entitled to have an answer now. If Clause 1 is passed, I might be ruled out of Order on Clause 3 because the Corporation has been disposed of previously.

The Deputy-Chairman
No. The Corporation is formed under this Clause, but Clause 3 provides for the Board of Trade to give directions to the Corporation, etc. I think the hon. Member will find that is the right place.

§ Mr. Granville
Does it mean that a new distributing or renting company can qualify under this Clause for the provisions of the Bill if it is set up after the passing of this Measure? I will not refer to the Amendment which was rule out of Order, but it is important to know that a new renting and distributing organisation would be allowed to set itself up under Clause 1. With regard to the persons 411 from whom the members of the Corporation will be selected, the Clause says that they must have experience in matters relating to finance, industry, commerce, administration or law. Is it intended also to co-opt somebody with experience and knowledge of films?

§ Mr. Wyatt (Birmingham, Aston)
May I address myself for a moment to the following passage in Clause 1: having reasonable expectations of being able to arrange for the production or distribution of cinematograph films on a commercially successful basis… I hope that the President will tell us exactly what is meant by reasonable expectations of making a commercial success. Hon. Members opposite, and also my hon. Friend the Member for East Islington (Mr. E. Fletcher), have been emphasising this afternoon that the ultimate test of a film is whether or not people will pay for it at the box office. I submit that this is not a correct test to apply in this particular case. It can well be applied to the case of, say, national newspapers or periodicals or things that can be produced fairly cheaply and do not need a tremendous bulk sale in order that they may be published. I am sure the noble Lord would not want to enter into a field of inverse censorship, which he would be doing——

§ Earl Winterton (Horsham)
Perhaps the hon. Gentleman will be good enough to leave me out of the discussion. I have not taken part in it and I have no intention of doing so. My listening to what has taken place so far has not given me a very favourable impression of the Committee.

§ Mr. Blackburn
On a point of Order, Mr. Bowles. Is it in Order for an hon. Member to make remarks which are insulting to the Committee as a whole?

The Deputy-Chairman
As the remarks of the noble Lord appear to have been a reflection on the Committee of the Whole House, I think he should qualify what he has just said.

§ Earl Winterton
The hon. Member for Aston (Mr. Wyatt) referred to me. I have not taken part or made any Interruptions in the Debate and I said 412 that the effect on my mind was not a favourable one. Do you rule that that was out of Order, Mr. Bowles?

The Deputy-Chairman
I think the noble Lord went very much further than that. He said he had a very unfavourable opinion of the Committee.

§ Earl Winterton
I am very much obliged to you, Mr. Bowles. I quite agree it was an unfortunate phrase, that the effect of my listening was not a favourable one.

§ Mr. Gallacher
Further to that point of Order. As the noble Lord has made a comment on the low level of the Debate, is it not desirable that he should be brought in, in order to elevate the level of the discussion?

§ Earl Winterton
I should now like to raise a point of Order myself. Is it not quite unusual, when an hon. Member is accused—in my case, I admit, very rarely—for there to be no interruption? My name was brought into the discussion and I should like to know what I have to do with this particular Clause?

The Deputy-Chairman
I do not think that is a point of Order. It is quite a common thing, as the noble Lord is aware, for hon. Members to refer to other hon. Members who have not spoken in the particular Debate or even in this Parliament.

§ Earl Winterton
May I raise a further point of Order, Mr. Bowles? I am anxious to get your Ruling completely clear. I understand that you do not rule that there is anything wrong in my rising to refute what the hon. Member had said and that it was only my method of approach to it which you thought was, perhaps, undesirable.

The Deputy-Chairman
I think the noble Lord was casting a reflection on this Committee of the House. That was quite out of Order and I so ruled.

§ Earl Winterton
I am quite prepared to withdraw but, for future reference, I should very much like to know—it is a matter I might want to raise on another occasion—what were the exact words which you thought reflected on the discussion. I said that the effect of the discussion on my mind was not favourable.

The Deputy-Chairman
I thought the noble Lord said that he had a very unfavourable view of the Committee. That was wrong, and I think he has withdrawn once. If he did not understand what he was withdrawing, perhaps he will withdraw again.

§ Earl Winterton
I will most certainly do so. I should like to say that the effect of the discussion upon my mind was unfavourable and I am very anxious, Mr. Bowles, if you would be good enough to do so, that you should now tell me, on a further point of Order, if that statement is in Order.

The Deputy-Chairman
I do not think the noble Lord has withdrawn his previous reflection on the Committee.

§ Earl Winterton
I had already withdrawn, Mr. Bowles, and perhaps I may be allowed to thank you for your great courtesy in calling my attention to the matter.

§ Mr. Wyatt
I am very sorry that the noble Lord did not intend to get dragged into this Debate because at the moment he seems to be in it right up to the neck.

§ Earl Winterton
On a further point of Order, may I say that, the Chair having called my attention to what the Chair described as being out of Order, I at once withdrew to the Chair and not to the hon. Gentleman. If the hon. Gentleman wishes to pursue this matter at the risk of having several more points of Order, we can keep them going, if necessary, for half an hour and I shall be glad to do so.

§ Mr. Levy
On a point of Order. As I understand it, the noble Lord previously apologised for his impertinent strictures upon the Committee. Now, as I understand it, he is withdrawing that apology to the Committee and trying to reduce it both in quality and in quantity.

The Deputy-Chairman
I think we ought to get on with the Debate.

§ Earl Winterton
I desire to call your attention, Mr. Bowles, to this further reflection which has just been made. You, Sir, very graciously accepted the withdrawal—if I may so say, the very proper withdrawal—that I made and the hon. Member for Eton and Slough (Mr. Levy), under the guise of a point of 414 Order, has made a most offensive attack upon me. He has described my statement as impertinent. When an hon. or right hon. Gentleman has withdrawn a statement is it in Order for another hon. Member to get up and further press the matter by describing that statement as impertinent?

The Deputy-Chairman
On the whole, I think that the hon. Member should not have done so, but I do not think he was out of Order. Now, can we get on with the discussion? Mr. Wyatt.

§ Earl Winterton
May I ask you, Mr. Bowles, whether it is or is not out of Order? I have always understood that when a statement—made inadvertently and, as I have said, not intended to be a reflection—has been withdrawn, the matter was then disposed of. The hon. Gentleman has now got up and, under the guise of a point of Order, has stated, without any rebuke from you, that my action was impertinent. I would respectfully ask you whether he should be asked to withdraw.

The Deputy-Chairman
I think it would be much more sensible if we got on with the Debate.

§ Mr. Wyatt
Whatever may be our views on the Clause, there is no doubt that had the last seven or eight minutes of our proceedings been screened they would have been an undoubted comrnercial success.
The point I was trying to make—I dare not even refer at the moment to a certain right hon. Gentleman opposite—was that it would be a mistake to impose too much duty on the Corporation to satisfy itself that the film or films to be financed would be definite commercial successes. I was trying to explain that in the world of newspapers, periodicals or other means of communication and information, it is comparatively simple to start a means of communication with a small circulation, so that all classes of the community may receive such matter as they would like, of whatever kind, even if it were Trotskyist, esoteric or anything else. With a film, however, this would be very much more difficult. If, because the costs of producing a film are so high, there is imposed a heavy onus to make quite certain before the film is produced that it will be a box office 415 winner, we may be depriving large sections of the community of the opportunity of seeing a certain type of film which they want to see because of the feeling that it may not be commercially successful.

§ Mr. H. Wilson
A number of points have been raised in this discussion. I hope I shall have a chance to reply more fully to some of them when we come to Clause 2. Many of the questions about the Corporation's procedure and course of action might be more fully dealt with at that stage.
The hon. Member for West Fife (Mr. Gallacher) returned to his point about films of cultural value. I want him to get out of his head, if he will, the idea that films of great cultural value are not being made at present, even at a loss. The general tenor of his remarks suggested that under the present organisation of the industry no film can be made if it involves a loss and that, therefore, the Corporation ought to step in to finance the production of such films. Without making any invidious comments——

§ Mr. Gallacher
Is it not clear that if it were certain that a film would be a commercial success the boys on the other side would be on it and, therefore, a Corporation of this kind would not be needed?

§ Mr. Wilson
What the hon. Member for West Fife really means, I think, is the film industry. That was a roundabout way of referring to them.

§ Mr. Gallacher
No, I was referring to finance as represented by the other side. If they are certain that a film will be a commercial success, they will be in on it to reap the profits.

§ Mr. Wilson
I do not want to pursue that very long and interesting subject this afternoon. What I was saying, and what the hon. Member for West Fife (Mr. Gallacher) does not seem to realise, is that there are many films of great cultural value which, apparently, under present conditions can only be made at a loss, and are being made at a loss, by existing firms in the industry. If the noble Lord would allow me, I was going to call him as a witness on this and I hope he has got over his hypersensitivity on the point.

§ Earl Winterton
May I say, without being hypersensitive on the point, that I hope the right hon. Gentleman will not cause me inadvertently to say something in reply which would be out of Order?

§ Mr. Wyatt
Is it in Order for the noble Lord to threaten to hold up the Debate by raising points of Order for half an hour, or something of that kind, if something is said with which he does not agree?

The Deputy-Chairman
I do not think the noble Lord said anything of the kind, but he said that he might be provoked into replying and might, inadvertently, be out of Order.

§ Mr. Wilson
What I was going to say could not have provoked the noble Lord to get out of Order. I was going to say that the Rank organisation, and the same is true of the Alexander Korda organisation, have been responsible for films of great cultural value, which have been produced at a loss, and it was known before production was started that there would be a loss but they contributed to the prestige value of British films abroad. If films of this kind are produced, the idea must be to recoup the losses by films of perhaps a different type.
My hon. Friend the Member for Eton and Slough (Mr. Levy), skating delicately round the Amendment which was not called, raised a question about distribution, and a number of other questions of a different kind were raised by the hon. Member for Bucklow (Mr. W. Shepherd), the hon. Member for Eye (Mr. Granville) and one or two other hon. Members. I hope I would not be out of Order if I said that if a new distribution company were established and if it were engaged in financing production, it could certainly receive assistance from the Corporation. For instance, if the freelance producers were to get together in order to form a distribution agency, or if the independent producers got together to form such an agency, and that agency required capital for financing a project, it could go to the Corporation. What the Corporation cannot do, is to take the initiative in establishing such a distribution organisation, nor would it be empowered to spend money in encouraging any of the ancillary services required for setting up a distribution agency. Undoubtedly any 417 new agency to be established could go to the Corporation for assistance.
My hon. Friend the Member for Eton and Slough went on to the very interesting point, which he has discussed before, of the definition of the independent producer. He rather suggested that I had been cautious in not venturing a definition, but I have ventured a definition of independent producers earlier this year in reply to a question by my hon. Friend the Member for Aston (Mr. Wyatt). It was necessary to have a definition of independent producers in connection with the operation of a Section of the Films Act passed this year, which relates to the showing of such films on the major circuits by independent producers. My definition, which must be a rough one, is that for the purposes of convenience we might take producers not connected with the major circuits or American film interests. But I am not certain that that is very relevant to this Bill. As I said on Second Reading, one of the most important things arising out of the scheme described in the Bill has been the maintenance in production of a number of producers who might, or might not, fall within the definition, but whose production is vital to the maintenance of the cinema industry in this country.

§ Mr. Levy
The point my right hon. Friend is making is that if we want to help the industry, that should not exclude helping the major combines as well; but, after all, the Bill has not been presented in that fashion, but as a Bill to help independent producers. I can quote my right hon. Friend on that in his Second Reading speech.

§ Mr. Wilson
I can quote myself on it, but the point is that there are a considerable number of independent producers, not in any way directly associated with major circuits, who, if given the finance, could produce against the production guarantee of the organisations, but are prevented from doing so by lack of finance, and with that group I was more concerned than with the major producers of the big circuits. I believe I have answered the hon. Member for Bucklow, but he also asked if it was possible for Members of Parliament to be members of the Corporation. If he turns to the Schedule, 418 he will find they are not eligible for appointment.—[Laughter.] I do not know whether the right hon. Member for Aldershot (Mr. Lyttelton) has ambitions in that direction, but he could always resign his seat and consider it.
My hon. Friend the Member for Tradeston (Mr. Rankin) raised a very interesting point in connection with the phrase "commercially successful basis," and asked whether a failure on the part of a particular producer to be able to raise money through normal commercial channels would be quoted against him as meaning that his project was not in fact commercial. The answer is quite definitely "No," because if that kind of answer could be given there would be no need for a corporation. The Corporation is being set up to fill a gap in the provision of money for film production.

§ Mr. Gallacher
This is very important. Are we to take it that if the ordinary financial concerns are satisfied that it is not a successful undertaking, the Corporation have the power to loan money, with the knowledge that outside financiers consider that it will not be a success?

§ Mr. Wilson
The hon. Member has got it wrong again. The whole point is that it is possible for a film, or a batch of films, to be capable of being produced on a sound commercial basis, but still possible for the producer not to be able to raise the money through normal channels. There is a lack of confidence and, although the thing may be commercially sound, there may not be means of raising money for it. That is why the Corporation is to be established.
My hon. Friend the Member for King's Norton (Mr. Blackburn) raised a question which would be better raised on Clause 2. He asked whether the wording of Clause 1 prevents the financing of individual projects. He will find from what I said on Second Reading that the wording does not in any way prevent the financing of a project of a single firm. The hon. Member for Eye asked a question, having read out the type of person who shall be appointed, whether this means that we shall be able to co-opt someone with knowledge of the film industry. Of course, a person could be co-opted under the phrase matters relating to finance, industry, commerce and so on. 419 But I should be very chary of appointing anyone from the film industry, because they must have a certain interest in a circuit, or American interests, or particular groups of one kind or another, and it would be extremely difficult to find any one person in the industry sufficiently independent to help in the work of advancing money for film production. It may well be that one or more of the persons appointed may have some knowledge of the film industry but I do not intend to appoint any one directly from the film industry.

§ Mr. E. Fletcher
Will my right hon. Friend deal with the point which I raised, and say whether or not it is any part of the function of the Corporation to deal with the merits of any particular film which is being produced, or whether their concern is merely to approve the reputation and prestige of the distributor to whom the money is to be lent?

§ Mr. Wilson
That was one of the questions to which I was referring when I said that I thought certain matters could be better dealt with on Clause 2 than on this Clause. Perhaps my hon. Friend will leave the matter until we reach Clause 2.

§ Mr. Oliver Lyttelton (Aldershot)
I beg to move, in page 2, line 29, at the end, to insert: (3) The Corporation may make a loan to any person in respect of whom the circumstances set out in paragraph (b) of subsection (1) of section one of this Act apply for the purpose of financing the production of a cinematograph film and in considering the propriety of making such a loan shall have regard to the sufficiency of the security for its repayment: Provided that a loan shall not be made under this subsection unless the Corporation are satisfied that the person to whom the loan is to be made will himself bear not less than one quarter of the total expenditure and liabilities incurred in the production and distribution of such film. If Clause 1 has proved to be rather a "feature" I hope this Amendment can be classified as a "quickie." It deals with a small point. I do not intend to repeat what was said on Second Reading, but the feeling of those of us on this side 420 of the Committee, which I think had some support on the other side, was that the operative part of Clause 2 was contained in the proviso. except in such classes of case as the Board of Trade may approve … The object of this Amendment is to give the operative part of the Clause a more positive shape. In what I am now saying I am also referring to the following four Amendments standing in my name: In page 2, line 30, leave out from "Corporation," to "make," in line 31, and insert "may."
In page 2, line 32, leave out "unless he is."
In page 2, line 34, leave out "and," and insert "where."
In page 2, line 35, at end, insert: (4) Save as provided in the two last foregoing subsections the Corporation shall not, except in such classes of case as the Board of Trade may approve, make a loan to any person. These are all consequential upon the main Amendment. We think that it improves the Bill to state that the object of the Corporation is to make loans to those people who are described in Clause 1 (1, b) upon two criteria, the first having regard "to the sufficiency of the security" which are very general words; and the second that the loan shall be subject to the independent producer, because he is the man referred to, or his backers, having taken 25 per cent. of the risk. That, I think, is the common form in this type of finance. It is exactly the same as when the Export Credits Department of the Board of Trade, for example, insure contracts abroad; it expects the shipper or producer to take at least the risk of all his profit upon the transaction. So I think that in making these loans to independent producers, the Board of Trade should be satisfied that those producers or their backers are at any rate involved in the risk to the tune of 25 per cent. of the total cost. The aim of the Amendment is to clear up the Clause generally and to bring the main object of the Bill to the forefront instead of leaving it in this contingency Clause. We are not wedded to the exact words of the Amendment, and if the right hon. Gentleman will give us a sympathetic answer on the general object of the Amendment, that will suffice.

§ Mr. H. Wilson
I agree with the right hon. Gentleman in that I do not think 421 we desire to go over the whole of the Second Reading Debate on this question of direct aid to production itself. The view of the House was expressed by Members on all sides on that point, Although I agreed that this Clause was rather negatively worded, I hope that I satisfied the House that it was our intention, as soon as we can work out the necessary safeguards, to enable finance to be provided directly for production and not merely through distribution companies. So far as the Amendment is concerned, I have a lot of sympathy with the aim of the right hon. Gentleman in trying to make this Clause more positive in its wording. The present wording is rather negative and if we could have found a more warmhearted and positive way of saying what we are trying to do, we would have done so. Since the right hon. Gentleman put down this Amendment our legal advisers have tried to find some more positive and warmhearted way of doing it, but we have not been able to find any way which is not much more clumsy, and which I think would be more offensive to the right hon. Gentleman's well-known love of good English and good drafting.
Perhaps if I say what we intend to do under this Clause, and what the effect of what is referred to as the contingency Clause is to be, I can give the right hon. Gentleman the assurance he wants. Before I do that I would say of his own Amendment that I disagree fundamentally with the second part of it, namely, the requirement that any producer must be able to put up 25 per cent. of the backing. That would mean that the producing company would have to find the whole or almost the whole of what, on Second Reading, we called the "end money," that very difficult 25 per cent. which has in the past been standing in the way of an expansion of film production. Indeed, if we were to do as the right hon. Gentleman suggests I do not think that there would be any room in the industry for the work of the Corporation, unless we were putting in the Corporation to usurp the proper functions of the bank. It is the normal position, as the right hon. Gentleman said in his speech on Second Reading, that a certain proportion, which has often been 25 per cent. has had to be put up by the producer and the rest has been covered by the banks. If we were to provide here that the producer has to 422 provide 25 per cent. and the Corporation the remainder, the Corporation would in fact be standing in the position of the banks.

§ Mr. Lyttelton
The right hon. Gentleman will agree that this Amendment covers only one of the avenues of finance which are open to the Corporation? There are others.

§ Mr. Wilson
I quite agree.

§ Mr. Granville
At the same time will the right hon. Gentleman bear in mind that if this qualification was insisted upon many important films of a semi-cultural character would never have been made— "Man of Aran," for example?

§ Mr. Wilson
I think that we all have the same point in mind. We regard it as essential that we should have as many safeguards as possible to see that producers do not come along to risk State money without risking that of anyone else. That is why we put in the phrase which the right hon. Gentleman did not like, except in such classes of case as the Board of Trade may approve, because I do not think we should lay down hard and fast rules as to how the Corporation should finance independent production. It would be wrong to tie them down to insisting upon a 25 per cent. guarantee by the producers themselves. It is probably quite right that except in the approved classes of case referred to the Corporation should not be at liberty to make direct loans to producers who cannot put up the money themselves or furnish completion or distribution guarantees from their renters. It would not be easy to find words the effect of which would not be to tie the Corporation hand and foot for some period to come and would not have a restrictive effect upon what we all want to do.

§ Mr. Lyttelton
I am not quite following the argument of the President of the Board of Trade, because under the Clause as it would be redrafted if the Amendment were accepted, it would still be open to the Corporation to make loans through the distributor in special cases approved by the Board of Trade where the security offered by the independent producer is insufficient. It opens another avenue of 423 finance by specifying that the Corporation can finance the independent producer if he puts up 25 per cent. of the total expenditure, or, if the President prefers it, let us reduce the figure to 15 per cent. That is a positive approach.

§ Mr. Wilson
All that the proviso in the right hon. Gentleman's Amendment would do would be to say that the Corporation could itself do what, by and large, the banks are already doing. I agree with him in what he has said that it is only one more method of finance. We have finance through the distribution companies, finance through the banks, and through this method. I do not think this has added anything to the Bill except the right of the Corporation to take over those methods of financing which in the banks already exist.

§ Mr. Blackburn
With regard to the words: except in such classes of case as the Board of Trade may approve … what method will the Board of Trade take to approve them?

§ Mr. Wilson
I was coming to that point. I do not feel that we should write into the Act some formula which cannot be changed over a period of years and which might prove to give either too much or too little latitude to the Corporation. I can tell the Committee that it is my intention, as soon as the necessary experience has been gained, to allow the Corporation to lend money direct to producers in all classes of case, if I can use that phrase, which are suitably defined and I should regard it as my duty to state the classes of case we were proposing to approve. But I would not like to tie myself down at the moment to exactly what they are to be. They would include such cases as where the producer is able to point to a satisfactory record of production—I think that is the best guarantee anyone could have.
I do not think we could take the chance of finding out whether the new producer was going to be a good one, at least not with State money. The producer should also satisfy the Corporation that the risk was going to be spread over a programme of pictures which would obviously give a better guarantee than if there was an individual picture. Also this would be 424 appropriate where the producer can also get either some finance—and this is the right hon. Gentleman's point—or some guarantee of completion by private backers or renters. Having given that assurance, I hope that I have explained what is meant by "classes of case."
I would tell the Committee that it is our intention to use this Clause, as soon as we have the experience and the organisation has been properly appointed, to see that production is financed directly.

§ Mr. W. Shepherd
I think my right hon. Friend the Member for Aldershot (Mr. Lyttelton) was too kind to the President of the Board of Trade when he moved this Amendment. My own view is that it was never the intention of the Board to use this Clause in any Measure. I think that the whole intention of the Bill has been to utilise the distributor as a means of the Corporation, and, in turn, the Government, avoiding their responsibilities. I think that they thought that by using the distributors' organisation they could say, "We shall avoid making decisions which may be wrong." It was only the Second Reading Debate last week which really forced the President to realise that hon. Members of this House wanted to see something more positive done for independent producers and free lance producers.
I cannot see what is the point of the President talking about this being what the banks did. It is precisely because the banks are not now doing it that we have this Bill. What alternative suggestion has he to put before the Committee? Is it not reasonable to expect independent producers to put down 25 per cent.? With the right kind of equipment, script, staff and reputation they would put down 25 per cent. Unless we can get something more concrete from the President today, I am afraid that this Bill will slip away from this place without any definite provision being made for the free lance and independent producer. Unless we can get something definite the whole effect that this Bill ought to have upon them will be negatived. I hope that if the President comes before us later, this provision will be made quite clear.

§ Mr. H. Wilson
The hon. Gentleman accused his right hon. Friend of being too kind to me in the way in which he 425 moved this Amendment, and suggested that I had no intention of operating except through the distributors. I think I can tell the hon. Gentleman—it is not often that he has these sinister and unworthy suspicions—that in this particular case he is completely wrong, and I can provide a considerable amount of proof. I met members of the interim company some weeks ago, before the Bill was introduced, to discuss the matter with them. I told them that I thought it was important that they should be working out a method of financing direct production and that I was sure that the House, on Second Reading, would want to know how we intended to do it. Therefore, the assurance on this point was not dragged out of a reluctant Minister on Second Reading. I knew in advance that the House would want the assurance, and I had every intention of giving it.
Before the Second Reading I did ask the chairman of the interim company to come and see me, and I suggested to him that it would be a useful thing if he could set up a sub-committee to start working out the methods under which financial aid might be given direct to production. He has, in fact, set up a subcommittee of the Board to work it out.
I cannot follow the hon. Gentleman in his reference to the banks. He said it is because the banks are not providing this percentage, and not doing the job, that we have this Bill. I would put it to him that the reason why we need this Bill is because many producers, independent and otherwise, but generally independent, however we define it, were unable to get the 25 per cent. I do not think it is right to say that the banks have been failing in their function. They have been a little sticky now and again this year, for obvious reasons, but I am confident that the banks are going on doing their job. It would not be right to set up a Corporation to take over some or other of their functions, and it is because the independent producers could not get the 25 per cent. that this scheme was announced and this Bill was introduced.
I think it is important that that point should be realised and I hope, therefore, that the right hon. Gentleman will agree to withdraw his Amendment. I assure him that if I could have found any satisfactory way to express the point in some positive way I would have done that. Perhaps I can satisfy him by saying that 426 the only way that could be done would have been by a very clumsy form of words.

§ Mr. Lyttelton
I am happy, of course, to accept the assurances of the President of the Board of Trade particularly as I understood him to say that he would come to the House and explain the criteria upon which he was going to judge those classes of case which are contained in the proviso. I agree that the Amendment is largely exploratory, and in view of what the President has said, I beg to ask leave to withdraw it.

§ Mr. Lyttelton
I beg to move, in page 2, line 35, at the end, to insert: (4) The Corporation shall not make a loan to any person in respect of the production or distribution of any film the cost of which exceeds such amount as in the opinion of the Corporation is recoverable by exhibiting the same in the United Kingdom. This Amendment is designed to prevent very large sums of money being advanced when there is no chance whatever of those sums being recovered. I agree with many hon. Members who have said that there are films which perhaps ought to be financed outside the commercial basis altogether. But here we are dealing with a commercial subject and what I rather recoil from is a film like "Bonnie Prince Charlie" getting £1 million of public money when, in fact, only 40 per cent. of that, at the very best, is ever likely to come back again. The object of this Amendment is to try to prevent advances against one or two films when in fact the commercial basis on which the production is put out is a "goner," if I may use a vulgarism, before it starts. I cannot imagine that this Amendment would be too restrictive. If it were, it would only be restrictive on that type of film finance which we do not want to see. The object of the Amendment is extremely clear, and I do not propose to say anything more about it.

§ Mr. H. Wilson
Once again, I have every sympathy with the object behind this Amendment, but once again I ask the right hon. Gentleman to agree not to press it. I made a few remarks on this point during the Second Reading Debate. I have not my exact words in front of me, but I think I said that the industry would be gambling on the 427 prospect of receipts from overseas showings if it were to produce on the average a number of films whose average cost exceeded what it could hope to get in the home market. I stand by what I said. The reason why I ask the Committee not to accept this Amendment is that although I said that it would be gambling to count on big overseas incomes, it would be defeatist for us to assume now, for a period of five years ahead, that we shall not get any overseas income. I agree that at present there are many difficulties about getting income from the United States. I have said that our hopes that the American industry was going to help in pushing our films for us have so far been very greatly disappointed. But I certainly hope, as I think we all hope, that there will be an improvement in relations there. I hope that we shall see a number of our films earning considerable dollars, directly or indirectly, by overseas showing. Certainly, it is a fact that only recently one of the films produced by the group which was also responsible for the production of the epic referred to by the right hon. Gentleman has been very much welcomed in the United States. I am not referring to "Bonnie Prince Charlie," but to another film made by the same company. There is every reason to suppose that it will earn considerable sums of money in the United States. Therefore, it would be defeatist to tie ourselves down for five years ahead to such a course as is proposed in this Amendment.
My second reason is one on which my hon. Friend the Member for West Nottingham (Mr. O'Brien) had something to say on Second Reading. I have not his exact words, but he said something to the effect that he thought it would be wrong for us to tie ourselves down to pictures of a standard quality, standard cost and standard size, and that what we have to produce is a representative series of films, some of them more costly and some less costly. He said that it was no good trying to produce "quickies" or films of a standard type. I entirely agree with what he said. Also I entirely agree with what is behind the right hon. Gentleman's Amendment in that, taken on the average, over a number of films in a particular finance scheme, the cost of those films ought not to exceed what we can legitimately expect to get back from the home market.
428 On the other hand, I do not like the idea of each individual film being tied down. It may be that money is to be lent to a production company which may have a programme of pictures, some of which may have a great hope of overseas showing and upon which we could not hope to recoup their cost from the home market. But as long as the programme as a whole seemed to be a commercially practical proposition, I think that it would be right that the Corporation should lend money for it. I hope that we shall not tie down the Corporation too closely in this way.

§ Mr. W. Shepherd
I am extremely disappointed with the argument put forward by the right hon. Gentleman. I do not think that there is any purpose in this Corporation financing would-be epics. It may be that there are epics produced which will earn great revenue in the United States and I am convinced that we shall continue to produce films of that quality. But surely it is no part of the purpose of this organisation to finance such films. We are concerned to bring down the costs of British film production. If the costs of British film production are not brought down the industry will be knocked out. This is a question of survival. No Wilsonian exhortations will cut down the costs of production in British film studios. A producer will spend as much money as he needs to spend. The only way to cut costs is to give the producer less to spend than he has now. This organisation ought to be an instrument by which costs in the industry are forced down. My hon. Friends and myself are concerned, as the industry is concerned, about the action of this Corporation so far. They have put £1 million into the hands of people who, on almost their last six films, have spent twice as much as the films will ever recover in the markets of this country. That is most disquieting. There may be some justification, but I cannot see it.
Surely, what we must do is to use this Film Finance Corporation as a means of forcing down high costs. How else are we to do that? Is the producer who at present asks for £20,000 to produce a film, likely to volunteer to reduce his salary? Are the film stars, who look upon prestige salaries of £20,000 or £30,000 as essential for their work, likely to volunteer to reduce their salaries? Are the unions 429 who indulge in the most vicious practices in the industry expected to do something? I do not refer to the union with which the hon. Member for West Nottingham (Mr. O'Brien) is connected. He behaves quite well on the average, although I have heard some most unfavourable comments about him recently from exhibitors. He is not responsible for the bad practices which exist in full measure in our studios at present. Neither would it cause producers and those responsible for production to get proper preparation of their films before they can put them on to a stage.
Therefore, it is wrong of the President of the Board of Trade to say, "We will see how it works out. We will let one film balance against the other." The thought that we may make a big profit on "B" but we may make a loss on "A" is the reason for the high costs which now prevail in the industry. Everyone expects that the next film they make will put them "soft" for the rest of their lives. Sometimes, of course, it does, but many times it does not. Surely, we ought to tie down every producer producing under this Corporation to a limit which may be recovered by sales in the home market. It is useless to say that one will be evened out with the other. Moreover, we must tie them down to the budget which they put up in the first place.
The problem of keeping down costs is absolutely vital to the survival of this industry. It cannot be done merely by the President of the Board of Trade saying that he will establish a working party or that it is hoped the producers will do well on one film to make up for what they have lost on another. Here is an instrument, the first that industry has had, to make certain that costs can be kept down, and here is the right hon. Gentleman throwing away this vital opportunity. I am immensely disappointed with what he said. Unless we can get these costs down to reasonable limits, this industry is finished and a great enterprise which could develop most advantageously for this country in the markets of the world will be lost. I remind the Committee that this industry is very near to being lost. It is touch and go at present. Therefore, I express once more my keen disappointment that the President of the Board of Trade has not taken the steps which I believe are vitally necessary for 430 the survival of what might be a very great industry for this country.

§ Mr. O'Brien (Nottingham, West)
I had not intended to take part in the Debate at this stage until I heard the speech of the hon. Member for Bucklow (Mr. W. Shepherd). I think the Committee will make a great mistake if they try to impose on producers of films the same sort of method as one associates with a tailor who makes a suit from a certain amount of cloth. If a tailor is given a length of cloth he can make a suit. I am speaking metaphorically, of course. However, if we say to a producer, "Here is a sum of money you cannot go beyond that amount," the effect will be entirely opposite to the intention.
For example, in budgeting for a picture, it is quite possible, without any question of extravagance or high costs of production, for things to happen in the course of production which make it necessary to find more money. If that extra money is not found, the film is likely to be a "flop." There are two extremes to be avoided—and I agree with much of what was said by the right hon. Member for Aldershot (Mr. Lyttelton) on this Amendment. The first is the encouragement of extravagance and unnecessary cost of production, which matter is under examination, and the second is the too rigid control of the producer. That will have a very bad effect.
I, for one, feel that the Amendment is not necessary, although I understand and sympathise with the idea behind it. There is one point which the Amendment has omitted. It refers to sums recoverable from the United Kingdom. That again will "put the screw" on producers even if the Amendment is adopted, because revenues come from the Dominions and the Commonwealth—from Canada, India, Australia, South Africa and Europe, from the soft as well as the hard currency areas. The revenues from these places, to a certain extent, help not only to make a profit but to return the costs of production. I feel, therefore, that the Committee would be wise to avoid the temptation to adopt this Amendment, in view of my remarks and in view also of the possibility of unnecessarily hamstringing a very competent producer.

§ Mr. Lyttelton
I do not know if it would help the Committee, but I under 431 stood from the remarks of the President of the Board of Trade that he would be more sympathetic towards this Amendment if it read— in respect of the production or distribution of any group of films. If he would consider that form of words between now and the Report stage, I would willingly withdraw my Amendment. I think that was the tenor of his remarks.

§ Mr. H. Wilson
I should like to think about it. I sympathise with the idea; certainly it should not be tied to an individual film. If it is to be tied, I think it should be tied to a programme of films. But even that wording would not express the way in which we hope the Corporation will work. The Corporation, acting as it is, as a trustee for public money, will undoubtedly have very close control over any money which is lent either to a distribution company or a production company, especially the latter. Therefore, it will have to devise methods of control to ensure that the total expenditure is not likely to exceed the prospective revenue. I feel that it would be wrong to tie it down even to a group of films. In view of its duty to recover these sums, it will have to be very careful about that sort of thing.
We also have to look at the possibility of an expanding overseas revenue, and it would be wrong if it were too closely tied. I am sure the Corporation will have very much in mind all the points which have been raised by the right hon. Member for Aldershot (Mr. Lyttelton) and by the hon. Member for Bucklow (Mr. W. Shepherd) on the question of production costs. I still think it would be wrong to tie down the Corporation, even if we were to spread the loan over a programme of films.

§ Mr. Granville
I think it will be very difficult to put this Amendment in the Bill and tie down the Corporation, but I do not agree with the hon. Member for West Nottingham (Mr. O'Brien) that there is a great revenue to be obtained from overseas at present.

§ Mr. O'Brien
In five years, the time envisaged in the Bill, a great deal can come from overseas.

§ Mr. Granville
Yes, it can come, but I am dealing with the situation in the 432 industry as it exists today. It is a tragic fact that one of the great difficulties in financing film production in this country is that the market which really matters is the dollar market in Canada and the United States of America. The hon. Member for East Islington (Mr. E. Fletcher), who rendered such a great service to the House on Second Reading by coming forward courageously and giving us all the figures in his professional capacity, showed quite clearly that the experience has been—he gave as an example the film "My Brother Jonathan"—that without an important English-speaking market such as the American market, every penny spent on a film over £150,000, which is about the figure likely to be obtained from the home market, will be a loss.
The fact is that unless we have the American market as our main overseas export market, we must restrict ourselves to what we can get back from the English market. That is one of our difficulties. In Hollywood, films are produced for a country with a population of 140 million; therefore, American producers can obviouly spend very much more money on the production of films for their home market. If a film is made for exhibition in this country, it is only possible to get back the money which is spent on it from a population of about 50 million. Therefore, when the film goes to the United States in order to get some revenue and make a profit, we are up against this comparison, which has existed for a long time.
Although it may not be possible to insert in the Bill the form of words proposed, the President of the Board of Trade has indicated that it will be borne in mind. I hope he will give us an assurance that this £5 million will not be used for another dollar gamble in the United States, because, as he knows, a great deal of dollar currency has been made available for a dollar gamble to capture the American market, and this effort has almost completely failed. Therefore, I should like to have his assurance that this money will not go into the making of epics and grandiose efforts to capture the prestige section of the American market in the hope that we shall get our revenue from there.

§ Mr. O'Brien
Five million pounds?

§ Mr. Granville
I do not want any part of the £5 million to be spent on producing pictures which will be shown on Broadway for prestige purposes in the hope of getting second-and third-rate bookings in the United States. This country has never been given a fair deal in the American market. Let us concentrate upon giving this money to the producers who, in the main, will satisfy the home market first.

§ Mr. H. Wilson
I assure the hon. Gentleman that I agree with him. I do not think this money ought to be used for the production of epics, except in so far as the production of epics can be expected to yield a reasonable return, either directly or indirectly on that film or by affecting the revenues of others. I should not want to put an Amendment into the Bill to say that epics cannot be financed, because we should then have some difficulty in defining an epic.
I have been thinking further about the point made by the right hon. Gentleman the Member for Aldershot. There are the difficulties I have mentioned, but I should be prepared to take this away and think about it again. If, as I hope, the Committee will accept my advice that a further Amendment to be debated shortly should not be accepted, it will certainly mean re-committal to get these things done. I do not know whether the right hon. Gentleman will be satisfied with what I am going to say—perhaps, he will want to divide—but I have every sympathy for the general point which he has made, although I should not like to tie the proposal to the exact anticipated home market revenue. I think that whatever phrase we can work out and introduce after today should be related to the prospective revenue of the film in a way which would allow the Corporation to take account of the prospective overseas revenue. Some of these films may have a small overseas revenue, and, in the next five years, it might develop considerably.

§ Mr. Granville
Will the right hon. Gentleman give us an assurance that the advisers who will advise whether the very expensively-produced films have any chance in America, will not be the same advisers whose advice to the industry in the past few years has been so calamitous to the industry?

§ Mr. Wilson
I do not know to what advisers the hon. Gentleman is referring. I think that a very gallant attempt has been made to establish British films in the United States in various ways. Various organisations have tried it by different methods and by financing. The Rank organisation has done it in one way and the independent producers in other ways, but I am not prepared to argue on the film companies' balance sheets this afternoon. I shall be prepared to discuss the working of the Corporation in this House after it has been established, and, if the right hon. Gentleman will accept my assurance, I shall look at this again with a view to introducing, on re-committal, a Clause under which the Corporation will not be obliged to make loans except when it expects the revenue of the film or group of films, taking into account any reasonable overseas revenues, to cover the cost. If the right hon. Gentleman will accept that assurance, I shall give an undertaking to try to have some words ready for introduction, and, in any case, if there is any difficulty about it, he can discuss it with me and perhaps we can reach agreement.

§ Mr. Lyttelton
So far as I am concerned, I am quite satisfied with what the President has said. He says that he is sympathetic to the general idea, and I do not wish to bind him in any way as to the exact method by which he will do it. I am content that he wishes to try to express our intentions. I regard the principle as one into which it is worth while taking some trouble to inquire. I have been accused by my hon. Friend behind me of being too kind. I will accept that rap, and say that, if on this occasion I am too reasonable, it is only in accordance with my general character. I will accept the President's assurance.

§ Mr. E. Fletcher
Before we part with the Amendment, it is very desirable in the public interest that we should ask the President to clarify the relationship which is to exist between the Corporation and either the distributing or production companies to whom money will be lent. A moment ago, the President said it is quite obvious that the Corporation would have to exercise a pretty tight control when loans were made to distributors or producers, and particularly to the latter. The particular objective is to make loans to 435 distributors in respect of special classes of cases which the President will define. He will tell us the categories in which the exception will apply.
The discussion on the Amendment has suggested that the Corporation will be able to influence, if not dictate, the films which will be made by the producers, who, in turn, will receive money from the distributors, to whom the Corporation will make advances of public money. I think it is important that the public should understand the precise functions of the Corporation, so that they will know what is their sphere of responsibility. As the Bill stands, and as I understand it, the duty of the Corporation will be to lend money to the distributing companies, presumably on the security of their general assets, and these companies will be encouraged to make, or to take part in the financing of, a film or a variety of films.
I want to ask the President whether it is contemplated that, when this public Corporation advances a sum of money to a distributor, conditions will be attached by the Corporation as to the particular film or group of films in respect of which this public money is to be spent? There is nothing in the Bill to indicate any such thing. If one reads the Bill, it is perfectly open to reach the conclusion that the Corporation can pick upon a distributor, say British Lion, and say to them, "You are good distributors and you have got judgment, so we will advance you money." If it is intended that the Corporation should go further and say, "We will only advance money to such-and-such distributors to enable them in turn to advance money to a particular producer to enable him to make a particular film or group of films," I think we should know, because it would involve a degree of responsibility which the National Film Finance Corporation will be called upon to discharge, and it will also affect the kind of question for which they will be responsible in this House.
If this is the intention—that they are not merely to select a distributing organisation to be the recipients of public money, but are also to exercise control over the particular film or series of films to be made with public money, and perhaps also control over the cost of production of those films—we are entitled 436 to know. I raise the point on this Amendment, because, with great respect to the right hon. Member for Aldershot and the hon. Member for Bucklow (Mr. W. Shepherd), their Amendment, as expressed in its present terms, would not give effect to what I understand to be their objective.
If my right hon. Friend will reconsider the matter before Report stage, I think he ought to consider much more than a mere extension of the language of this Amendment. Let us assume that the Amendment, in its present terms, or with the substitution of "a programme of films" for "any film," were accepted, what would the result be? I do not think it would achieve the object at all. It would merely say that the Corporation shall not make loans to any person in respect of the production or distribution of any film, the cost of which exceeds such amount as in the opinion of the Corporation is recoverable by exhibiting the same in the United Kingdom. It would impose an injunction of a particular kind against a particular loan, but it would not in any way prevent a loan under Clause 1 (1, b) to persons who, in the judgment of the Corporation, have reasonable expectations of being able to arrange for production on a commercial or satisfactory basis. These are the operative words in this Bill as it stands. If this Amendment were passed, the position would still be that, under Clause 1 (1, b), this National Film Finance Corporation could make a loan of £1 million or £2 million to a particular distributing organisation because it was thought to be the kind of concern which would reallocate the money on a commercially sound basis. If my right hon. Friend is going to reconsider this matter between now and the Report stage, I ask him to do so in the light of the observations I have put before the Committee.

§ Mr. Wyatt
I was a little alarmed when I heard my right hon. Friend the President of the Board of Trade say that he was going to re-phrase the passages which might be covered by this Amendment. I was alarmed because, when I first saw the Amendment, I thought it was just the sort we ought to have in the Bill, that it was absolutely on the right lines, and that it would help to curb the excessive cost of films today. I was for supporting it, but, as the argument 437 developed, it became clear that, once such a provision was put into the Bill, it would prevent the making of such films as "Hamlet" and "Henry V" which, of course, cannot recover their costs in this country. In fact, both those films have been very substantial dollar earners in the United States.

§ Mr. Lyttelton
I think the point is a very valid one. My reason for wishing to limit it to the United Kingdom was because I thought that further risks ought to be carried by the producer in that case, that that was the most hazardous part of the receipts, so to speak, and that it ought to be on his shoulders if the loan which he received were only extended up to the amount of the potential receipts in this country.

§ Mr. Wyatt
I quite appreciate what the right hon. Gentleman says, but, with great respect, I do not think that is what the Amendment says. It says: The Corporation shall not make a loan to any person in respect of the production or the distribution of any film the cost of which exceeds such amount.…. I think it would be a most dangerous precedent, even though the right hon. Gentleman's further suggestion that any extra amount should be borne by the producer himself might not be possible of fulfilment. It might prevent a worthy producer from making such a film because he could not raise the extra £100, or whatever it might be, over and above the prospective British revenue. I hope that my right hon. Friend will not re-phrase the Clause in such a way as he just mentioned. I think that my hon. Friend's point as to the exact relationship between the Finance Corporation and a distributor who is going to finance the film, and between the Finance Corporation and the producer direct, requires more clarification, although I suppose it will come out when we discuss the Question "That the Clause stand part of the Bill."

§ Mr. Gallacher
I have never had any association with, and have very little knowledge of, film production, but the more I listen to hon. Members opposite, the more convinced I am that they know only as much as or even less, than I do. I want to see costs brought down in the interest of the patrons of the cinema. I want to see good British films produced 438 under conditions that will allow of their being shown. An Amendment of this sort shows a great lack of knowledge of the film business. When the right hon. Gentleman was speaking, he mentioned the film "Bonnie Prince Charlie."

§ Mr. Lyttelton
Nothing personal was intended.

§ Mr. Gallacher
I understand it was a heavy cost. I went to see the film, and I enjoyed it. How could anyone consider the production of a film like "Bonnie Prince Charlie" without taking into account the great Scottish populations in Canada, Australia and New Zealand? An Amendment of this kind shows an incapacity to understand the conditions which govern film production today I hope that the President of the Board of Trade will make certain that when assistance is given to the production of films, it will always be recognised that the important thing is that the film should he shown.

§ Mr. H. Wilson
Like the hon. Member for West Fife (Mr. Gallacher), I, too, thought that "Bonnie Prince Charlie" was a very good film. However, I do not want to go further into that question now. I want, first of all, to reassure my hon. Friend the Member for Aston (Mr. Wyatt) as to what I was going to do on reconsideration of this Clause. Perhaps he did not hear what I said; I think I dropped my voice round about that point. I said that, in taking into account the probable revenue, the Corporation should not merely consider the domestic revenue, but what might reasonably be expected from overseas.
My hon. Friend the Member for East Islington (Mr. E. Fletcher) raised a very important question about the relationship of the Corporation to the distribution companies whom they might finance. I think that the question he asked is one which I ought to answer now. He quoted me as saying that they would have to have a tight control over distribution costs, and an even tighter control over production costs. He asked whether this meant that the Corporation would have control over the films which would be made with the money advanced. Of course, the answer to that is "No," if it means that the Corporation is to have the last word as to whether a particular 439 film should or should not be made with money advanced to the distribution company by the Corporation. I do not think the Corporation would wish to have any control over the exact projects and scripts of the producers who would be financed by the distribution company, but I am sure the Corporation ought to have some control over the conditions under which money is to be lent to producers by the distribution companies without being called upon to pronounce upon individual films or individual castings, scripts, and so on.
For instance, I think it is quite right—and this, perhaps, is where I am answering the point raised by the hon. Member for Bucklow (Mr. Shepherd)—that the Corporation should, on lending money to a distribution company, sign a treaty with that company making quite certain that the money will be used for independent production, and not for meeting past commitments, and things of that kind. That is the sort of reasonable thing that it might wish to insist upon. Secondly, I think it will probably want to satisfy itself that the distributor is going to use this money for financing production only in cases over which the distributor is going to have pretty tight control through the examination of the budgets of individual films, and pretty tight control over the production of individual producers.
I think the Corporation is right to insist that the producer shall have generally a tight control of that kind, but that does not mean, of course, that the Corporation is going to see to each individual project itself in these cases. It may also wish to lay down certain conditions under which money will be made available. It might want to lay down some method of payment of producers and directors; it might want to introduce a system of payment by result rather than give them a fee in advance. There are many things of that kind which it might like to lay down, and which, I presume, will be in the contract entered into with the distribution company.
The answer to my hon. Friend's question, therefore, is somewhere in between the two extremes he mentioned. It certainly would not be satisfied by saying simply, "You are a good distribu- 440 tion company and, therefore, we will give you the money and a free hand." On the other hand, it would not go to the extreme length of saying, "We give this money to you as a distribution company and we shall want to see a full account of how every halfpenny of it is spent and to give full approval to every individual script and project." The answer will be in between the two extremes. It will lay down the conditions under which the distribution company will finance production.

§ Mr. Granville
The President of the Board of Trade says that production will be in the hands of the distributors. Does that mean that the distribution company will also have the say as to whether £200,000, £300,000, or £400,000 shall be spent on the production of a film, in view of its knowledge of what is likely to be recouped from the export market?

§ Mr. Wilson
Subject to whatever control is put on the distributor, in respect of individual films, by the Corporation when the money is advanced.

§ Mr. E. Fletcher
The President of the Board of Trade has made an important statement. He said he presumed certain steps will be taken. May I remind him that £1 million of public money has already been advanced to a distributor. It is public money. As I understand it, money has already been advanced to the tune of £1 million by a company formed in pursuance of the announcement made in this House in July last and, in fact, without any statutory authority at all. If the object of this Bill is to sanction that payment which has already been made and to sanction future payments, then one of the objects of this Bill is, in effect, to ratify retrospectively steps which have already been taken by the Government with public money.
The President of the Board of Trade has said he presumed that when further advances are made by this Corporation it will lay down such and such conditions in order to ensure either that certain films are made or that films of a certain class are made; also to ensure that production costs are adequately controlled, and perhaps to ensure that no excessive or extravagant payments are made to any individual. All of those, I think, are very desirable things, but I feel that the President of the Board of Trade ought to go 441 further than that, and, in view of the fact that £1 million of public money has already been advanced, that we should know what kind of conditions have been attached to the advance which has already been made. We should know whether the President of the Board of Trade will himself lay down the kind of conditions or whether those conditions will be purely in the discretion of the Corporation.

§ Major Gates (Middleton and Prestwich)
From what the President of the Board of Trade has said, it does not appear that the Corporation will have sufficient control over the money which the Treasury will be lending for this purpose. The whole of the discussion on this Amendment seems to boil down to one point: are these loans to be used for the making of prestige films? My hon. Friend the Member for Bucklow (Mr. Shepherd) used the words "epic films," but I prefer "prestige films" because we all know what is meant by that phrase. If so, whose prestige?
I have the impression, on the whole, that the money is not to be used for the production of prestige films. If that is the case, the market for which they are to he made is fairly well known. It is, presumably, the home market. If they are not to be large-scale, epic, prestige films, the President really cannot have much valid objection to accepting some sort of limitation such as that suggested in the Amendment so that the loan shall apply only to the United Kingdom. In any case, if the film is successful the overseas showing can very properly be profitable. I do not think the President has given a valid assurance which will be sufficient to satisfy the taxpayers of this country that their money will be properly controlled when it is advanced for this purpose. I do not think his assurances are satisfactory.

§ Mr. W. Shepherd
My right hon. Friend the Member for Aldershot (Mr. Lyttelton) has already indicated that we wish to withdraw this Amendment, subject to impressing upon the President that we hold the principle which is contained in the Amendment to be of the utmost importance not only to the preservation of public money, but to the ultimate survival of the industry. On this occasion there is no difference between my right hon. Friend the Member for Aldershot 442 and myself. Therefore, I beg to ask leave to withdraw the Amendment.

§ The Deputy-Chairman (Mr. Bowles)
The hon. Member cannot withdraw it. Only the Mover of an Amendment can withdraw it.

§ Mr. Levy
I beg to move, in page 2, line 38, at the end, to add:

"(5) The Corporation shall not make a loan to any distribution company whose charges for distributing the film or films for whose production the loan is made exceed twelve and a half per cent.

(6) The Corporation shall make no loans without the right to examine and amend the budgeted costs of production and without being satisfied that all reasonable economies are made.

(7) For the purpose of fulfilling Subsections (5) and (6) of this Section the Corporation shall appoint an officer equipped with the necessary experience and ability unless one or more members of the Corporation are so equipped."

The purpose of this Amendment, as the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) has said, is not dissimilar from the purpose of the Amendment which he moved, but the means proposed are dissimilar. The starting point of the Amendment is a very simple proposition. My right hon. Friend the President of the Board of Trade has said that in these days the banks are very sticky about lending money for film-making. I and, I think, my hon. Friends take the view that, in an industry such as the film industry, if an investment is a bad bet for the banks, then it is a bad bet for the taxpayer. Although we want to salvage the industry, and for that purpose it is necessary to advance funds, we are very anxious that funds should not be advanced without most stringent conditions calculated to safeguard public money and, at the same time, to put the industry on its feet.
I do not want to repeat the arguments which I advanced during the Second Reading Debate, but if we are, in fact, to set the industry on its feet and to make investment in it a reasonable prospect, there are only two sources from which economies can be sought. One is by cutting down the exorbitant charges levied by distributors, and for that purpose the new Subsection (5) is put forward. The other possible 443 economy, of course, is on the production floor. The new Subsection (6) is intended to deal with that.
I do not think it is necessary for me once again to suggest in greater detail how these economies can be effected, but I might try to anticipate one possible reply, which my right hon. Friend the President of the Board of Trade may make. He may say—and this is perfectly true—that the Bill as it stands at present provides the Corporation, through the distribution companies, with the power to effect precisely these economies. But, in the first instance, it is extremely unlikely that that particular economy will be voluntarily undertaken by the distribution companies—namely, that they will voluntarily forgo 50 per cent. of their own normal charges.

§ Mr. Wyatt
Profits.

§ Mr. Levy
It is charges we are talking about. Secondly, I am not even convinced that they will insist on the necessary economies from the production companies which the Corporation will authorise them, in effect, to subsidise. It could be argued, of course, theoretically, that they would do this because their own assets are or may be pledged to the Government in the event of a loss, and that obviously they want to protect their own assets. However, I can imagine a case where a distributing company already well on the way to Carey Street might think it worth while to have a final flier with public money. Incidentally, in a curious way the Bill does put them on a kind of cost-plus basis because distributors' percentage is on the gross, and the gross is liable to be bigger—and past figures will bear this out—on an expensive picture than an a cheap one. So we have really a kind of counter-incentive against the very economies, which all of us desire.
I realise also, of course, that this Bill does make provision for direct loans to producers, so the arguments which I have just been elaborating do not come into effect there, but, frankly, I am sceptical about this project for lending money to producers direct—not because I do not want that to happen, I do—but because I do not see how it will work. Before money is lent to an independent producer, private or public money, there has to be assurance that the producer has a 444 release for the picture he is to make. There cannot be that assurance that there is to be release unless there is contact with the distributing company. So we come back to the same position. There is surely no real difference whether we go to the independent producer and say, "Show us your distribution contract," or we go to the distributor and say, "Show us your production contract." It is as broad as it is long, and we might just as well go to the distributor first—which, I venture to predict, is precisely what is likely to happen.
For all these reasons, I think that these Amendments ought to be carefully considered. It is, of course, competent for my right hon. Friend to say that these matters are, in a way, sub judice; that they are matters that will be considered either by the working party he has set up or by the committee of inquiry into distribution and exhibition. I cannot object to that reply if it comes, though I sincerely hope that my right hon. Friend will give proposals of this kind a very vigorous blessing; as it were, a recommendation to the committee of inquiry. Even so, I should be happier if he would accept the Amendment because the committee of inquiry has not yet even began to sit and it will be some months before it reports, and, therefore, it will be some time before any schemes can be put into operation. What we are dealing with now is a very important interim period, and for that reason I hope my right hon. Friend will be able to say something to satisfy us.

§ Mr. J. P. W. Mallalieu (Huddersfield)
I rise to support what my hon. Friend the Member for Eton and Slough (Mr. Levy) has said, not with a view to pressing vigorously the Amendment, but to ventilate a point of view which is important. I think that in actual fact Mere may be difficulty about Subsection (5) at the present time. It might conceivably happen that if the Corporation were limited to dealing with renters only within the limit of 12½ per cent., it might not find any renters at all with whom to deal. I do not know. That point is one which will be brought out in the inquiry which is now to take place into the costs of distribution and exhibition. I hope very much that the costs of the renters will be examined with great care.
445 Subsections (6) and (7) seem to me to stand on their own feet now, and to contain points of immense importance. Hon. Member after hon. Member has stressed the importance of the Corporation's keeping some sort of control over expenditure when making loans, and it seems to me that that would do no harm at all. It would bind the Corporation not too tightly were Subsection (6) to be accepted by the President. If Subsection (6) is accepted by the President, it follows almost automatically that Subsection (7) must be accepted as well, because if Subsection (6) is to be carried out we shall need the type of man referred to in Subsection (7) on the Corporation itself.

§ Mr. Blackburn
The difficulty about the Amendment is that, so far as I can see, if it receives the construction put upon it by my two hon. Friends, the whole Bill will be completely nullified, because no money at all will ever be advanced. The whole issue that matters in regard to films is, Who finds the money? This Corporation will not advance money except against security, as laid down in Clause 2. Therefore, what matters is the question, What terms are the independent producers able to get from the distributors? No distributor is going to give a complete guarantee in respect of a film on a charge limited to 12½ per cent. My hon. Friend the Member for East Islington (Mr. E. Fletcher) knows these difficulties very well. I am sure that 12½ per cent. is far too low. I think the minimum average figure must be 15 per cent. Everybody wants to bring costs of distribution down.

§ Mr. Levy
Distributors do not.

§ Mr. Blackburn
My hon. Friend says distributors do not, but are the distributors to have a monopoly of the industry? Who are the distributors? The distributors are Rank, A.B.C., and British Lion. So far as Rank and A.B.C. are concerned, this Bill is not an advantage at all. They do not want any money from the Government and they will not ask for any from the Corporation. If the thing fails, it is to their advantage from the commercial point of view. My hon. Friend the Member for East Islington wants the Corporation, but if I may bring my hon. Friend back to a sense of reality in this matter, I would tell him that if he wants to make a film and asks the 446 distributor for that money, the distributor has himself to get the money from the Corporation by providing security.
The whole secret of film finance turns round the completion guarantee. My hon. Friend knows perfectly well that the banks—and we have heard much about them—used to advance money, but they did not advance it just because they liked the film or the script, but only advanced it against the completion guarantee; which meant that in one form or another the producer had to find the money himself or give security to satisfy the bank. The whole trouble in relation to the film industry relates to the terms upon which the finance itself is available.
I should like to say one word only on the general question of Government money. I entirely agree that costs must be brought down, and, therefore, the proposed new Subsection (6) is one with which I entirely agree. However, I think its provision is already in the Bill, in Clause 2, because the Corporation may require any such security as may be available. Of course, the Corporation must have the right to approve the budget of every film and must examine it very carefully. I would remind the Committee that when dealing with this £5 million, we are only re-allocating the £41 million which the public gets out of this industry through Entertainments Duty. I would prefer to regard this £5 million as a reallocation of money already obtained in the form of tax.
One practical illustration may surprise the House, and particularly the right hon. Member for Aldershot (Mr. Lyttelton), because it occurred while he was a Member of the Government. The Government advanced money in respect of the film "The 49th Parallel," and the Government made 100 per cent. profit on that film. Therefore, while I entirely sympathise and agree with the general remarks made, I say that they bear very little relation to reality, and that the money which in fact has been advanced so far by this Corporation has been advanced on security, and on the same kind of security as the ordinary bank would require.
The real trouble here is the one to which reference has already been made—the question of how can we succeed in getting money to producers which will 447 make them independent of the distributors? I am afraid there is no answer to that problem, but a great benefit is being conferred on the industry by this Bill because through its medium the British producer will be able to get money from the distributors or the Corporation direct, which otherwise he would not be able to get. The effect of this proposal is to add £5 million to the total of money in circulation for the financing of British films.

§ Mr. Wyatt
I do not altogether agree with the remarks of the hon. Member for King's Norton (Mr. Blackburn). The hon. Member for East Islington (Mr. E. Fletcher) showed the other day that his own distributing company, which is linked with the Associated British Pictures Corporation, charges 15 per cent. for distribution, because that was the effect of the figures which were given to us. The hon. Member for King's Norton says that they charge more. We must go by the figures given to this House by the hon. Member for East Islington in respect of the particular film, where the charge was 15 per cent. If that could be done without any Government money being associated with the film whatsoever, as in that case, we ought to be able to get nearer to 15 per cent. for distribution in respect of money advanced by the Government.
I think that what the hon. Member for Eton and Slough (Mr. Levy) said was quite true, that the biggest burden on the film industry and film production at the moment is the extent of the distributor's profit and the distributor's charge. The distributor will not voluntarily reduce his own charge, but will try to get the maximum he can out of the unfortunate producer. It is all very well to say that this means that no distributor will advance money to an independent producer, but it may well be that if some provision of this kind is not made no producer will have the courage or daring to ask for a loan from the distributor because he will be charged, say, 25 per cent., which is a quite normal charge at the moment. I do not say that all distributing companies have charged that amount in respect of all films being distributed, but, nevertheless, it is a normal charge, and it must come down. I think it is only reasonable that the Government 448 should try to insist on some such provision as that.
So far as the proposed Subsection (6) is concerned, this is a most important provision, and some reference should be made to it in the Bill. There is at the moment no specific injunction or requirement on the Corporation to undertake the examination of the budgeted costs, or the estimated budgeted costs of production, of a film, and I think that there should be. We have had in this Debate and on the Second Reading enough evidence given to show that money is not only spent unavoidably buts that large quantities of money are spent quite avoidably, and that expenditure must be reduced to a reasonable level in respect of a particular film. We must see that reasonable economies are made.
One suggestion which I would make to the right hon. Member for Aldershot (Mr. Lyttelton)—and this meets an important part of his point with regard to the producer putting up some money himself and bearing some responsibility—is that whenever money is advanced to an independent producer, neither the producer nor director should get any fee at all, or only a very small fee, until after the film has recovered the cost of production. This would be a constant incentive to the producer and director to cut down costs and to see that they are kept at a very low level. If they were really keen on making films, they would, without producers' fees and directors' fees, make the films at a lower cost than at the moment. That, in a sense, would be requiring them to put something of their own into the film.
6.15 p.m.
I do not think there is sufficient provision at present for the Corporation to ensure that people with the necessary knowledge are at its disposal. I understand the difficulties of the President of the Board of Trade about having people from the film industry sit on the Corporation, because every one in the film industry would say—it being what it is—that anybody having anything to do with the film industry before he went on to the Corporation was there only for the purpose of feathering the nest of the particular person with whom he had previously been connected. It is a difficult job for a body without any expert advice at all to make up its mind on these very complex issues. I hope that the 449 President of the Board of Trade may find it possible to find someone sufficiently reputable and "above the crowd" in the film industry not to come under such suspicion, and be able to put him on the Corporation.

§ Mr. E. Fletcher
I want to say a word, if only again to draw the attention of the Committee to what I still regard as being probably the most important matter in the public interest requiring clarification in this Bill. The House and the public should know where the responsibility and accountability is to lie. I think that the proposed Subsection (6) again draws attention to that aspect of the matter, because there the suggestion is that the Corporation should not make a loan without the right to examine and amend the budgeted costs of production.
The Bill authorises the expenditure by the Corporation of public money by way of loan to a distributor who, in turn, will be able to lend it to the producer. I understand that the chief responsibility on the Corporation is to select the distributor and to rely on him to exercise control to see that there is no undue extravagance in the production of a particular film. The Amendment is designed to secure that the Corporation has the direct right to examine and amend the budgeted costs of production and, I take it, to make a direct approach to the producer in order to effect control over the way in which the money is spent. I again ask the President of the Board of Trade to clarify the degree of control which it is intended that the Corporation should have over the ultimate spender of this money, which will be the production company and not the distribution company to whom the money is loaned.

§ Mr. H. Wilson
As with so many Amendments this afternoon, I must again express my agreement with the object of the Amendment and ask the Committee to agree that it would not be desirable to add the proposed Subsections to the Bill. The hon. Member for Eton and Slough (Mr. Levy), who moved this Amendment, is really trying to cover three points in the three Subsections which he has proposed. Perhaps I might deal with them in turn. The first of them which he proposes in Subsection (5) relates to the charges of distribution companies. I am quite sure the whole Committee will 450 agree with him that it is desirable to reduce to the lowest possible figures the charges made purely for the wholesaling or retailing of films, in order that as fair as possible a return can accrue to those whose job it is to produce the films. As my hon. Friend knows, some time ago I announced my intention of appointing a Committee to inquire into the whole question of the distribution and exhibition of films. Like him, I regret the delay in giving effect to that undertaking and in seeing the Committee start on this work. However, I am now in a position to announce the names of seven persons who have consented to serve on this Committee, and perhaps it might help to reassure my hon. Friend if I tell him who those seven are, what their terms of reference are to be, and that I expect this Committee to get down to work in the immediate future.
The chairman of the Committee will be Lord Portal of Laverstoke In this connection, perhaps, it might be useful if I were to make a comment on some quite extraordinary remarks which have been made about the Government's attitude to film distribution—and not only in the English Press. I saw recently—only this weekend—in the American Press the suggestion that this Bill has been introduced with some idea of providing a political censorship on the kind of films to be made in this country. Only a few days ago I saw the suggestion that this Bill is the thin end of the wedge, and that very soon any films which do not secure the approval of my right hon. Friends in the Cabinet will not be allowed to be made. I should think the fact that I have invited a Conservative former Minister to preside over this very important Committee would be one of the best possible answers to any suggestion that the Government are proposing to use this Bill or any of its other contacts with the film industry for the purpose of political censorship or in any way affecting political opinion.
In addition to the noble Lord, the members will be: Mr. Barrington-Gain, who I think is well known for his financial knowledge of the industry; Mr. J. H. Lawrie, who is Chairman of the interim Finance Company; Miss Lucy Sutherland; Sir Arnold Plant, who has for many years been a member of the Films Council, and has an almost unrivalled know- 451 ledge of certain types of film distribution; Sir Ralph Richardson, who is being appointed, of course, because of his very great reputation on the stage and his knowledge of this problem from the actors' point of view; and finally, Mr. William Smart, who is a Scottish trade union leader. I hope that ultimately there will be eight members in all, and it is my intention to appoint someone with a more purely financial or City background.
The terms of reference of this Committee have been settled and are: To consider, against the background of the general economic situation in the film industry, the arrangements at present in operation for the distribution of films to exhibitors and their exhibition to the public in commercial cinemas, and to make recommendations. I hope my hon. Friend will agree that those pretty wide terms of reference will mean that this Committee will go into many of the questions covered in his Amendment, especially—if I may use something of a vulgarism—the share-out of the total revenue of the industry among its component parts—to the wholesalers, or renters, and to the retailers or exhibitors. I think it would be wrong, therefore, to prejudge the issue of what is a reasonable percentage.

§ Mr. Levy
When will the Committee report?

§ Mr. Wilson
It is very difficult for me to say that, or to enter into any commitment. However, I have the Chairman's assurance that he intends the Committee to get down to work as soon as possible and to produce a report as quickly as is compatible with completing the very big and important job the Committee has to do.

§ Mr. Levy
Am I right in thinking that the terms of reference which my right hon. Friend has just read out do not exclude necessary investigation of the production end? That is of such great importance.

§ Mr. Wilson
The production end will, of course, come into it, though the actual work on what we all agree to be so important, namely, the problem of reducing production costs, is being currently undertaken by the Working Party of the Film Production Council.

§ Mr. J. P. W. Mallalieu
What power will the Committee have to secure information from the trade itself?

§ Mr. Wilson
It will have the usual powers of any Departmental Committee. I should be extremely surprised if any section of the trade withheld any information required for the purposes of the Committee. In fact, if the Government felt that information was being unreasonably withheld, then we in the Board of Trade possess all the powers required for getting any information relevant to the work of this Committee. I should be very surprised if it were necessary to use any of those powers.
Turning to the proposed Subsection (6), I agree with what is intended, but I do not think it necessary to tie down the Corporation to operate in this way. Obviously, the Corporation, consisting as it will of members chosen for their business experience, will insist on scrutinising the budgets submitted to it wherever it is financing production directly, and will insist as far as possible on the elimination of extravagance. If we were to say that the Corporation shall not make loans except in cases where it behaves in this way, we might tie its hand, and in certain circumstances it might be prevented from making the loans which we all consider it desirable to make.
There is a difference, I think, in the degree of its control as between those loans which go through distribution companies, who may be presumed to have their own organisation and methods for vetting budgets and keeping control over costs, and those loans which go direct to production. As I said on Second Reading, it will certainly be necessary for the Corporation—and I agree with the purpose of the Amendment in this connection—when it does make loans direct for production, to set up the kind of organisation needed to check expenditure, to vet budgets, and so on. However, I do not think it is necessary to put that into the Bill.
I do not think it is necessary or right to accept the proposed Subsection (7), which implies that the Corporation could not be trusted to take sensible precautions unless it were tied hand and foot by explicit provisions. I am quite certain that the Corporation to be appointed will be very fully alive to the 453 need, not only for protecting the tax. payer but also for ensuring that money is wisely and economically used. I hope, therefore, that my hon. Friend will agree to withdraw his Amendment.

§ Mr. Levy
In view of the assurance given by my right hon. Friend, I beg to ask leave to withdraw the Amendment.