FILM INDUSTRY

HC Deb 14 December 1949 vol 470 cc2682-802

3.59 p.m.

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

I beg to move, That this House takes note of the Report of the Working Party on Film Production Costs and of the Report of the Committee of Inquiry into the Distribution and Exhibition of Cinematograph Films. The publication of the reports of the committees headed by Sir Arnold Plant and Sir George Gater provides an opportunity for this House to Debate the general position of the film industry, on which much concern has not unnaturally been expressed in recent weeks. I am sure it will be a Debate that will cut right across party lines, and I should like to say here and now that the views expressed by hon. Members in all parts of the House will be of the utmost assistance to the Government in framing a long-term policy for the industry, which we were not in a position to do until these reports were received, and until public opinion had had time to make itself felt on their conclusions.

I am sure the House will understand that the Government, in proposing that a Debate should be held so soon after the publication of these reports, and before we go away for the Recess, are not in a position—apart from expressing their broad agreement with most of the conclusions of both reports—to go into any detail on plans for giving effect to these conclusions until an opportunity has been given to the various sections of the industry to comment on them. I am sure this is right, the more so as in the Plant Report it is suggested that the industry be invited to carry out the principal detailed recommendations against a specific time limit mentioned in the report.

This House has debated the position of the film industry on a number of occasions in the past four years, but most of the debates have been related to specific legislative proposals or to specific events.

such as the Anglo-American Film Agreement of March, 1948. Today provides the first opportunity for a review of the problem as a whole; and, perhaps, it would be appropriate for me to say something of the development of the film industry, and of Government policy to the industry, since the end of the war.

Immediately following the war, the first task which the industry and the Government had to face was one of physical rehabilitation. The producing side of the industry, located as it is mainly around London, had suffered its share of enemy attack, and repair and reconstruction—indeed, the rebuilding—of studios was essential if the industry was to be able to play its full part in the production effort. Roughly speaking, there has been £1,750,000 worth of building work on studios licensed and completed since the end of the war. In addition, from £250,000 to £500,000 worth of work on film laboratories has been licensed, but not all of that has been completed.

Almost before the film industry had begun to recover from the war there were the difficulties, which have been the subject of considerable debate in this House, resulting from the nation's dollar situation in 1947. The ad valorem films duty, and the resultant boycott placed on the export of films by the American motion picture industry, dominated the situation in the winter of 1947 to 1948. The possibility of an indefinite continuation of that boycott might, one would have thought, have presented the industry with a real incentive to build up film production, and certainly the Rank Organisation, the noble Lord the Member for Horsham (Earl Winterton) will recall, made it clear that their own cinema interests dictated the stepping up of production to give a reasonably adequate supply of British films. But although production was increased in terms of quantity—I shall have a word to say about quality in a moment—it soon became clear that the existence of a boycott was presenting the film industry, and the normal sources of film finance, with an excellent excuse for one of its periodic crises.

It has been suggested recently—and Mr. Rank's statement has given support to this—that the agreement of March, 1948, which brought both the tax and the boycott to an end, descended on the industry like a bolt from the blue, and frustrated its efforts to increase production. As I have already explained to the House on a number of occasions, this view cannot be upheld. Indeed, in the late autumn of 1947, I myself received _ a strongly worded memorandum from the British Film Producers' Association, headed by Mr. Rank, which said this: If the import duty prevents American films coming to this country, it will inflict serious financial hardship on British film producers, who cannot, except on a long-term plan, so increase production as to make British cinemas independent of imported films. It was suggested—in many quarters, in fact—that the possibility that cinemas would be closing down within 12 months was operating to prevent both producers, and the normal sources of finance, from making possible an increased programme of production.

Then it has been suggested—in the past few weeks—that the terms of the 1948 agreement, on which, as Mr. Rank has said, the film producing industry was not consulted, operated against the interests of British film production. I well remember the violent Press articles of the time—in particular one by Mr. Randolph Churchill in the "Daily Mail," describing the agreement—an agreement which reduced our dollar expenditure on films from 50 million to 17 million a year—as a sell-out to the Americans, and saying that it was certain that American producers would come in and over-run British studios. It was about eight months later that I was being equally violently attacked by those who said that the agreement had led not to too much, but too little production in British studios.

The removal of the hardship and the uncertainty, to which the film producers had drawn attention, in terms of the boycott did not lead to that rapid increase of production which we had been led to expect would be possible after the agreement. This House in fact, before the agreement, had, during the previous few months, passed the quota legislation which is now in force, and the agreement was followed by urgent demands from producers that the quota be fixed at not less than 50 per cent.; and Mr. Rank was talking of playing over 60 per cent of British pictures in his own circuits. In fact, I myself took a more cautious view, and recommended to this House a figure of 45 per cent. which was accepted, though the expectations of production which had been held out by the producers, and which more than justified such a figure, did not, in fact, materialize; and it was with regret that I had to come to this House in March this year and propose a reduction to 40 per cent. Meanwhile the industry's difficulties in finding enough financial backing for production had become still more acute. The Rank Production Organisation, aided as it was later in 1948 by a new arrangement under which the immense resources and earning power of the circuits and distribution organisations were made available for meeting losses on film production, was still going at full blast, but a number of the more important independent producers, particularly some who, in the later war years, under Mr. Rank's leadership had done so much to revive the prestige and quality of British film production, were unable to find finance sufficient to enable them to go on the studio floor with projects which were all ready for shooting. Private sources of finance—the famous so-called "angels" of the industry—seemed fewer and farther between.

The British Lion group, the principal distribution agency outside the Rank Organisation which was at that time financing a considerable volume of independent production, was struggling against the incubus of a succession of highly picturesque, but not, on the whole, remunerative, productions. In "Hamlet," a film which has added greatly to the prestige of British films abroad, Sir Laurence Olivier uttered the words, "Angels and ministers of grace defend us." This was a fitting commentary on the financial position of the industry. In the absence of angels, Ministers were faced with the imminent collapse of the film industry if special steps were not taken. Apart from the substantial finances made available to the Rank Organisation, the City was even more than usually unforthcoming in financing film production.

It was in these circumstances that the Government took the unprecedented and, to us, unwelcome step of announcing that Government finance would be available, in the form of working capital, through appropriate distribution companies in the first instance, for film production. At the earliest opportunity the situation, as the House will recall, was regularised with the legislation to establish the National Film Finance Corporation, and to provide it with a fund of £5 million for the purpose of supporting production, with loans both to distribution companies who were engaging in financing production and, in appropriate cases, to producers.

Now I should like to turn to the events of the past year and to the financial difficulties which have overcome the industry as a whole, not excluding the Rank Organisation. I am sure the House would wish to join with me in paying tribute to what was done in the later war years, and the years immediately following the war, to raise both the quantity and the quality of British film production. Whatever may be the position today, Mr. Rank and many of those associated with him—and the noble Lord will be with me, if he can overcome his natural modesty, in this connection—will have an undying place in the history of the British film industry for the production of British prestige films, in the real sense of the word, such as—if I may invidiously select one or two—"In Which We Serve," "Henry V," "Hamlet," "The Red Shoes," and many others; while, of course, Sir Alexander Korda and his group will be similarly remembered for other no less memorable productions.

But it was during this period of the artistic renaissance of the industry that the seeds of disaster were being sown. Methods of financing—particularly out of E.P.T.—undue hopes of world market revenues for any production that was set in hand, fantastic extravagance on the part of certain individual producers, the loss of financial disciplinary control, the desire to produce prestige films no matter what the cost, the growth of harmful restrictive practices on both sides of the industry—all these things piled up costs, and gave rise to an attitude on costs from which the industry has not recovered.

Both my right hon. and learned Friend the Chancellor, when he was at the Board of Trade, I myself, and hon. and right hon. Gentlemen in all parts of the House, warned the industry that this situation could not last, and since we could not expect to earn substantial overseas revenue, especially dollar revenue, on more than a proportion of our productions, costs simply had to be reduced to a level which could for the most part be recovered in the domestic market.

Well, I think the industry has realised the importance of the financial factor, though, at least until this year, this realisation has principally taken the form of attacks by each side on the alleged extravagance of the other. It was for this reason that I proposed to the Joint Film Production Council that a working party should be set up, representative of both sides of the industry, in order that these matters could be thrashed out, and an agreed view presented of the real facts on costs in the industry. The Gater Report, which is available to us today, is the result of that proposal, and I propose to deal with its main findings in a few moments.

Undoubtedly the main event in the film industry in the public mind in recent months has been the publication of the Rank Organisation's balance sheet and accounts and the statement to shareholders. This has been followed in the past few days by the publication of the accounts of the British Lion group. No one would, I think—I am sure the noble Lord would agree with this—wish to minimise the gravity of the situation as shown in these published accounts. But they would certainly seem to lend support to statements that have been made, that with the industry organised and managed as it is, with its present level of costs, its present overseas outlets—and current limitations on the remittance of blocked overseas earnings to this country—and with the present net domestic earnings, after distribution and exhibition charges and Entertainments Duty, film production in this country is not paying its way. The fact that in vastly easier conditions, and with a market of something like four times the size, Hollywood is even more depressed, is of small comfort to us.

The House would not expect me to go into the details of the balance sheets of individual film companies, nor indeed in the Motion I have moved is the House asked to take note of these financial accounts. But they, and the speeches and statements recently made on the film industry, are very important in any discussion of the economic position of British film production. There is one general point I should like to make, and that is that it has been too easily assumed, at least in certain sections of the Press, that after years of reasonably prosperous economic conditions in the industry, this industry—which in the Press anyway is far too frequently defined as being coterminous with the Rank Organisation; they are two separate things—has suddenly been plunged into economic difficulties.

It has even been suggested or implied that this sudden stormy weather has arisen through, for instance, the Anglo-American Film Agreement, or through a suddenly felt burden of Entertainments Duty, but I think a study of the relevant figures and facts make it clear that, although this has undoubtedly been a bad year both for new British film production and for realising the return on films made in previous years, the events of the past year are, in fact, no more than the accumulated results of tendencies which have been at work for some years past.

Films distributed in the past financial year earned at the box office much less than had been hoped a year ago. This has been a year, too, for both of the major production groups of writing off substantial figures in respect of film productions or advances on account. To what extent that was due to a real change in trading conditions during the year, or perhaps to a change in the degree of optimism with which future earning power was forecast, it is impossible on the present basis of film company accounts to say, so far as the valuation of film assets is concerned.

Undoubtedly the past year has seen the production of a considerable number of films the entertainment value of which has not been very high, and it is probably not unfair to say that the attempts of at least one section of the industry to reduce costs by producing a number of mass-produced films—it would be a little unkind, and perhaps a little inaccurate because they were so slow in production, to call them "Quickies"—have contributed to the relatively poor earnings of the year's output of films.

In the film industry, of course, even more than in other industries, the accounts for a particular year are not wholly, or perhaps even mainly, related to the production activities of that year. Films never make anything like their full revenue in a single year, much less in the year in which the bulk of the expenditure is incurred. The chairman of British Lion has recently suggested that a minimum five-year period is required to know the real financial position of many films, sometimes even longer than that. The accounts at the end of any financial year must contain an estimate of the future earning capacity of the products of the past and preceding years whose showings are not complete.

Clearly this valuation of completed and partially shown, or even unshown, films cannot be the subject of any scientific or physical measurement; a good deal must be left—certainly far more than in most other industries; perhaps far more than in any other industry—to a subjective valuation of those particular assets on the part of the company's directors and their financial advisers. As I have said, there is certainly not enough to show in the accounts to what extent changes in the valuation of film assets for the past year are due to sudden changes in their earning power or to a change in the degree of optimism or pessimism with which future earning power has been viewed, though in the case of, at any rate, British Lion the chairman made it clear last year that substantial losses had already been made on account of film production and would have to be written off, as has been done this year.

It is for these reasons that I have felt it right because of my responsibilities to this House, to the country and the investing public, under the Companies Act, to ask the Companies Act Standing Advisory Committee to review methods of film asset valuation to see whether something can be done to make it less subjective, and less capable of variation between company and company and even within a single company between one time and another.

In the case of the Rank Organisation, quite apart from the revaluation of completed films, on which there was some idea a year ago of a changing basis of valuation—since rejected—there has been a substantial writing off amounting to £2.5 million on advances against future film production. These advances, presumably, related to previous years and support my point that much of what has happened in recent weeks represents the accumulated result of several years operations. Quite apart from this and other details of the balance sheets, I am sure it is fair to say that the present financial position of the industry is due, as the Gater Report makes clear, to its history and development and to a considerable extent to the bad habits acquired in past years.

Both the reports before us today deal with important aspects of the economic position of the industry, and I should like to pay tribute, and I am sure the whole House will join with me, to Sir George Gater and Sir Arnold Plant and their colleagues, for the tireless efforts and the great deal of time and trouble they took in producing two such important and valuable documents.

The particular value of the Gater Report is, I think, the achievement of the chairman and the two independent members in getting an agreed report from representatives of such diverse interests in the film industry on the causes of high cost production. I know the criticism has been made in some quarters that the. report merely states facts which are already known and does not say what can be done to deal with them. But I myself attach great importance to having secured this agreed statement of the position, and I have called a special meeting of the National Film Production Council next week to review the findings of the committee and consider what steps can be taken to act upon them. But I think it will be clear to the House that the action called for is in the main action to be undertaken by the industry itself, and by both sides of it.

Mr. Blackburn (Birmingham, King's Norton)

No. Action to reduce the cost of production in the industry should be taken by the Government.

Mr. Wilson

What action?

Mr. Blackburn

The action which I have always suggested, that the Government should requisition vacant studio space and undersell the industry itself.

Mr. Wilson

I am quite prepared to deal with that later on. If my hon. Friend had given thought to the economic position of the film industry, he would have decided that studio space is not such that requisition would be of any service; but I am prepared to debate that with him later.

So far as one section of the industry is concerned, that is a matter for Mr. Rank and his colleagues, and there is no doubt that this organisation has fully recognised the need of cutting production costs to a minimum compatible with quality. There is a fairly general view that costs have been kept down in such a way as to interfere little with quality. So far as the greater part of the remainder of the industry is concealed, this is the area of direct or indirect financing by the National Film Finance Corporation. They are able through the power of the purse to influence at least part of the items entering into the cost, and indeed, as I hope to show in a few minutes, they have already done a great deal to cut out some of the more notorious extravagances of the industry.

Now I should like to turn to the Report of the Committee on the Distribution and Exhibition of Films, which is intimately connected with the other and is, of course, complementary to it. As the House knows, this committee was presided over in the first few months of its work by the late Lord Portal, whose death not only deprived us of the contribution he would undoubtedly have made on this problem, but also, of course, robbed many other spheres of our national life of one of their most important figures. Sir Arnold Plant, who had been a member of the committee from the beginning, agreed to succeed Lord Portal as chairman, and under his chairmanship the later part of the inquiry was conducted, including the preparation of the report.

The committee's terms of reference involved an inquiry into the single problem of film production earnings, namely, the proportion of total box office revenue taken by the producers, the distributors and exhibitors, and the methods by which these proportions are determined. It involved the study of the strategic position occupied by the circuits, who not merely account for a high proportion of box office revenue, but whose booking power and position is so fundamental that very few first feature films are produced in this country without prior guarantee or probability of circuit release.

The cardinal theme of the committee's report is the need to overhaul the too rigid pattern which regulates the circulation of British films to particular cinemas, a pattern imposed by the booking strength of the three major circuits. The committee points out that as a result of this system, there are many localities where a good number of the best films are either not shown at all or not shown in the best theatres, that is, those which can best accommodate the public and earn the biggest returns for the producers. Each film is steered into one of three channels, and none of these artificial channels passes within convenient reach for the largest possible national audience.

The committee recommend a different and more flexible pattern which would make the best films as widely available as possible to the public at the earliest possible stage in the history of each film. This result they consider could be achieved by "the adoption of freely competitive showing at each stage and in every situation" without, however, sacrificing the security presented to producers by the possibility of a circuit booking.

The Plant Committee have, in my view, done valuable work in drawing attention to the position of the circuits. The front money for film production is usually not forthcoming without a distribution guarantee nor the end money without at least a probability of circuit release. This virtually means that few films are started unless they have the prior approval of one of the two exhibiting organisations in this country. This is a very serious fact. This House, which has always been rightly jealous of freedom of expression from censorship whether applied by persons in a public or in a private capacity, whether or not answerable to this House, may perhaps feel some concern about the power exercised by two organisations over what is one of the most important media of public entertainment and education.

Equally, of course, it is extremely difficult to find any other means of deciding what films should be made since in the last resort the economics of the industry depend on those films being made which will have the box office appeal. I think that it is a serious thing that in the last resort the films made should depend on the judgment, virtually speaking, of two men responsible certainly not to this House and certainly not to any other accounting organisation, apart from the shareholders of the circuit companies.

There is another important aspect of the position to which I feel it is right to draw the attention of the House. The Plant Committee has advised against a divorcement of production from exhibition such as was recently introduced in the U.S.A. following a judicial decision under the Anti-Trust Legislation. I think that in the conditions of this country their recommendation was right. There have been over the past few years a number of advocates of this kind of a separation—I believe that the "Express" group of newspapers has for some time advocated this degree of divorcement—but, to the extent that losses in film production were being financed from profits on exhibition and distribution—and to a smaller extent this is still true of the Rank Organisation and also of the A.B.C. circuit—such a divorcement would have dried up yet a further channel of finance for film production.

But, of course, it will not have escaped the notice of the House that Mr. Rank is no longer predominant in production, and that in his recent speeches he has presented the possibility of a complete withdrawal from production if certain things do not happen that he would like to see happen. Therefore, as far as these two circuits are concerned, it is not antitrust legislation and any action by the Government that has virtually divorced production from distribution, but it is the decision of the directors of the organisations concerned.

I think it is right to point out to the House that, although in the past we could rely on the two Rank circuits having an identity of interest with the largest group of British film production, and therefore could rely on them giving the best possible showing of at least a high proportion of British films, that identity of interest is fast disappearing. Apart from the quota legislation, there will be now no security that these two circuits will not seek to maximise their revenue regardless of whether they are showing British or foreign films, and they may be even more unwilling than before to experiment with unusual methods of film exploitation, which might in the course of time provide additional revenue for British film producers.

It is already a fact, I understand, that the circuits in London do not give films facilities for second and third week bookings as is done in many provincial centres, and this undoubtedly lowers the earning power of individual films. This and other examples of such conflict of interest between the exhibition and production side of the industry cause me to view this development with some apprehension, and the House will, no doubt, conclude that the economic justification for complete vertical integration of the industry is now much less strong than it was.

These questions are all of vital importance to the economic position of the British film industry. I know that following Mr. Rank's statement of a few weeks ago, in which the subject of the Entertainments Duty was headlined, there has grown up an unaccustomed and almost sinister unanimity in all sections of the industry on this particular matter within the domain of my right hon. and learned Friend.

Earl Winterton (Horsham)

Why "sinister"?

Mr. Wilson

It is always potentially dangerous when industries that have long been divided and have been remarkable for their lack of unanimity come along with a new degree of unanimity to get something, not from efforts by themselves, but out of the taxpayer or the consumer.

Mr. O'Brien (Nottingham, West)

Does not my right hon. Friend agree that for many years—at least in my experience during the past 25 years—the Board of Trade and other Government Departments have criticised and castigated the British film industry for its lack of unanimity? Now that we have reached, or are trying to reach, an agreed policy, we are criticised and described as "sinister."

Mr. Wilson

I certainly agree, and I have done it myself. Last year, when various processions went their separate ways to the Treasury, I understand they were told it would be interesting to have an agreed view for the industry as a whole. When this magical unanimity suddenly arises, the consumer and the taxpayer must begin to wonder, not only what is behind it, but who is going to pay, and what private deals may, perhaps, have been made to secure this new degree of unanimity. I want to make it clear that in using that phrase I am referring to private deals between different sections of the industry, agreements perhaps that have not been previously the subject of unanimity between the two sides.

Mr. John Wilmot (Deptford)

Can the right hon. Gentleman give any particulars of the deals he has referred to?

Mr. Wilson

I was merely saying that one begins to wonder whether, for instance, agreement on some of these matters perhaps envisages possible agreements which have so far been noticeable by their absence—for instance, the subject of quotas and things of that kind.

I am sure that the House will not expect me in any way to anticipate my right hon. and learned Friend's Budget statement, but I am sure there is one thing to which the House will agree, and that is, that both Parliament and the country would reject any facile solution of the film industry's problems based simply on handing back, in the form of a subsidy, money to an industry, admittedly convicted of considerable extravagance, without guarantee that this money would not be swallowed up in further extravagance. I am sure the House will desire to emphasise the fervent hope of the vast majority of us that concentration by all sections of the industry on their new fiscal objectives—it is natural and perfectly right for them to concentrate on any fiscal or other political objectives—will not for one moment divert their attention from those major tasks on which these reports have thrown so much illumination. I think it will be dangerous to the industry if, in concentrating on political or fiscal changes, they fail to do what is required and shown to be required in these reports.

Finally, I come to the production position in the industry. A month ago I said in the House, in reply to a Question by my hon. Friend the Member for King's Norton (Mr. Blackburn) that I could not agree that these developments—that is, the Rank Organisation developments—confront us with any threatened collapse of the British film producing industry, and I hold to this view. I am certainly justified in saying, in considerably stronger terms than I did a year ago, that if the Government had not established the National Film Finance Corporation a year ago, there would have been by this time an almost total collapse of British film production. The establishment of the Interim Organising Committee and, later, of the National Film Finance Corporation made it possible to maintain in being the British Lion Group and the considerable number of free-lance producers associated with them, a good number of whom were previously working with the Rank Organisation and severed their connection with it at various dates in the past.

The N.F.F.C. is also financing other distribution organisations, as well as a considerable number of film productions direct. In all, some 50 films completed, started, or ready for starting, owe their existence to the establishment of N.F.F.C., and for some months past it has been true that about half the productions currently being shot in British studios are directly or indirectly financed by the N.F.F.C. The House on a number of occasions has expressed fears that its activities would be too closely associated with financing of production from the distributors' end. I ought to make it clear that of the films whose production it has facilitated, roughly half have been financed from the distributors' end and half from the producers' end.

Mr. John Lewis (Bolton)

Is my right hon. Friend in a position to say what has happened in the case of these films financed by the N.F.F.C.? Are the records of the box office takings sufficient to show that the costs of production have been covered?

Mr. Wilson

Since the corporation has been in existence for only a few months, I think my hon. Friend will agree it is not possible for the films that have been produced to begin to show any returns adequate for any views to be formed upon them. The films include "The Third Man" the results of which, quite apart from sales of gramophone records of the zither playing in the film, would certainly suggest a fairly hopeful outcome.

Mr. William Shepherd (Bucklow)

Will the right hon. Gentleman give an assurance that there is no danger of any money being lost by the N.F.F.C.?

Mr. Wilson

I hope the hon. Gentleman will be prepared to wait for the publication of the first annual report of the corporation, when a proper statement and assessment of the position will be made by the corporation.

Although the number of films being produced at present is fewer than a year ago—14 against 21—it is greater than at the lowest point of production in the earlier part of the year; a further 12 films are already planned to start in the very near future, and at least five productions are programmed to begin shooting within the next three months or so with financial assistance from the N.F.F.C. In these cases, though, studio arrangements are not yet finalised, so it is fair to say that as privately-financed production has gradually been cut down, the corporation has been taking up a good deal of the slack. The corporation has not, however, rushed in with public money to carry on precisely where private finance left off. I do not think the House would have wished that to happen. The corporation has preferred to build on fresh and, I hope, more solid foundations. There is no doubt at all in my mind that since the corporation started to operate costs of production have been considerably reduced.

Mr. Blackburn

That is exactly what I said earlier. The problem of production costs is being dealt with by Government action. Would my right hon. Friend make it plain that the loans made by the corporation are not made without security being given by people who receive the loans?

Mr. Wilson

That is right, although the amount and degree of security varies from case to case. All along it has been one of the cardinal points of the operations of the corporation that its powers would be used to help reduce production costs to a more reasonable form. But this has nothing to do with the requisitioning of studios.

The corporation is now employing methods which result in a greater degree of control, both of budgets and of expenditure, than has been general in this industry. I do not think the House would wish to see the corporation financing projects regardless of their merits just to keep the studios full and the workers in the industry employed. Indiscriminate financing of that kind would be far more likely to ruin the industry than to save it. Considerable discrimination is being and must be exercised by the directors of the corporation in the discharge of their duties. The fact remains, however, that finance has been provided or promised for about 50 films by the corporation and the interim company that preceded it.

What the financial results of this will be is a question which cannot be answered today; no one can possibly forecast them. Hon. Members must realise, however, that operations of this magnitude cannot possibly be undertaken without the risk of considerable losses being made. The financing of film production inevitably entails certain risks, and the greatest risks are attached to that part of the finance which is provided by the corporation in most of its loans.

The right hon. Member for Aldershot (Mr. Lyttelton) had something to say on this on Second Reading, and I hope the House will agree that, even if some losses should be incurred, the corporation should continue to finance all the worth-while projects that it can. If it does this, there is no reason why film production should not be kept going at least at its present level without the sacrifice of that quality which is essential if the industry is to be worth saving.

The N.F.F.C. has, in fact, in its few months of operation done far more than finance a number of productions which would otherwise have perished; it has introduced further measures of budgetary control of individual production and constituted a number of healthy arrangements under which a proportion at least of the fees earned by particular talents—and these are now being calculated for the most part on a much less lavish basis than has been usual in the industry—are deferred until the film is completed and has earned a reasonable revenue. More than that, the N.F.F.C. has introduced a degree of business organisation and common sense into an industry famous for its esoteric notions of business organisation and methods.

This review of some of the problems of the film industry thrown up by these recently published reports will, I hope, serve to make it clear that there is no easy or royal road to a solution. While from the Government point of view the N.F.F.C. is playing a major role in keeping production going and helping the free lance producers to put themselves on a sounder economic basis, the industry's problems will not be solved without heroic efforts on the part of both sides to reduce production costs, and without a thorough effort on the part of all concerned with distribution and exhibition in such a way as to give British films a far better deal than they have had in the past.

I have used the phrase "the industry" several times this afternoon to refer to film production. But in a wider sense this is a problem for the whole industry including exhibitors and distributing agencies. From the narrow short-term financial point of view it is, I suppose, a matter of small concern to the exhibitor whether British production continues at the level of recent years or is severely restricted. The statement usually made that American films on average earn more than British films tends to predispose the exhibitor in their favour. I certainly do not need to give the House this afternoon the reasons why the British film producing industry must be kept in being and put on a sound economic basis, and I know that among the leaders of the exhibition side of the trade there are many whose devotion to the public interest far transcends any considerations of narrow or short-term financial advantage.

Lest there be' any who are careless as to the future of British film production, let me say—and I am sure I am speaking for all sections of the House—that the maintenance of the prosperity of the cinema exhibition industry in this country is not to be bought at the expense of British film production; let them not think it will be possible to maintain an exhibition industry on anything like the scale or standards they would have in mind if the British film production industry is allowed by them to go under. They certainly must not expect any supply of dollars being made available to fill the gap on British screens caused by any further fall in British production.

Mr. Shepherd

Is the right hon. Gentleman suggesting that there exists in the margins available to exhibitors something which could be put in to fortify the production industry?

Mr. Wilson

I think the hon. Member will agree that exhibitors could, if they would, give a better showing to British films. They could give them a better chance and undertake a little more experimentation in the methods of showing British films. They could by various means increase the revenues available to the British producer. It is not a question of mere compliance with a quota, it is their national duty, as well as their long term interest, to go out of their way to give British films—and I am thinking not only of first feature films, but to that most important section of film production to which this country has made a unique contribution, the short and documentary films—a fair, indeed more than a fair, showing.

For in the British film producing industry we have not only an industry capable of considerable dollar earning and much more considerable dollar saving, not only an industry which offers employment to a considerable number of people, whose lives and work are bound up in its future, but an industry capable in its finest products of presenting our way of life, our national character and our cultural heritage to the peoples of the world. There is, therefore, on the leaders of all sections of the industry a grave responsibility to the industry, and to the country; I am certain that in the discharge of these responsibilities they will not fail.

Mr. Kenneth Lindsay (Combined English Universities)

Has the President of the Board of Trade any proposals to make as to Government policy towards the end which he has in view?

Mr. Wilson

I do not know if it is for the convenience of the House to answer that before the right hon. Member for Aldershot speaks. I made it clear at the beginning that the Government's view, in proposing this Debate, was that we should be free to have a full discussion of the facts put forward in these reports to enable the Government to formulate their minds on certain long-term aspects of the future of the industry. In dealing with this industry I have often said that we are not dealing with any other economic industry, but with an industry which powerfully affects public opinion, public entertainment and public education. Therefore, before we form any views on this important subject, it is right that we should hear the views of hon. Members in all parts of the House.

4.51 p.m.

Mr. Oliver Lyttelton (Aldershot)

I was going to refer to the very point mentioned by the hon. Member for the Combined English Universities (Mr. K. Lindsay). In a very painstaking production the President of the Board of Trade began by saying that no long-term policy would be announced by the Government until they had had an opportunity of reading the reports which are now the subject of this Debate. That is a rather curious statement after nearly five years of office. It is a still more curious statement when read in conjunction with what the President called a "sinister" agreement on certain fiscal aspects which is now sweeping over the industry, so long disunited on other subjects. But if the right hon. Gentleman appoints a distinguished committee of independent persons and the main parts of the report are concerned with the incidence of the Entertainments Tax, he must not be at all surprised if the people in that industry agree with the findings.

This was a very painstaking and skillful production on the part of the President of the Board of Trade, because he has succeeded in an agreeable speech in dealing at some length with all the subjects which are not of very great relevance to the topic we are now discussing. If this Debate does something to resolve the perplexities which have troubled the industry and have darkened the counsels of His Majesty's Government, it will not be in vain.

We are faced in all these subjects with the inherent difficulty of trying to harmonise or reconcile a commercial, industrial business—I see the report says that 28 million people see the pictures every week—with the artistic standards which are necessary and which have to conform to artistic canons. We talk about the film industry, the theatrical profession and so on, but I must say that the word "industry" always strikes a little oddly in my ears when we are talking of films. The balance of these 28 million people who attend every week tend towards the happy ending amongst the apple blossoms of spring rather than towards the darker events which generally await human life.

There is another word which has to be used with limitations in connection with this industry, and that is the word "efficiency." We all agree that production costs have to be pared as far as possible, and all kinds of waste removed. Still, we must be a little careful about the word "efficiency." The Rokeby Venus by Velasquez no doubt took a long time to paint, but when the production was finished, the lady was found with her back to the auditorium. No doubt it was a very inefficient production, but that does not make it any less of an artistic success. We must use this word "efficiency" very carefully.

There are three reasons for the present plight of the industry, and the President has given us a slightly technicolour version of the second. I shall try to reduce it to more sober terms. It is necessary to see that the fundamental thing in connection with this industry is the small size of the market available to the British film production compared with the American production. I apologise for repeating this, but it is fundamental, and during any discussion on Government policy and other measures it is necessary to fix our attention upon it. The President of the Board of Trade said that the market available to the American production was four times that available to the British production, but taking all the economic facts into account it is nearer six. We do not quarrel much about those details but that is a fundamental handicap.

The second handicap has been Government action over the last few years. I am excepting from that statement the National Film Corporation, which I concede to the President has certainly been a great help in time of very severe crisis in the industry. But the Government actions have their share in the plight of the industry, and that is the part of the President's speech where he got into the technicolour sequence. On this side of the House we have tried to support him as far as we could in the difficult situation which confronted him and the industry. In this history we have to go back to the days when the right hon. Member for Bishop Auckland (Mr. Dalton) was Chancellor of the Exchequer. At that time he imposed a 300 per cent. ad valorem duty on imported films, or that is the effect of the duty.

We all agreed at that time that we could not afford to allow the American industry to remit the equivalent of £17 million sterling from this country. But the action was taken very brusquely, and with so very little warning, that it led to a virtual embargo on the importation of American films here. That that in fact was due to resentment over the terms was undoubtedly true, but there are other things, which we ought to remember. I have seen it said—and I believe it to be broadly correct—that in order to finance American imports here, there would have been locked up something like £20 million sterling to bridge the gap between the period when the American producers had to pay the Customs duty, and the time when they earned their receipts. It was not only a psychological fact, but also there was this serious burden.

As far as I know, there was little or no consultation with the industry at all. We know the Government think they can manage everybody else's business. There are times when everybody else thinks that the Government cannot manage their own business, and perhaps this was one of them. There was no consultation with the industry, which was a curious thing, because the Government and most Members in all parts of the House are advocates of general consultation in industrial difficulties. All through this story very little consultation has taken place between the Government and the industry.

Mr. J. Lewis

Does the right hon. Gentleman mean the industry as a whole?

Mr. Lyttelton

Yes, the industry as a whole.

The embargo was on both the Americans and ourselves, and it is to the President's credit that he ended this difficult period by the arrangements of 11th March, 1948. I also thank him for having made the arrangement in a form which I can always remember, because it gave the American producers and importers the right to export the equivalent of 17 million dollars instead of £17 million, which they had been exporting before. He also made arrangements about the investment of any funds earned here in excess of those 17 million dollars. He rigorously interpreted these arrangements afterwards.

Of course, immediately after the 300 per cent. ad valorem tax had been removed, agreement followed about the importation of American films. That was on 27th April. Shortly afterwards, on 11th June, a 45 per cent. first-feature quota was given to British producers, by which 45 per cent. of the first-feature screen time had to be devoted to British films. I think, and I said so at the time, that this arrangement was maladroit and showed the President of the Board of Trade in the somewhat unintended light of being rather smart at the expense of the other parties to the agreement. He should have warned the Americans at the time of the previous negotiations that he intended to raise the quota very sharply.

Mr. Wilson

Perhaps the right hon. Gentleman will forgive me for interrupting. Seeing that the negotiations took place in March, and seeing that I was by statute required to consult the Cinematograph Film Council, which was not set up until some time afterwards, before I could begin to inform my own mind on the quota, how could I possibly have warned the Americans at the time of the discussions what figure was likely to be established?

Mr. Lyttelton

I did not say anything about the figure. The President of the Board of Trade need not have confined himself to the actual figure, but he ought to have indicated that it was his intention to bring about a sharp rise in the quota.

That was one of the things which caused a great lack of co-operation from the Americans at that time. One cannot expect co-operation if agreements which purport to cover the whole field cover only part of it, and then if very drastic action is subsequently taken. We may be told first of all that the embargo acted as a great stimulus to British production. There was a fear that there would not be nearly enough first-feature films to keep the theatres full. That stimulus was afterwards supplanted by the high quota, but the question which the whole of the exhibitors were asking was whether there would be enough first-feature films to keep the industry going.

It was in those circumstances—first, as a result of the embargo and afterwards of the quota of 45 per cent. which was imposed—that the industry threw itself into production with, I think, more enthusiasm than judgment. I believe we are all agreed about that. It is now more the fashion to complain of the extravagance and inefficiency with which they did this than to extol the enterprise and determination they showed to place the British film industry in a good position. I believe that was really the dominating intention which governed their action.

I will confess, to be wise after the event, that the industry did try to expand itself too quickly under those various stimuli and that too much attention was placed on quantity and not enough on quality. At that period of the industry's expansion, the word "efficiency" in relation to artistic production became rather like that which I have cited with some levity about the Rokeby Venus. The effect of the Government's other agreements was even more serious.

I should like to remind the House that by April, 1948, I think, about the end of the spring, the Americans had accumulated rights to export something like 14 million dollars worth of sterling. That is the accumulation over a period of about 10 months and had been banked up owing to the embargo. They also had at that time the rights accruing in respect of films for the following 12 months, namely, 17 million dollars. Then several other factors supervened. As soon as the Americans could export films here they were determined to re-establish themselves in this valuable market and to make their position as impregnable as possible. The fact was that they had not exported anything here for 10 months. They had this right to export and remit in dollars.

The laws of supply and demand began to operate, always the most awkward thing in the Socialist economy. The Americans were very anxious to get in here with their films, and keen competition began. It banked up. Many Americans in some cases accepted 30 per cent. box office receipts who previously would have expected very much more. This situation was one of the reasons why the quotas could not be, at least were not, honoured by the exhibitors. By June, 1948, all the expected conditions governing the import of American films had altered to our disadvantage. There were 31 million dollars' worth of the best American films banked up because of the scramble of competition by the Americans to get in. Later, by November, 1949—and this was perhaps the "most unkindest cut of all"—the Board of Trade was found to be not enforcing the quota for which it had previously legislated.

This is a sad story. It shows what blunders can be made by a Government even if well-intentioned. Even after this record, I think there are some hon. Members, if I am to believe the Press, who are not deterred from hankering after nationalisation.

Mr. Blackburn

Who are they?

Mr. Lyttelton

I am not going to say who they are.

Mr. Blackburn

The right hon. Gentleman has rightly quoted the President of the Board of Trade a moment or two ago. He ought not to make reflections of this kind without specifying who the hon. Members are.

Mr. Lyttelton

If I am wrong, I am glad to learn that what I said was incorrect, but I should be interested to hear whether the hon. Member who interrupts me is really speaking for everybody.

Mr. Blackburn

There is nobody else.

Mr. Lyttelton

As the Debate is allowed to develop I think the hon. Member will find that the speeches will prove that I am nearer to the truth than he is, but I cannot help saying how agreeable it is for me to find myself in agreement with him, and that he is in agreement with the Plant Report, which says, on page 38: For our part, we are unanimously of the view that film production, which requires the free exercise and development of individual enterprise, skill and craftsmanship, is among the businesses least appropriate for State ownership and operation. I am bound to say how appropriate those words are when applied to industries concerned with things other than films and I am glad that the President of the Board of Trade wholeheartedly agrees with that remark.

Mr. Wyatt (Birmingham, Aston)

Would the right hon. Gentleman say that the record under private ownership has been a good one?

Mr. Lyttelton

That is the whole question to which I am coming now in the third part of the subject. Of course, the industry is in difficulties now or we should not be discussing this matter perhaps. Where I think we are getting to is a method of getting it out of the difficulties. The one thing that is not required is nationalisation. Now I am coming to the third matter, which was hardly referred to by the President of the Board of Trade in the course of his remarks, although it is the centre of the subject.

I am glad that the hon. Member interrupted in order to point to what I am now going to say, which is that the third main reason is the Entertainments Duty. I have not got the information and I cannot say if the law of diminishing returns is yet beginning to operate. I should have thought so, but I do not know. Many hon. Members know more about this industry than I do. I should not have thought that the Entertainments Duty would act as more than a slight deterrent to the level of public attendance. I do not know whether hon. Members agree. I should have thought that it might drive the public to rather cheaper seats and might lengthen the queue of those going to see Miss Russell escape a fate worse than death. I doubt if it has a very big effect on the whole attendance of the public but, before attacking the main part of this subject, there are some fairly cogent arguments for altering the incidence of the Duty.

Let us take the hypothesis that the exhibitor is entitled to another 1d. gross on his takings. In order to put that on a 1s. 9d. seat we should have to charge 2s. to the public, because the Exchequer would take 2d. out of the extra 3d. Quite apart from the broader questions, there is something to be said for revising the incidence of the Duty. In these times we have to look upon the Entertainments Duty primarily in terms of Revenue and put that foremost in our minds, but I think that the indirect effects upon the future of the Revenue are probably much more serious than the direct, for if film production involves a certain financial loss, which I shall show that it does, the Treasury will suffer in two ways, and suffer severely. First of all, it will be impossible to maintain the necessary flow of first feature films to fill the theatres and down will go the attendance and consequently, the revenue from the Entertainments Duty. Secondly, the demand from the public for films must in one way or another increase the strain upon dollars by creating a more insistent demand by the public for American films.

The report bears out my fears. It is quite categorical. On pages 27 and 28 are set out the calculations. It was remarkable that in the speech of the President of the Board of Trade only the most passing butterfly reference was made to this subject. The report says: When full allowance is made for errors of computation it remains abundantly clear that the average receipts fall far short of the minimum average cost of production. That is very strong language for a Report: Abundantly clear …. fall far short. Do the Government accept those words or do they reject them? I want to know whether the Government accept those words or reject them. Such information as a private individual is able to gather would appear more to confirm them.

I am told that if one takes an ordinary film such as those in which the National Film Finance Corporation is engaged this is the kind of typical economics of the position. About £140,000 is spent upon the production. I think the President of the Board of Trade will agree with me that at that figure we should not describe the production as extravagant. These are about the costs which are blessed by the N.F.F.C. having regard to our economic situation. The public will probably pay something like £500,000 at the box office to see such a film if it is reasonably successful. Out of that £500,000 the Chancellor of the Exchequer takes £200,000 and the exhibitors and distributors, including the expenses of copies and so forth, about £210,000, so that at the end there is £90,000 left for the producer, who has spent £140,000.

These facts were never mentioned in the President's speech, but they are fundamental matters and they tie up with the first thing of all, which is that the industry starts out with a handicap of having a much smaller market than its competitors who use the same language. These are the economics of what might be called the "run-of-mine" film.

Paragraph 64, which deals with global figures, says that the net proceeds on first feature films are £18,750,000. The share of the market leaves something between 210 and 300 first feature films, and on this calculation, the average return to the British producer would be between £62,500 and £89,200 per film. The £89,200 is the £90,000 which I used in round figures just now. The paragraph concludes with the striking words: On either assumption, the average cost of production cannot be recouped at present from the cinemas in Great Britain. Do the Government accept those words, and if they do, are they surprised by the "sinister" agreement which exists among all sections of the industry when they are in great economic difficulties with the present duty being levied upon them? I think this "sinister" agreement is the result of the persuasion which the President himself has put out.

As I said at the beginning, we all now know that it is the fault of somebody else. The City is not being forthcoming. Of course it is not. I should think very little of the City if it was prepared to finance ad lib an industry which must always be upon a losing basis, at least must always be upon a losing basis according to the Government's own report. It is time the Government occasionally looked at some of their own shortcomings and did not always pass the buck to somebody else.

I have now discussed what I believe to be the three main difficulties facing the industry—first of all, its inherent handicap, second, much Government action during the last two years, and, third, the Entertainments Duty. The report goes on to make a number of other suggestions—they are quite innocuous and will be very largely ineffective—and from a dialectical point of view the President was quite right in directing most of his speech to them. They appeared to me to be valuable but, with respect, they appear to me as a layman to be ancillary rather than to strike at the fundamental difficulties.

I believe that more competitive conditions and bidding for films and some other administrative changes may accelerate box office receipts and even increase them somewhat, and both an increase in receipts and an acceleration of receipts are valuable and helpful, but I should have said that it is manifest that such measures are only palliatives and ancillary action, and, to go back to a delicious phrase by the Chancellor of the Exchequer, they only serve to high-light the deep-seated maladjustments of the industry.

Of much of the other measures suggested I am at least doubtful. The report suggests that the exhibitors should discard the arrangements under which they refuse ever to pay more than 50 per cent. of the box office receipts for a first feature film. At first this 'proposal seems very attractive because it appears to increase the rewards for a very good film and to be cancelling out something restrictive, which I think most hon. Members would applaud as a general principle, but I must say that I am very doubtful about it in practice.

First, this limitation of 50 per cent. is made at a time before the exhibitor knows what the film will earn from the public. He has to make a guess about this. We have to concede that the 50 per cent. restriction deprives a very successful film of the proportion of the box office receipts which it otherwise would have. Under the present arrangement, however, some of the receipts which might have gone to that successful film are undoubtedly finding their way into the less successful productions. There is a great deal in what Mr. Laurie says in his objection on page 58.

I must admit that if we keep the 50 per cent. cap on box office receipts by the exhibitors, we shall take away a large part of the effect of bidding for films. The right way is probably to have some sliding scale arrangement to be fixed after the film has been exhibited, rather than to try to get the cap of 50 per cent. removed altogether. I have serious misgivings at going in one step from the maximum of 50 per cent. of the box office receipts into completely unrestricted bidding for films, and I believe that the result might be the reverse of what we all hope—it might increase the risk of production rather than reduce it. Mr. Laurie says quite clearly: … film production must always be to some extent speculative, and even the best producers sometimes have disastrous failures. I question the wisdom of doing anything that will make these failures even more disastrous and of emphasising the element of speculation by a deliberate attempt to increase the profits of the winners by adding to the losses of the losers. Now I turn to another aspect. Again I may be wrong, but I think I have detected in the Press a desire to run two horses at once in the Parliamentary film stakes over some aspects of this business. It is quite common to complain about the size of the circuits, and of the Rank circuit in particular. I am not here to defend the circuits and my right hon. Friend the noble Lord is not able to do so even if he wished, for we have him muzzled today. We all admit that the size of these circuits brings disadvantages, but it is a little hard for people to complain about the monopolistic practices of the circuits in one breath and, in the next, to complain of the large losses they have incurred.

Once upon a time a monopoly used to be criticised because of its ability to hold the consumer in fee and charge what prices it liked for the goods and services which it gave to him. That used to be the classical example of monopoly. Nowadays this monopoly which is complained of has provided the public with goods and services which cost it £4½ million more than it has received back from them, and has also paid to the Chancellor £9 million in Entertainments Duty. On those terms I think the Chancellor could well do with a few more monopolies, and so could the public.

There is also, I believe, a movement to break up the circuits. Of course one of the reasons why the circuit and the exhibitor is pushed into the production business—and many of us would like to see production more independent—is because the basic economy of this industry is such that unless they willingly go into production the supply of first feature films would undoubtedly be insufficient to fill the deficit. So do not let us blame the circuits for what is after all a piece of self-preservation, the fact that they have had to enter production and, having done so, have tried to protect themselves against competition to some extent. Their whole business is affected.

It is generally true that we on this side of the House think it healthier that an industry which cannot live in a competitive world should wither, and that the labour and materials which it is misusing under that hypothesis should be available for other industries which can contribute to building up the national wealth. However the application of such a doctrine must always take account of special circumstances, particularly of the human factor, and there are many technicians in this industry who cannot readily find employment elsewhere. We are debating this question at a time when there is mounting unemployment throughout the industry and, in many cases, those who are becoming unemployed cannot readily use their skill and talents elsewhere.

Of course a national film industry is, if not as important, at any rate of comparable importance to a national Press or national literature, and it would be a counsel of despair to imagine that a country which bred Shakespeare and Sheridan, Congreve and Bernard Shaw, to say nothing of Keats and Wordsworth—[An HON. MEMBER: "And Rank."]—should have to rely on the exotic productions of another civilisation, however admirable we may think that civilisation to be.

If these arguments have any cogency; if it is true, as I submit it is, that the industry starts out under a grave initial handicap, then we might expect to see the Government lightening this handicap instead of doing everything it can to make it more heavy. Yet it is singled out for almost the hardest slashes of the Chancellor's tax whip, and nothing was more remarkable this afternoon in the long but interesting speech of the President of the Board of Trade than the almost complete silence upon the most important facts which emerged from the report of the committee which he himself set up.

5.25 p.m.

Mr. O'Brien (Nottingham, West)

It is a matter of regret that an important industry such as the British film industry should be the subject of continual Debate in this House, for that is a vote of censure on the industry itself. Of all the industries that should be in a position to manage their own affairs, to solve their own problems and to resolve their own troubles and quarrels, the entertainment industry of this country should be able to do so. Therefore, it is no credit to producers, distributors, or exhibitors, it is no credit to any of the trade unions in the industry, that matters have got so much out of hand that the problems are thrown into the political arena and we have these continual Debates on the state of affairs in the industry. So whatever may be our divergence of opinion on policies with regard to this issue, politically and industrially, I must say, as one who has been in this industry for 30 years, that I feel ashamed that matters have reached such a stage that it is now the subject of political and industrial wrangling.

Despite the implications of the opening remarks of my right hon. Friend, this Debate is more or less non-political in the sense that it is a non-party Debate. I congratulate the right hon. Member for Aldershot (Mr. Lyttelton) on what I regard as being in the main a very truthful and factual historical review of the conditions and the problems of the industry. Many hon. Members on both sides of the House have their own views about the industry. I do not know the degree of their expertness and knowledge, but their views differ considerably from the views which I have expressed both in this House and outside, and no doubt from the views I shall express this evening. Having caught your eye, Mr. Deputy-Speaker, I shall be able to deal with those differences by way of anticipation rather than by way of debate after hearing what hon. Members have said.

The causes of the present issues can be divided into two parts. First, there are what people regard as the original defects of the industry. There are defects in every industry. Why the film industry should be singled out, apparently, as the only one with any troubles, I do not know. No doubt it is due to the fact that it has a great deal of public attention; it is glamourised and catches the eye of newspapers, periodicals and all the rest. Nevertheless, there are defects in the industry quite apart from the general defects about which we are talking; they are the defects which are inherent in any other industry.

Secondly, there are troubles which are undoubtedly due to lack of foresight and planning in the industry, and defects for which Ministers of the present Government are partly responsible. It is very difficult for me to agree with the right hon. Member for Aldershot when I say that the prime cause of the trouble in the second part of the industry's problem, to which I have referred, is the peremptory although necessary action taken by the previous Chancellor of the Exchequer in the imposition of the "Dalton" duty. There is no argument against the fact—I have heard no satisfactory argument accepted by any authority—that that was the first death blow to British films at a time when their prestige was rapidly rising in the United States and in other parts of the world, and when everything was lined up for a great programme of prosperity in production.

I will not traverse the other consequences, but I thank heaven that when my right hon. Friend the President of the Board of Trade entered that Department the first thing he did was to take a live and alert interest in the state of affairs as he then found it in film production. His record in this respect is an excellent one. There may have been mistakes, but the trade as a whole regards the present President as one of the best men the film industry has had. Having said that, I hope that the policies to be propounded by the Board of Trade henceforth will not diminish and dim that lustre which my right hon. Friend has so far earned.

The two reports before us are given a great deal of attention. I happen to have been a member of the working party on costs, with which the first report is concerned. It is rightly said that that report may not have told us anything we did not know before, but my right hon. Friend is quite right when he says that for the first time a body representing conflicting interests got together and agreed on facts. Those facts were not on record before; today they are recorded in a document which has been agreed to by different unions and different bodies of employers. The value of this report will be realised as time goes by and when investigations into the problems are made by this Government and by others. A lot of bunkum is being talked about extravagance in film production. That there has been extravagance is beyond question, but everybody engaged in film production, including labour, has in some way or other benefited by that extravagance. Members of all the trade unions and the artists have benefited.

Mr. Lyttelton

Cheer up!

Mr. O'Brien

Oh, yes, the problem has to be faced, and some of us must have the courage to face our own errors. The fact remains that everybody in the British film industry, from the star down to the girl who works in the canteen, in some way or other has benefited by the extravagance in the industry.

Mr. Collins (Taunton)

And now they are out of work. Is that the benefit?

Mr. O'Brien

The workers of the industry certainly have had no hand in shaping policy. When I say that they have benefited by the extravagance, I mean that they have benefited indirectly from the extravagance of those in charge of policy. Costs of production, however, have been cut to a terrific extent in all studios, and it is a matter of considerable regret, as many hon. Members have verified by their letters to me and to others, that the sufferers are those who have been dismissed and that the axe has fallen mainly upon members of trade unions, technicians, craftsmen and others. The sackings are still going on every week and we are losing men from the industry, many of whom, I agree, may find occupation elsewhere, but many of whom, as my right hon. Friend mentioned, will have difficulty in finding other occupations by reason of the nature of their skill. The great tragedy is that while most of these men and women may find other employment, the film industry is losing a repository of skill and experience which it will be almost impossible to recoup or to regain should the industry get out of its present "jam" and come once more on to the highroad of prosperity. We shall have lost this great repository of experience and skill that is so vitally necessary and which it took Hollywood many years to build up.

I should not like the House to think that this extravagance is still going on. It is being cut out a great deal, and it should be. But I should prefer to use the word "waste" rather than "extravagance." It is waste that has been going on. Waste is unnecessary anywhere, and it must be cut out of film production as it must be cut out anywhere else. But a certain amount of extravagance—using that word in its wider significance—is essential in what I may term "show business." One cannot put on a show in a theatre or in a music hall or make a film in the same way as one would reel out sausages or make pots of jam. There is bound to be an element, not of waste, but of extravagance.

Let me give an example. At this time of year we might put a Christmas tree into our homes for our children, grandchildren or friends. Left in its natural state that tree still remains a Christmas tree, but how miserable and dull it would be to the children on Christmas Eve or Christmas morning without tinsel, lanterns or toys to make it glitter. I regard the necessary extravagance of the film industry in the same way as the necessary extravagance of dressing up a Christmas tree. It may be said that that is extravagance. Of course it is. The tree is a tree despite its adornment and embellishments, but those necessary embellishments must continue. I do not think that my right hon. Friend the President of the Board of Trade is aiming at getting rid of them.

I share the President's view that we owe a debt of gratitude to Sir Arnold Plant and his colleagues for producing such an objective and interesting report. I notice that that Committee was helped by evidence from four hon. Members, including my hon. Friends the Members for Eton and Slough (Mr. Levy), Huddersfield (Mr. J. P. W. Mallalieu), and Devonport (Mr. Foot). I see from the list that everyone inside and many outside the industry gave evidence, so it cannot be said that Sir Arnold Plant and his colleagues rushed into print with the report and recommendations without having regard to those monuments of wisdom and ideas about the way in which the industry should be run.

Those are the immediate factors which face the film industry and which in some way will have to be collated, and solved as one problem. We have the defects of the Anglo-American film agreement, between known as the Wilson-Johnston agreement, which is to be reviewed. There are certain matters arising from it which cannot be ignored and which I am sure my right hon. Friend will be going into. Much of what I was going to say about the effects of that agreement has been said by the right hon. Member for Aldershot, and I will not take up the time of the House on it.

There is the question of American sterling balances held here. Many of us believe that they should be used to make British films, or American films, in Britain. I will be frank with the House and say that at the moment I am speaking with my head under the cold water tap and my feet on the earth, very realistically. Members of my union and of other unions, who are being dismissed from employment without prospects of absorption for years to come, would not be averse from making films in studios sponsored toy sterling balances held by Americans in this country. The President of the Board of Trade should endeavour to arrange with Americans the permissible use of sterling here in the manufacture and making of films in our empty studios.

We have the problem of dollar remittances, a wider problem, on which the entire industry is in agreement with the Government. We cannot agree to any policy which would involve us in difficulties in regard to dollars. It is agreed by those of us who have been in the industry for years that the basic rock-bottom problem of the British film industry—which unless solved will always create other difficulties and problems—is the fact that we cannot continue to make good British films of a type that our British audiences will continue to see unless we have some reasonable access to foreign markets. We cannot recoup the costs of production in this country of British films continuously made and continuously pleasing British audiences. That is a fact, although it is ignored by many. As far as possible, we should arrange our scheme of things to get reasonable access to the North American market and other markets, in South America, Europe, the Colonies and the Dominions. In that way we can be assured of the continuity of production of our British studios. If we could get even under 5 per cent. of the United States market alone, our problems would be over.

Mr. Bena Levy (Eton and Slough)

Will my hon. Friend say how he would manage to achieve that?

Mr. O'Brien

It is not my duty to solve the problem; I can contribute towards the solution of the problem and, in answer to my hon. Friend, I advocated on the occasion of my last but one visit to the United States that there should be on the Films Council all the American interests, including labour, British interests here, including labour, plus the Board of Trade, plus a request to the Board of Trade, if they could get their interest, to include the American State Department, or Trade Department equivalent to our Board of Trade. By the establishment of such an all-in Films Council, an international films' council, these problems could be looked at and possibly solved, without having to come to this House for a Debate of this kind almost every three months. That is one idea I put forward, but vested interests on both sides of the Atlantic thought otherwise. I can go back to the days when the Ostrer Brothers almost "went broke" in trying to establish a distribution agency in the United States, and one must give credit to Arthur Rank. He has spent a great deal of money in the United States in building up a distribution agency and has invested a great deal of money in Canada in order to try to get a footing in the Canadian market. When I hear some people criticising a man like Rank, I think they do not know what they are talking about.

Mr. Michael Foot (Plymouth, Devonport)

How many dollars did Rank earn in the United States? He refused to give any figures and if we could have the figures through my hon. Friend, who has access to them, it would enlighten the House.

Mr. O'Brien

That question would be more appropriately addressed to the Chancellor of the Exchequer—[An HON. MEMBER: "It has been."]—who has access to them; I have not. I do not think Rank would object to giving the figures to anyone.

Mr. Levy

The answer of the Chancellor of the Exchequer was that the receipt in dollars is negligible.

Mr. O'Brien

I like to hear these experts on films. It is like a Debate on Foreign Affairs in which there are so many Foreign Secretaries in the House that I have great difficulty in following the actual Foreign Secretary. I am not criticising it at all, but when my hon. Friend says that it was negligible, he, as one who is not uninformed about the entertainment industry of this country, must not overlook the fact that though dollars are earned by Rank, or Korda, as the case may be, distribution charges and costs have to be paid out of those dollars. As far as I know, the Rank organisations or any other similar organisation have not had a special allocation of dollars from the Treasury or the Bank of England to set up a distribution agency in the United States.

Mr. Boothby (Aberdeen and Kincardine, Eastern)

Surely they have.

Mr. O'Brien

I do not know; if so, it could not be much.

Mr. Edgar Granville (Eye)

On the Board of Trade recommendation.

Mr. O'Brien

The expenses would be met out of earnings in the United States and, if the cost exceeded the earnings, the receipts would be negligible.

The other factor with which we have to deal is the question of quality and quantity. That has been referred to in the two reports in different ways. Whatever we do, for heaven's sake do not let us sacrifice the quality of our films merely to get quantity. Mr. Rank has learned that lesson much to his sorrow. The President of the Board of Trade mentioned it in his review of what happened in that particular episode.

The British have a reputation abroad in all countries for the quality of their goods.' Films must not be an exception. We must maintain quality whatever happens. Quality does not mean extravagant or wasteful pictures. It does not necessarily mean prestige pictures, but we cannot continue to make on a cheap scale quality pictures which will continuously please our audiences and meet with that requirement in our market overseas. Money has to be spent on quality films, because they cannot be made for £50,000 or £60,000. One or two can be made; a good picture can be made for £100,000, but we cannot continue to make quality pictures on a cheap basis. We must keep to quality.

That brings me to the last two points which I wish to make, which concern the Film Finance Corporation and the question of quota and Entertainments Duty. The Film Finance Corporation was a great source of salvation to the industry a year or so ago, but I agree that it is not the answer to the industry's problems. Like everyone else, it charges interest. It charges 4½ per cent., which I think is excessive. If the intention of the Corporation is to help the industry, why should it act like a bank? That is a comment not a criticism, but if what it does is done to help the industry its interest charges are too high.

We do not want the Film Finance Corporation to take the place of the industry's responsibility for putting its own house in order. There is certain criticism at present that the Film Finance Corporation is beginning to act as a censor, that it has to look at the scripts and even pass comments upon them. I happen to know Lord Reith, the chairman of the Corporation, and Mr. Laurie, the managing director, and I am quite satisfied that neither of these gentlemen nor their colleagues on the Corporation wish to act as censors, but by the very nature of their task and responsibility they have to be sure as to what it is for which they are advancing the money. That comment is enough to show that we do not look to the Film Finance Corporation as a complete solution of our difficulties.

Of the quota I will only say that it has not saved the industry. There is more unemployment today with a high quota than there was when the quota was 20 and 25 per cent. A high quota has failed miserably. The facts are staring us in the face. Studios are closing and all the statutory enforcements in existence will not make films. The quota only obliges the exhibitors to show the films. There is no demand coming from the cinema or from the public to enforce that demand. There is in fact no effective demand, and no finance which would meet an effective demand. A mere statute compelling exhibitors to show 45 per cent. British films is as bad as compelling a grocer to sell pots of a certain make of jam when no pots of such jam are being produced. It is nonsense. We want a realistic quota, whatever the figure may be.

I would not advocate that the quota should be abandoned. I advocate the quota being at a figure that could be met—in fact, at a figure which exhibitors of all kinds can exceed. It is far more dignified to have a quota that is" exceeded, than to have one which is falling down badly.

Mr. Gallacher (Fife, West)

If all the studios were working, could not the quota be met?

Mr. O'Brien

My answer to the hon. Member is that all the studios cannot work because there is no money available to open them, there is no money available to make films in them. If money were available to make films in all of them, the quota could be met, but money has to be available to open studios and capital to make films. There is none available except what is left of the gallant £5 million of the Film Finance Corporation, which is very little. I do not know the figure, but it does not mean anything in the production programme of the next 18 months.

Much can be said about the Entertainments Duty, but this is not quite the occasion on which to say it. It is a fiscal matter which concerns the Chancellor of the Exchequer, but the House cannot ignore the very serious statement in the Plant Report on the question of the Entertainments Duty. Nor can it ignore the fact that almost the entire industry on both sides is unhappy in one way or another about the tax. Reference to this unity brings me to the "sinister plot" or whatever was in the mind of my right hon. Friend in respect of deals being made by the various interests. No deals have been made. There is no sinister movement, no ulterior purpose about the matter. The industry and its various sections have realised that they have been clowning and making fools of themselves for many years with divided policies, etc; that we are bringing public odium upon ourselves by the antics of that last 25 to 35 years; and a greater sense of responsibility is entering into the minds of the leaders on both sides of the industry, including the trade unions.

We are trying to see what common ground there is on which we can stand and upon what common purpose we can agree to solve our problems. We have reached unanimity on one point only upon which we made representations this morning to the President of the Board of Trade. The Association of Cine Technicians, which represents the technicians of the industry, the Electrical Trades Union, my own organisation, all the leading producers and also the documentary and specialist producers went to the Board of Trade and made representations on one point. That idea briefly was to obtain, in effect, the complete abolition of the Entertainments Duty in respect of British films and for an entire British programme, that the tax should, by an agreed percentage, flow back to the producer of a film already made and taxed on condition that that producer was in the course of making his second film, so that the finance would be earned by the tax on the first film automatically going back to the producer for his second film, and so on, and that an incentive should be given to the exhibitor by way of a percentage so that there would be a greater desire to show an entirely British programme.

That was the case, and my right hon. Friend has promised to look at it and to collect whatever information he can upon it. It is a practice which I believe operates, or is to operate, in Italy and in some form in France. The point is that the Governments of those two countries feel themselves compelled in some way practically and constructively to aid their native industries by relieving them of this taxation, provided that The tax flows back to the proper quarter. There are other ideas on the subject of Entertainments Duty relief. The Cinema Exhibitors' Association, as hon. Members know, have circulated literature. They can make out a case irrespective of the prosperity or losses of the industry. That is a matter which will have to be discussed on another occasion. There are other ideas about Entertainments Duty in other quarters. We agree that those quarters can further their case as they wish, but the idea of which I have been speaking is an agreed one between all the parties concerned, and is worthy of having notice taken of it.

Finally, if the Government of the United States applied to American cinemas an entertainment tax of the same percentage—roughly £38 to £40 million a year in this country—of about 36 to 40 per cent. of the takings, the entire movie-picture industry of the United States—the distribution and the exhibition—would collapse. Although it is mighty, and is stronger than we are, it would have to fold up in less than three months. The best picture costs the same to the public as the worst film. The difficulty of producers is to recoup from the best and more paying films the losses experienced on inferior films.

There is one point which I wish to refer to my hon. Friend the Member for Devonport. His idea, from what I have heard and read of his views, is that the argument against the Entertainments Duty is a bad one, because it is a Purchase Tax, and that any other industry could have its Purchase Tax taken away. That makes it appear that the argument of those in the industry, who feel that this duty is too heavy and acts as a block and a barrier to progress, is a bad one. A little thought will shown that the Entertainments Duty is not a Purchase Tax, and nothing like a Purchase Tax. The Entertainments Duty in itself can be attacked, quite apart from the fact of whether the entertainment industry is prosperous or not. Tobacco, beer and whisky, and so on, have been used as examples. A film shown in the cinema once a week or twice a week is not the same film. Every film is a different film and is probably made by different directors, by different artists, at different studios and probably in different parts of the world. Tobacco and beer do not fall into that category. If the tobacco manufacturers had to make a separate type of cigarette every week or a separate type of tobacco every week; if they had to have different sizes and lengths week after week; if the brewers had to brew a different bottle of beer every week, of different sizes and so on, that argument would apply. But tobacco and beer and wireless sets are all of a fixed pattern. They all conform to one pattern. Films are not made that way.

Mr. Follick (Loughborough)

Are they not?

Mr. O'Brien

No, and consequently when hon. Members on both sides of the House think of the Entertainments Duty as a Purchase Tax, they should keep that particular example in mind. I hope that whatever the Government can do as a short-term policy—

Mr. Wyatt

Will my hon. Friend explain why, if the Entertainments Duty were reduced, the benefit of the reduction should not be passed to the consumer rather than the exhibitor?

Mr. O'Brien

I did not say that the benefit should be passed on to the exhibitor exclusively. I dealt with one example, where a plan or idea was placed before the President of the Board of Trade this morning that the Entertainments Duty should be taken off British films, or preferably off British programmes, and an agreed percentage given to the producer of the film which earned the duty and a small percentage as an incentive to the exhibitor. The argument which involves the consumer or picture-goer is one which I will not take up at this stage, because it is not relevant to the point. It may be dealt with when other proposals come before the House, probably at Budget time.

I hope that the Treasury will favourably consider the present plight of the industry. Everyone in it is involved; workers and technicians and artistes, all are affected. I can assure hon. Members that extravagance, or waste as I should prefer to say, is a thing of the past, and if in some way or other the Treasury can come to the rescue of an industry which is vitally necessary for the wider interests of this country, then that industry will be grateful—and not only the industry, but the public, who like our good films, will ever bless the Government for whatever help or contribution they can make.

Mr. Mitchison (Kettering)

My hon. Friend has talked about incentives to exhibitors. What is the difference between an exhibitor who has an incentive and an exhibitor who has not? My impression of this industry has always been that they went on exhibiting until they went "bust."

6.5 p.m.

Mr. Boothby (Aberdeen and Kincardine, Eastern)

The House always listens with great attention to an expert on any subject, and we have listened with great attention to the hon. Member for West Nottingham (Mr. O'Brien), who made a very interesting speech. I make no claim to be an expert at all; I am only an observer. I think that the hon. Gentleman made a very valid point when he said that, looking back, we had made two pretty bad mistakes. The first was our mishandling of our relations with the United States of America in respect of the film industry ever since the war, and particularly the handling of it by the former Chancellor of the Exchequer. I think that the action we took was absolutely disastrous. Quite frankly, we were not in a position to take high-handed action of this kind. We were inviting retaliation of the most vigorous character, and we got it from a competitor who was stronger than we were. We have now to face up to the consequences.

There was a second point made by the hon. Gentleman which interested me very much. He confessed that there had been great extravagance in this industry in the past, if not waste; and then he said that it was over. He implied that this did not matter very much any more, but of course it does matter. I believe that the extravagance which has been displayed by this industry generally—and that goes for everybody—is to some extent responsible for its present plight. I should like some more assurances than we have had in this House that that extravagance has really come to an end. I wish to tell the House that I have recently seen some people connected with the American film industry. They were not high-ups, not stars, and nobody whom I am prepared to quote by name; but I believe what they told me.

Because they have had great experience, I asked them what in their opinion was the real trouble in the film industry in this country. They told me that one of the main reasons, apart from anything else, was the frightful slowness. They told me that M.G.M. 'has a studio in this country in which they are now producing films. I think they have produced a film called "The Forsyte Saga"; and they are now producing a second edition of "Mrs. Miniver." They also had plans for producing further films in this country, at American expense. These experts on the American side told me that the contrast between the time taken to produce films in this studio and the time taken in Hollywood was almost in the proportion of three to one. They said that every technician, for example, carpenters—and I give only the one example—that for one carpenter employed in the United States there were two or three employed in this country. They said there was no stream-lining of any sort, kind or description.

Then they said there were "elevenses," and for a moment I could not think what they meant. They said it meant that everybody stopped for tea at 11 o'clock in the morning. If they only stopped for tea at 11 o'clock in the morning it would not be so bad. But they stopped for tea continuously, at one o'clock, at three o'clock and at four o'clock, when everybody sat down and had a kind of garden party. There were the high-salaried stars sitting round with nothing to do, and everybody going pretty slow and taking it pretty easy. Meanwhile all these high-powered and high-salaried stars have to be kept week after week and month after month in this country. They can rightly demand, and they get, extremely comfortable living conditions, shall we say, perhaps at the Dorchester Hotel. Whereas, if the thing were streamlined and really working at high pressure and efficiently, they would be here for perhaps five or six weeks, they are kept here making one film for three months instead. I was informed—and I see no reason to doubt the accuracy of my information—that whereas M.G.M. had contemplated making another three or four important big films at their studio in this country, the delay has been so great and the consequential expense has been so great that they are now seriously contemplating scrapping the whole of the rest of their programme. That will mean that the studio will be closed down.

Mr. Wyatt

How can that be so when presumably M.G.M. are using frozen sterling in this country? It can mean nothing to them.

Mr. Boothby

My experience of a rough life is that expense is never totally meaningless to anyone. I think that the expense factor does come in, even if one has assets which may be temporarily frozen. One may take the view that one might expend those assets in a more profitable way than by wasting them, if one really thinks that it is waste. If we think that we can take advantage of our position as holders of frozen assets of the United States to mulct them by producing films in an expensive and inefficient way, I think that we shall make a very great mistake. That is not how the American mentality works.

Mr. O'Brien

The hon. Gentleman should know that his American friends gave him a very coloured and extravagant picture of what is happening in the British studios. The tea breaks are the ordinary tea breaks which are enjoyed by workers in most factories under trade union agreements and they are not of the character described by the hon. Gentleman. I am sure that the English directors of Metro-Goldwyn Mayer will tell him that extravagance in costs of production in Hollywood is far greater than in this country.

Mr. Boothby

I have had a look at Hollywood, and I have had a look at our studios here. It seemed to me, purely as a superficial observer, that it was a more streamlined business in Hollywood; that people were more on their toes, and more anxious than they are here to get the job done quickly. At a time when the film industry in this country is going through a very difficult period, and everyone is apprehensive about their jobs, there is a great incentive not to hurry too much in case, when the film comes to end, there will be no job left. That is understandable.

Mr. Gallacher

Oh.

Mr. Boothby

The hon. Member for West Nottingham (Mr. O'Brien) said that people are actually being thrown out of employment in this industry, and so it will go on. If one has an industry where unemployment is not only threatening but actually taking place, of course there is always the temptation to drag on a little bit in order to keep the job going. That is most understandable. I ask hon. Members whether there is not also something in the question of redundant labour, particularly technical labour. Are we not employing, under present conditions, too many men on a particular job to make a really efficient competitive production?

That brings me to my last point. Here, from a competitive point of view, we are absolutely up against an industry which nobody can say is inefficient. I think that we have come up against one of the fundamental difficulties of this country, that competition is in many industries, and over a very wide field of industry, almost a lost art. Here in this industry we are feeling the full blast of competition almost for the first time, and I think that we must take very serious account of that.

We have proved since the war that we are capable of making in this country what I think are the best films in the world. I think that a great deal of the credit for that, if we are to be fair, must go to Mr. Rank. He has produced some very fine films, and some magnificent documentaries. For my part, I am particularly interested in a recent documentary which he produced about the possibilities of a greater unity in Europe. I thought that was the best propaganda from the point of view of those of us who are interested in a united Europe that I have ever seen.

Not only from a British, but a European point of view, it is absolutely essential that this industry should be revived, because it has come to that now. It is not a question of preserving it; it is a question of reviving it. If we are to do that, the industry must become reasonably competitive. It must become more efficient than it is now, and less extravagant than the hon. Member for West Nottingham admitted that it has been in the past. If it does all these things, then I think that its claim for some direct financial assistance from the Government—I will not specify the form now—will be very much greater than it has been during the past four years.

6.16 p.m.

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

The hon. Member for East Aberdeen (Mr. Boothby) may well have brought out one of the underlying defects of the British film industry when he referred to the slowness of production by comparison with the United States. But I do not think that he imagines—I am sure he does not—that to remedy that defect alone, whether by cutting out these alleged tea breaks or by more drastic methods, will get us out of the difficulties which we face. Speaking personally, I have been disappointed so far by the Debate because no one has really made any concrete suggestions about what should be done to get the industry going again and to deal with the immediate troubles which it faces.

The right hon. Member for Aldershot (Mr. Lyttelton) spent part of his speech blaming the Government for the failures of private enterprise. He spent another part of his speech in mentioning proposals put forward by other people and proceeding to puncture them. He did not himself put forward one concrete suggestion about what should be done to help the industry. My hon. Friend the Member for West Nottingham (Mr. O'Brien) in a very lengthy speech, so far as I could see only put forward one suggestion, and that was one which I understand he had already put to the President of the Board of Trade privately this morning. That suggestion was in connection with Entertainments Duty.

Before trying myself to put forward one or two humble suggestions, I should like to put my point of view about Entertainments Duty. I think that the campaign that has been run in the country in recent weeks in favour of a flat reduction in the duty is a very dangerous one indeed. We are out to help the production of good British films, but a flat reduction in the duty, among' other things, would help the producers of American films, and it is no part of our job to do that. It would also help the producers of bad, extravagant British films, and it is no part of our job to do that. Further, it would help the distributors and exhibitors, and I am very far from being convinced by anything I have read in the recently published reports that in fact the distributors and exhibitors need any help whatever. Therefore, I beg the President of the Board of Trade to reject outright any demand for a flat reduction of Entertainments Duty.

The proposal put forward by my hon. Friend the Member for West Nottingham is not that. It is a much better proposal than that, but I think that it has a serious defect in that it will mean that bad producers as well as good—bad in the sense of extravagance, quite apart from any question of quality—would get the benefit of the remission of tax just as would the good ones. I should like to concentrate any help we give upon the good ones. I suggest to the President of the Board of Trade that if he intends to consider that proposal seriously, he should make one or two additions to the proposal. One is for the benefit of specialised film producers—the makers of "shorts." I should like to see him specify that they shall get a certain stated percentage of the tax remitted for the further production of short films.

Furthermore, I think we must extend the idea to cover not only all British programmes, but any programme in which a British film is shown. It seems to me that it would be very hard on the producer of some British film, who happened to sell his film to a circuit which was showing American films at the same time as British, if he himself, because his film was not in an all-British show, could not get the benefit of the remission which would be given to an all-British programme.

But I do not myself think that it is by way of remissions of Entertainments Duty that we are going to find any immediate solution to the problem now facing the industry. I would, therefore, as quickly as I can, put forward one or two suggestions which might well be considered for the immediate assistance of the British film industry. First, the British Film Finance Corporation. I suggest that at once—and by that I mean this week—the British Film Finance Corporation should find out how many good directors who have a good record are out of work. Having done that, they should get hold of them and find out how many of them are able and willing to work, in the sense that they have got scripts ready or reasonably nearly ready. Those who are ready to work should at once, with or without a distribution contract, be given financial assistance to get on with the job.

I know there are risks, but it seems to me that the production position has become so desperate, with Denham as the latest one to close down on the 23rd, that unless something unconventional in the financial sense is done right away, we shall have the bulk of production stopping entirely. I would also like to see some provisions being applied to the use to which the money that is issued is put, such as some of the suggestions about the reduction of production costs, which were mentioned by the hon. Member for East Aberdeen (Mr. Boothby) and also by the Gater Committee.

Now I come to the second point. One of the troubles from which it seems to me the producers are suffering at present is the fact that the allocation of the proceeds of a film is unfair. Maybe there is too much for the exhibitor and too much to the distributor, and not enough going to the producer. I do not know; it is very difficult to tell, but it seems to me to be possible that that is so. I believe that the one way in which we can help to make certain that that shall not continue to happen in the future to the same extent as it has done in the past would be to establish, again through the British Films Finance Corporation, a public renting corporation. I believe that the Finance Corporation has the power to do that without further legislation. I suggest that this public renting organisation, taking for itself out of the proceeds of a film only an amount necessary to cover its costs, would make possible a greater share of the proceeds of a film to be sent back to the producer.

Mr. J. Lewis

With which circuit would such a public renting organisation be tied up?

Mr. Mallalieu

With all of them; it need not necessarily be tied up with any one circuit.

The next thing I would suggest, in opposition to the point of view of my hon. Friend the Member for West Nottingham, is that we should put more teeth into the quota. At whatever rate it is fixed—and my hon. Friend said it should be a realistic rate—once we have fixed that level, let us see that it is properly operated. The present level officially is 40 per cent., but I am told that exemptions are so great that the average level is something like 27 per cent. That seems to me to be no way of conducting the nation's business. It should be made clear to all exhibitors that, once the rate is fixed, if they choose to disregard it they will be fined very heavily indeed instead of receiving warning letters and that, on the third offence, the right of the President of the Board of Trade to take away their licences will in fact be exercised.

I should also like to put before the House a proposition which has been made many times before concerning the double-feature programme. At present we are faced, for reasons of which we are fairly well aware, with a shortage of British films, and indeed of films of all kinds, and we should do our best to economise. By means of legislation we should stop the double-feature programme. I believe that would be a tremendous saving of first-feature films. It would also offer tremendous encouragement to the producers of the "shorts." I should like to go back to the old-fashioned cinema programme of my childhood, when, as far as I can remember, we used to have a nice documentary the big feature, a serial with Pearl White or William S. Hart and then Charlie Chaplin. That was the best four pennyworth I have ever had, and it was a contribution—[HON. MEMBERS: "Tory misrule."] That is one way in which we can make the immediate cuts that are required, but side by side with the immediate programme we have got to get down to the long-term policy.

My hon. Friend the Member for West Nottingham has been complaining that every three months this industry comes before the House for discussion of its affairs, and he dislikes it. I think he said that this is the result of what he called "messing about," just dealing with things from day to day and not trying to achieve a long-term policy for the industry. Under that heading of a long- term policy, I would recommend, if indeed they need recommendation, some of the suggestions included in the reservation by Mr. F. A. Hoare in the Gater Report. The recommendations made there were, in general, for a greater planning of the industry on the production side, and an attempt to get together the various individual companies, so that they would let each other know what their own production programmes were. Even more, I think Mr. Hoare had in mind the idea of making a survey of the capacity of the industry, and by capacity I do not mean merely studio space, but include the services of directors, technicians and the rest. Having discovered what is the reasonable capacity, it should be our job to see that that capacity is fully and steadily used. We should plan production so that it is sufficient to occupy the total capacity, and should organise it in such a way as to ensure that, when one picture finishes, there is another ready to go into production.

There is another, and last, suggestion. I was asked a few momments ago about the public renting organisation and whether it would be tied up with any particular circuit. It is not necessary that it should be so, but I think that, on the whole, it would be desirable if that renting organisation could have behind it a circuit which would be reasonably well disposed to the public renting organisation. I therefore return to a proposal which I and some of my hon. Friends have made several times before, that we must now seriously consider the creation of a State circuit as well as of a State rental organisation. [HON. MEMBERS: "Oh."] I am afraid that, as always, hon. Members opposite are far too dogmatic and doctrinaire. Oddly enough, though I am a Socialist, I do not believe in the nationalisation of the film industry. I am not dogmatic or doctrinaire about it. But if the State comes into an industry in any other way except to dole out money, then, apparently, it is wrong in the dogmatic minds of hon. Members opposite.

I would say that the future of the film industry is probably going to be bound up with the provision of a State circuit. I will not tonight, partly because of the shortness of time and partly because I have done it before, go over the arguments in favour of it, but I should like to commend once more to the President of the Board of Trade and to the Parliamentary Secretary this proposal which has been put forward in detail to the Board of Trade. I would say, as I said just now, that this industry is not suitable for full-scale nationalisation. Quite clearly, from the experience we have had, it is equally unsuitable for full-scale private enterprise. Here is an industry which, it seems to me, is best suited to something which is a mixture of the two, something which would enable it to use those parts of private enterprise which would give freedom to directors to develop the ideas in their heads, and, side by side with it, the advantages of public enterprise which would give it a reasonable chance of having its products shown.

Mr. Gallacher

Does the hon. Gentleman mean by that remark that if an industry is nationalised, the directors associated with it are incapable of developing ideas?

Mr. Mallalieu

By no means. But I would suggest to the hon. Member, whose experience in these matters is perhaps greater than mine, that there is a difference between ideas and material things. Generally speaking, I want to nationalise material things, but I want to keep ideas as individually free as we possibly can.

6.34 p.m.

Mr. Erroll (Altrincham and Sale)

What a contrast there has been between the speech of the hon. Member for Huddersfield (Mr. J. P. W. Mallalieu) and that of the hon. Member for West Nottingham (Mr. O'Brien)? The speech of the last named contained much that was right and sound about what is necessary for the industry. I particularly like the remarks about the need for courage in talking about extravagance to both sides of the industry. I only hope that, in fact, the hon. Member for West Nottingham will speak to that section of the industry which he represents as he has spoken this evening. By contrast, we have the remarks of the hon. Member for Huddersfield advocating a State circuit. "When in doubt advocate some State organisation," seems to be the theme of hon. Members opposite.

The hon. Member for Huddersfield pointed out that we on this side were being doctrinaire, and that we only invited the State in to dole out money. We are opposed to nationalisation just because we find that in almost every nationalised enterprise the State has to dole out money. We are therefore opposed to a State circuit because we see in such a proposition, quite apart from the evils of extended State power, the prospect of yet further drawings on the Exchequer to subsidise its inevitably inefficient operation.

It was satisfactory to hear in the opening remarks of the President of the Board of Trade that this Debate was to be in the nature of a general discussion, and that no hard-and-fast line of policy had been adopted by the Government. Far too often we have come to a Debate in this House only to find that the Government have decided their policy and that the Debate has been arranged merely as an opportunity to blow off steam without our having any chance of effectively influencing a policy already decided upon. It is indeed a welcome change to find that we can all, by reason of our speeches today, hope to have some influence on the Government's policy in the matter of the film industry.

I hope that during this Debate we shall avoid any polemical references to figures in the industry. I notice that already one or two remarks have been made about Mr. Rank—some good and some bad—but I hope that hon. Members opposite will not descend the easy road of damning figures in the industry, because that does much harm outside the House as well as inside. If the management of the industry is persistently "slated," it will only create a bad impression and make what is urgently needed in the industry, namely, the full collaboration of both sides, all the more difficult to obtain.

What we on this side wish to see is more collaboration at all levels of the industry, between workers, technicians, producers and distributors. I thought that the speech of the hon. Member for West Nottingham was a notable contribution in that direction. I am sorry to find, of course, that if anything constructive is said by an hon. Member opposite, he is immediately met with the jeers from his own side. They cannot even listen to one of their own colleagues with whom they happen to be in disagreement without noisy jeers and laughter, but, of course, that is another aspect of the Socialist Party.

Earl Winterton

They hate each other almost more than they hate us.

Mr. Erroll

As my noble Friend says, they appear to hate each other more than they hate us, and that is one of the most regrettable appendices in that book of Socialist demonology from which they all draw from time to time.

Today we heard a rather regrettable aside by the President of the Board of Trade when he referred to the industry's views on the Entertainments Duty as displaying a "sinister unanimity." I do not want to make too much of what was only an aside; on the other hand, it is significant because it shows the way in which the mind of the right hon. Gentleman naturally works. Sometimes asides are very revealing. They sometimes show the true state of a man's point of view more than does a prepared speech. There was surely nothing sinister about the industry responding to the recommendation of a powerful and impartial committee and saying that they were in full agreement with it. If they do not get together, that is a fault; if they display unanimity, that, too, becomes a fault and is labelled "sinister." I hope that hon. Members opposite will refrain from using that type of language on which they so freely draw from time to time.

The President of the Board of Trade dealt very lightly with what is, in fact, the main cause of the troubles in the industry. The disease from which the film industry is suffering is that of Government interference. The reason this industry is worse off than any other is that it has been more interfered with than any other industry in the country. I do not allude merely to the Parliamentary Debates which were referred to by the hon. Member for West Nottingham; they are but a reflection of Government interference. The interference is far more widespread than that.

The Minister referred to the "City angels" withholding their support. It is something new to hear financiers described by a Socialist as angelic. It is welcome perhaps to see this change. But why did they withhold their support? They did so because it was no longer desirable or worth while to put money into an industry which was being subjected to so much amateurish interference. That is what happens to all aspects of free enterprise economy. If one creates by Government interference conditions in which money cannot fructify and expand, the interferers have only themselves to blame. It is no good putting the blame upon the shoulders of the financiers or the leading figures in the industry itself. The precise details of interference were well outlined by my right hon. Friend in his opening speech—the heavy import duty followed by the reaction of the ban, then the new quota so arranged that it caused the maximum discontent among American producers, and all the time the figure of Mr. Johnston flitting from room to room in Mill-bank and phoning the President late at night.

Mr. Boothby

Is the hon. Member referring to the President of the Board of Trade or the President of the United States?

Mr. Erroll

The President of the Board of Trade. That is my main complaint against the behaviour of the President of the Board of Trade in this matter. I do not think that he has behaved with the full dignity of his office. He has been quite content to deal with an American civilian who may be quite reputable in his own way but whose position does not hold the same status as the office of the President of the Board of Trade. The attitude of the President of the Board of Trade towards the American industry has been most undignified. I will not proceed further, as he is not here, but I should be glad to hear later an explanation of why such an unconventional approach should have been deemed right and proper in this field. By a more aloof and dignified approach to the problem, instead of running after one particular civilian in the United States of America, the President of the Board of Trade might have secured far better terms for the British film industry.

I want now to turn to the Entertainments Duty, as it obviously and inevitably represents a major factor in any discussion of the industry today. The President of the Board of Trade deprecated the industry, to use his own words, begging for tax relief. But if one is hard hit by the taxation levied by a Government, it is quite honourable to appeal against it. It has been done by other industries, and done successfully. I have only to cite the radical change in Excise Duty on motor vehicles, passed in a recent Finance Act, to show that other industries have adopted the technique of obtaining taxation relief in order to improve their industrial position.

In any case, as the Entertainments Duty is a duty essentially on turnover, surely it is unfair and unjustifiable at a time of declining attendances at individual cinemas. The whole position of Entertainments Duty is riddled with anomalies, as the spirited questioning in this House in the last few days on the subject of "A Streetcar Named Desire" has shown. Here is a profitable dollar play which is performed free of duty at the same time as British films are heavily taxed on the turnover basis.

A good deal of play has been made of the fact that there are only two or three distribution networks which can exercise something like a monopoly control over what is produced. Surely, as the cost of producing films increases—and it has now reached six figures in most cases—the producer has got to have some guarantee that his film will be accepted and shown in a large number of cinemas. It is, therefore, inevitable that the exhibitors should coalesce into several big groups and so provide the producer with a sufficient guarantee to go ahead with a highly expensive production.

One sees in other walks of life much the same process taking place. In fact, it would be difficult to imagine a firm or undertaking embarking upon an entirely speculative production of such magnitude in the hope that it would be sold. For example, any building construction work is proceeded with only against a firm tender or a firm order. One would never build a large works or structure of any sort entirely in the hope of selling it some time afterwards to an unknown purchaser. Before one embarks upon an expensive piece of construction one must have some guarantee that what is made will in fact be purchased. So with the modern expensive films. There must be some guarantee for the producer that there is a likely outlet on a sufficiently large scale to provide a chance of the picture proving remunerative.

The hon. Member for Huddersfield referred to the Charlie Chaplin shows of his childhood and their cheapness, for which a Tory Government is entitled to take its due share of credit; but, of course, the main reason why such films were cheap was that they were much easier to produce and were not nearly so expensive. Production has become more expensive not only because of the inevitable extravagance but also because the technique is more complicated and the standard has become much higher. I think it is essential, therefore, that we should not look to the break-up of the distribution network and a return to a position of entirely unrestricted competition, because that might be very much worse for the producers in the long run.

I agree, however, with the Plant Report that there is a strong case for some freeing of competition. One important factor in that freeing of competition would be to make more copies of a film available in England. There are four very significant paragraphs in that report—paragraphs 73 to 77—which deal with the production of film stock from which copies are made. Film base, from which the film stock is made, comes mainly from America, and has to be paid for in dollars. While some proposals have been made for its manufacture in this country, nothing very much has come of the suggestion, due largely perhaps to a certain Board of Trade reluctance to give the necessary approval, authority and encouragement to this development.

Mr. Kenneth Robinson (St. Pancras, North)

Has the hon. Gentleman any reason for believing that that is why the factory has not been built?

Mr. Erroll

Yes. The report strongly urges that the Board of Trade should investigate its own position in the matter. The matter was originally sponsored by my right hon. Friend the Member for Aldershot (Mr. Lyttelton) when he was President of the Board of Trade, and it seems to have lagged ever since. Perhaps I may quote from the report. This. is strong language for an impartial official report. It says: … we would strongly recommend that the Board of Trade should investigate the present state of the projects for industrial development to which we have referred and assure itself that the work is pressed forward upon a sufficient scale with all speed.

Mr. K. Robinson

There is no suggestion whatever that the Board of Trade is in any way to blame.

Mr. Erroll

Having read many of these reports, I know that a sentence of that sort is as near to a stricture of a Government Department as an official report normally can go.

Mr. Wilmot

Has the hon. Member any evidence that this is not a private enterprise venture.

Mr. Erroll

There is plenty of evidence to show that many private enterprise ventures are frustrated by Government interference or Government activities. I think it would not be fair to take up more time of the House on this matter. The Minister will have an opportunity of stating his case when he replies.

The Parliamentary Secretary to the Board of Trade (Mr. John Edwards)

Before the hon. Member leaves that point would he mind telling me in what way the Board of Trade has frustrated any of these ventures?

Mr. Erroll

I am going by what is said in the report—in paragraph 76.

Mr. Wilmot

It does not say anything about it.

Mr. Erroll

It is the sort of language which is used in an official report when a Government Department is being censured. If that is not the case, I should be very glad indeed to be corrected.

I should like to refer, in passing, to what I think is a lamentable lack of initiative on the part of exhibitors. In the present state of the industry, I think there is room for considerably more variety and enterprise on the exhibiting side. Wherever one goes, one finds that the methods of showing are standardised. Everywhere the programmes are continuous and nowhere is the attempt or experiment made of introducing fixed times of showing, with intervals, so that people can book seats in advance and thus plan their evening with a reasonable certainty of being able to get into the cinema. It should be noted how the theatres, and particularly the pantomimes, profit immensely from large parties going through together because they have booked their seats in advance. There is no sign of such an arrangement being possible in the cinemas of this country. True, a small number of the most expensive seats can usually be reserved in advance at certain cinemas, but there is nothing like the advance booking facilities available in the cinemas everywhere as they are available in the London theatres. This suggestion might not work, but at least it would be worth trying. I suggest that some initiative of this sort would be well worth displaying.

At the same time, there is an obvious need for longer periods of showing of popular films. I speak as a layman in this matter, but surely all of us have often found that the particular film which we wish to see has appeared at our local cinema for one week—perhaps a week in which we could not attend—and then, if we wish to see it, it is a matter of trying to chase it all over the country to find it in the short period during which it is shown in the other cities. Surely there could be more flexibility in this matter so that popular films could be shown for longer periods, thus increasing the revenue. Surely, it would be possible also to bring the popular films back again if only there were more flexibility in the arrangements. At times they are brought back, but usually long after the time when such a film has lost its major interest. The film could be brought back in order to have repeat shows and thus earn increased revenue for distributors and producers alike.

I am sorry that exhibitors have not shown more initiative with regard to television programmes—surely an additional source of revenue in these days. In the week when normal revenue is not likely to be great they could show the television programmes on the screen of their theatres. These are but a few simple suggestions to show that there is certainly room for improvement on the exhibiting side of the industry, and I hope these suggestions may be heeded.

6.55 p.m.

Mr. John Wilmot (Deptford)

I should like to follow my hon. Friend the Member for Huddersfield (Mr. J. P. W. Mallalieu), who made a most interesting speech, to make one or two practical suggestions. In opening, I must say that I should regret it if this Debate should seem to exhibit the British film industry as being wholly disastrous and altogether bad. In fact, the British film industry has great achievements and has had some remarkable successes. In many ways it has set a new standard of artistic performance in the film world and the best British films—not always the most expensive—are certainly among the very best in the world. We have shown that we can make these films and that there is a wide public outside this country for them, and in passing judgment on or making a review of the past, I think we have to avoid, if we can, getting ourselves divided up into pro-Rank and anti-Rank parties.

We know that the Americans have learned from bitter experience some of the lessons which we are learning now. They have been through. their worst boom-time extravagances. They set a pattern which, unfortunately, the British industry followed, and the Rank organisation made the mistake, which I think it recognises now, of trying to follow the American model and to make a colossus at once instead of building up from the bottom a sound industry, not in copy of the American system but based upon a native and different British method. Had such a policy been followed, we should be in a very much better position now, but we should acknowledge and proclaim with pride that the Rank organisation, both on its production side and on its exhibiting side has done a first-class job in many ways. It has produced some grand films and has opened cinemas all over the British Commonwealth—in New Zealand, in Australia, in Canada, in South Africa, in Cairo and in many other places. These first-class theatres stand as a shop window for British ideas, British goods and British life. Indeed, I am told that in the beautiful cinema in Cairo, the best theatre in the city, the foyer is devoted to an exhibition of British export goods.

Mr. J. Lewis

In view of the argument which my right hon. Friend is putting forward, is he suggesting that a subsidy should be given to this industry or is he saying that, in fact, the industry should stand on its own feet?

Mr. Wilmot

I think my hon. Friend should wait for a moment to see why I am making this statement. I want to get things in focus in order to point to one or two possible remedies. I think—and the right hon. Member for Aldershot (Mr. Lyttelton) agrees, in spite of his doctrinaire principles—that this industry cannot be left to go down because it is in financial difficulties. He, too, thinks that the Government must come to its aid because of the widespread ramifications and of the repercussions of a failure to continue to produce British films. As I was so glad to hear the President say, we all recognise that a way has to be found to bridge the gap and to make it possible for British film production to continue. If it is to continue, then as a corollary of Government assistance in some form or another the industry——

Mr. Lyttelton

I do not want to interrupt the right hon. Member, but I think he is getting his terminology mixed, because this is an industry out of which the Government are at present drawing £39 million sterling. One could hardly describe it as giving assistance if the industry were relieved in this direction.

Mr. Wilmot

The Government are drawing taxation from many industries in various ways, and if it should be found expedient and desirable to make a special remittance of taxation in the case of some particular industry or part of an industry, that is Government assistance and we must recognise it from the start. I do not think that the assistance which the Government can give should be or can be confined to a single channel. I think there are a number of actions which the Government can take which can, if properly directed, assist the British film industry in the right way and to the right purpose. I do not believe that a flat reduction of Entertainments Duty is the way to do it. Such a flat reduction would assist alike deserving and undeserving, good and bad, British and Foreign.

We have to be very careful in what we do here that we do not encourage the replacement of British films by Foreign films made in Britain. I think this is very important, as anybody who has seen a film like "The Forsyte Saga," to which my hon. Friend the Member for East Aberdeen (Mr. Boothby) referred, will understand—an American film of a famous British classic completely ruined by the American treatment. It would be a disastrous thing if that kind of production were the result of Government assistance to the industry. It is most important that British films which exhibit the essential British subjects, British ideas and British life should be travelling round the world.

I suggest that there is a very good reason for looking at the impact of Entertainments Duty on this industry, and so far nobody has referred in this Debate to what I regard as the key passage in the Plant Report, and that is the first few lines of paragraph 63. Perhaps, the House will allow me to read them: If the establishment of a British film industry on a self-supporting basis can be correctly assumed to be an accepted aim of government policy, then the amounts of the cinemas' admission prices which are levied in Entertainments Duty appear to us to be in general quite excessive. Now we know it is an aim of Government policy that there should be a self-supporting British cinema industry, and therefore I invite the President of the Board of Trade with the utmost earnestness to pay attention to this and the contiguous important paragraphs. It goes on to say: The overall proportion taken is in practice nearly 36 per cent. There cannot in our opinion be any doubt that the balance of receipts left in the industry after meeting the reasonable costs of exhibition and distribution is inadequate to recoup even reasonable production costs of the whole supply of first-feature and supporting pictures required to keep the cinemas in operation. Now, that cannot be overlooked. It is the considered opinion of the most authoritative inquiry into the film industry that we have had. I think a case is made out for saying that what the Government have to consider is not whether or not they are going to do something to lighten this burden on the industry, but the manner in which the relief should be made.

I suggest that we have some guide to help us in the living theatre. It would be impossible for the best productions of the British stage to appear at the present time if it were not for direct assistance by way of concessions in Entertainments Duty, whatever we may call them. The fact of the matter is that the flower of the British stage today is being produced under the protection of this special help, and without it the best to be seen on the British stage would disappear.

I suggest that some part of the product of the Entertainments Duty could be put into a special fund. I know that Chancellors of the Exchequer do not like this earmarking procedure, but we have to find a way of differentiation between good and bad, and some part of this enormous revenue taken out of this industry—taken out in the most peculiarly damaging way, which prevents the exhibitor raising the prices of his seats—some part of this revenue should be put into a fund, administered by a competent body to be created, as suggested in the Report, and used to assist the production in the form of relief or payment to British films, which in production costs and quality conform to certain standards, and pass the tests which that body lays down. There are, of course, difficulties. Of course, somebody has to judge between good and not good. Naturally, there will be mistakes, and inevitably there will be criticism. Unless, however, some way can be found of doing this, then I think we may face the close-down of British film production altogether.

But this is not all. The Government should assist in other ways. Although I should regret the State embarking upon film production, I think there are special spheres of production in which it could easily take a hand. Some of the best films we have had were produced in the old days by the Post Office Film Unit. The Crown Film Unit has a first-class record of film production of documentary films, a peculiarly British contribution to the cinematographic art. There is no reason at all why such units should not be a great success in this limited but most important field, the field of the first-class little film.

One of the criticisms I make of the industry is its failure to develop a sufficient number of competent producers. We are terribly short of first-class British producers. It is not true to say there are large numbers of first-class producers out of work. The trouble is we cannot find enough to make the volume of really good films that we need to have made. I am hoping that, just as in the theatre the Old Vic, through its threatre school centre and with the help of Government subsidies given through the Arts Council, has been able to set about building up a succession of leading players—through team work in the theatre and the school—so some such influence may be—as it ought to be—brought into the cinema industry; it must if the British genius in British film production is not to die.

I think that the Film Finance Corporation, which has made a very good start in most difficult conditions, could well extend its activities, by providing for such a purpose, so that, just as the Old Vic and Sadler's Wells have built the system of theatre education and production which is world famous, and which has made an enormous impression across the Atlantic, so the cinema could do the same.

Those are one or two suggestions which I think we might bear in mind, and to which I invite the Government's attention. I think it would be a great mistake if the Government were to set their face against any form of reduction or remission of Entertainments Duty. There is no way, I think, of bringing this industry into a healthy condition unless some part of this heavy tax is re-routed.

There is one other thing I should like to say. I believe that some help for the cinema industry could be found during the shortage of British films that will come, whatever we do now, if something concrete and progressive could be said about the cinema showing of television programmes. This matter seems to have got bogged down in some Beveridge Committee. I am told that people in the industry are completely unable to get any help or guidance as to what possibilities there are; and that they are refused permission to proceed. Technical developments are held up because nobody knows what is likely to be the line of Government policy. At this time it seems to me that we should do very much better to fill a part of our programme time by the showing in cinemas of television programmes, rather than be forced to buy second-rate American films with precious dollars to fill up the gaps in cinema showing time caused by the absence of British films. I commend these suggestions to the President in the hope that, with the expert knowledge at his disposal, he may be able to find a practical method of assistance.

Finally, I urge him to strengthen his arrangement for continuous consultation and connection between his Department and the industry. There seems to be a great barrier between the Board of Trade and people who really understand this highly-complex and difficult industry, in which I have no professional status at all. I am sure that in this complex matter, and at this time, continuous advisory help from a practical body actually engaged in this industry would be invaluable in assisting the President in the very difficult decisions he has to take. It is not enough merely to have a somewhat decorative body to which things can be referred from time to time. I think that there must be much closer day to day co-operation, and I strongly advise my right hon. Friend to get it.

7.11 p.m.

Mr. Scott-Elliot (Accrington)

At the outset I should like to associate myself almost entirely with what has been said by my right hon. Friend the Member for Deptford (Mr. Wilmot) in a most interesting and persuasive speech. I feel that something has to be done to help this industry, because cinema-going is an important feature in our social life: for good or for bad it has become so. I therefore think it essential that people should see British films portrayed upon the screen. Now, if films are to continue in production, there are two things upon which I think we are all agreed: they must cost less and they must earn more.

I deal first with the recommendations of the Working Party Report. They are no doubt very useful recommendations; they are rather technical recommendations in some cases; but they do not go very far. There is only one suggestion here that I have to make to my right hon. Friend. Where advances are being given by the National Film Finance Corporation—which I recognise is, as the President told us this afternoon, doing an admirable job of work—I hope the Corporation will try to secure that the recommendations of the Working Party are carried out before those advances are given.

I am told—and I hope I am right about this—that the cost of a French first-feature film such as may be exhibited in the cinemas of London like the Academy, bears no relation at all to the cost of a first-feature film as made by British producers. I have been given a figure as low as £35,000 to £40,000. I simply throw out that suggestion, that the industry, which has got into such difficulty, should not dismiss anything without carefully examining it, and should consider whether there are some practices now being carried on in France—more particularly with regard to the salaries paid to stars and to some of the leading technicians—which could well be adopted in this country. One further consideration that must be taken into account has already been mentioned by the right hon. Member for Aldershot (Mr. Lyttelton), and that is that the British industry must concentrate upon quality and not upon quantity. That has been the terrible mistake which I think Mr. Rank would, to judge from his recent speeches, be the first to admit.

I would also draw attention to what was said by my hon. Friend the Member for Huddersfield (Mr. J. P. W. Mallalieu) when he referred to the minority reservation made by Mr. Hoare on the first recommendations of the Working Party. What, in effect, Mr. Hoare recommended was the setting up of a planning organisation for the industry. That seems to me highly desirable. It is something into which all members of the industry can come, both on the employing side and on the trade unions side. They should set up a planning organisation on similar lines to those which have been advocated in respect of a great many other industries. I cannot believe that my right hon. Friend will really dissent from that. Surely he believes in planning. If and when Government help is to be given it seems to me that this might very well be taken into account as a condition of Government assistance.

If the output of British film production falls, as it may very likely fall, we must face up to what will be the result. I think that my right hon. Friend will probably have to reduce the quota. Here let me interpolate a little more about what was said by my hon. Friend the Member for Huddersfield with regard to offences under the quota. I am told that in some cases it will actually pay a cinema deliberately to infringe the quota, no doubt in the hope that they will receive no more than a warning letter from the Board of Trade. I have heard about these warning letters before, and they are not always very effective. But suppose there is a prosecution, and suppose they are fined £100. It may actually pay them to pay that fine of £100 if they are pocketing so much more by doing so. It would seem that the law ought to be amended in that respect. While dispensations should clearly be given under the quota where a cinema cannot carry out the provisions of the quota, where a cinema is deliberately evading the law the punishment should be very much greater than it is today.

Let us turn to what will be the implications if there are less British films coming into British cinemas. There seems to be only one thing to take their place, and that is more imported American films. I contend that we cannot allow the export of more than the 17 million dollars that are allowed at the present time, and I cannot imagine for one moment that the President of the Board of Trade or the Chancellor of the Exchequer would agree to more money being remitted. It therefore seems very possible that the Americans will be unwilling to send over more films. In other words, we shall have less films for the British cinemas as a whole.

Now, what has got to be done? As my hon. Friend the Member for Huddersfield has said, we should consider abandoning this rather extravagant form of two-feature programme. It may be argued, and it is argued in some quarters, that the abandonment of the two-feature programme would lead to a fall in box office receipts. I am not at all sure that that is not the opinion of the Board of Trade, but I venture to give my own opinion. I think that people go to the cinema far more as a habit, because they want to go to the cinema, than because they receive some particular form of entertainment. I therefore suggest that the fall in box office receipts would probably be nothing like as large as some people may fear.

I now come to the Plant Report on distribution, and, of course, to the major recommendation that was made, to which I am sorry my right hon. Friend did not make more reference in his speech: namely, that there should be some rebate on the crushing duty that falls upon British films at the present time. Here let me make a point which I think has not yet been made during the Debate. Entertainments Duty falls with equal severity upon an American film, which has probably already succeeded in recovering its negative cost and is showing in this country merely for profit, and upon a British film which at the outset is struggling, probably vainly, to secure its negative cost. Therefore, in addition to the points made by the right hon. Member for Aldershot about the larger size of the American market, which as he says is probably between five and six times our own, the British film starts at a very great disadvantage. As my right hon. Friend the Member for Deptford said, some form of assistance should be given, but I think that that form of assistance should be given wholly, or almost wholly, to the British producer: not to the exhibitor, not to the renter, and not to the American film, but to the British producer. That postulates that it should be an all-British programme before it can receive any assistance at all. I will not enlarge upon that, but I end by saying that I feel that assistance must be divided fairly between the first feature film and the supporting programme.

May I say a word on behalf of the documentary film? Documentary films have received praise from all quarters of the House, and from the President of the Board of Trade. I do not feel, however, that they have been given very much help. I think that the documentary film, if there is to be a rebate, must secure its proper share of that rebate. Personally, I would go further. I spoke on behalf of documentaries when the Film Bill was going through Committee and Report stages, saying that the documentary film was worthy of greater consideration. I commend that suggestion to my right hon. Friend because I believe that the documentary film has a tremendously important part to play in British life. If only it is given a reasonable chance of securing its initial cost, we shall, I think, in the future see even better documentary films than we have seen in the past.

7.22 p.m.

Mr. Beverley Baxter (Wood Green)

It is inevitable in a Debate like this, dealing with a complicated industry, that every now and then hon. Members will show a flash of insight into the problems of that industry, and, at other times will show the greatest intellectual confusion. I think that the hon. Member for Accrington (Mr. Scott-Elliot) seems to have performed both those feats. I agree with much that he said, but when he said that people go to a cinema as a habit, and it does not matter what picture is on, that is something which should not be said even in this House which accepts so many improbable theories. One has only to have some experience of the industry to know how utterly untrue that is.

I want to come at once to the Entertainments Duty side of the industry. It seems to me that the Chancellor of the Exchequer suffers from a split mind when it comes to Entertainments Duty. So far as the Entertainments Duty on films is concerned, that to him seems sacrosanct. He demands 100 per cent. to be gathered into the capacious pockets of the Treasury. When it comes to the theatre, it is another thing—the Chancellor does not seem to want to touch any of it. He wants to give it away. He wants to finance American importations. That is not good enough. On the one hand, Entertainments Duty has discouraged film production, and, on the other hand, it has discouraged the production of British plays.

Mr. Scott-Elliotindicated dissent.

Mr. Baxter

The hon. Gentleman shakes his head. Mr. Speaker, if you will allow me, because it has been raised once or twice, I will tell the House exactly what happens with a much discussed play like "A Streetcar Named Desire." The Entertainments Duty on that play was not deducted from the public. It is still there, but the Chancellor of the Exchequer does not take it. The company take it and put it to their non-profit costs. They then advance upon New York with this immense sum. If not this play, another advances upon Broadway, and the company say, "We will pay you anything you like. It does not matter what percentage you want within reason because we are not going to take the profits anyway, and, besides, we are going to get the Entertainments Duty as a bonus."

I do not think that the House has the faintest idea of what is happening. The Americans say, "We want as much as 17½ per cent." "That is all right," says the non-profits tax company, "we will pay that certainly, and perhaps we will give you an extra big production." How interesting it is when one company has one room marked "non-profits" and one room marked "profits," or one set of offices marked "non-profits" and one set marked "profits." They have the same staff and the same publicity—

Mr. Speaker

I think that the hon. Member is going a little far, and that we are getting on to another subject.

Mr. Baxter

I am sorry, Mr. Speaker. We can see the abuses that come from that.

Mr. Wilson

No.

Mr. Baxter

Therefore, I think that the Chancellor of the Exchequer and the President of the Board of Trade must take a more charitable view of this problem. I agree that a flat reduction of the duty would benefit those who did not need it as much as others. I think that the best suggestion is that which has been hinted at once or twice—that there should be a proportion of the Entertainments Duty drawn from all the theatres and cinemas put aside as a bonus for British film producers who have reached a certain average of excellence. There would be some trouble about it, but, nevertheless, it could be done, and I think it should be done.

What is really the trouble with the cinema industry? In the first place, one cannot tax any industry to the extent of 30 per cent. of its gross revenue and expect it to survive, any more than the Government can take 40 per cent. in taxation from the people and expect the Government or the nation to survive.

Mr. Levy

They are surviving already.

Mr. Baxter

One of the real troubles of the film industry has been the humbug existing in it since it got through its beginnings. As it grew, caught on with the public and soared in finances, so directors and producers began to believe that what they paid for something, was the value of it: that if one paid a star £30,000 for a picture, that made the star worth £30,000. The directors who were not extravagant had no chance. Temperament was mistaken for genius. All that the director had to do was to throw a fit on a set and walk off, tearing his hair, and all the directors said "He is a genius." Of any ordinary director who got his picture through on time, they said "He is nobody." Believe me this is the truth. I was in the film industry for two years, and I have been trying to forget it ever since.

It amounts to this. There is no trouble that a good picture cannot cure. The Government can plan away and give advice, but all a company has to do is to turn out a picture like "The Third Man," and there are no troubles. That picture will make money. There we have a brilliant director, Mr. Carol Reed. Why are there not more brilliant directors? There has been some confusion about producers and directors today, but it is the directors we are short of. What is the reason for it? Once an industry becomes as huge as this—and I will grant this point—once it becomes a great financial venture and combines and monopolies come into it, so the structure grows and grows, and, as it grows, the man on whom it depends, the author, grows less and less. So today there is hardly a successful writer of scenario. I doubt if anybody in this House could name two really successful writers of scenario. They are not counted. The same happens in the theatre.

The more this industry is built up financially, the more the creative side is reduced. I do not know how the President of the Board of Trade is going to help. It is easier to plan when there is a great corporation to deal with, but, instead of planning, we should get competition back in the industry. I would rather see studios working short of money on the chance of producing a good picture. I should like to see the pioneers of the early days, who never knew how they would be able to finish a picture, back in the industry. I would far rather have that than a finance board saying, "Here is the money available. How much will your picture cost?"

The custom of the House for a Member to speak on what he knows something about, should be encouraged, but I fear that if I continue a little further I shall prove that I do not know as much as I pretend. Therefore, I will end with this one thought. The big combines of picture houses have too much power, and the distributor gets too big a percentage for what he does. The big circuits have too much power because they can book a picture and refuse to allow its showing in other circuits, which means that it does not earn its maximum return. That is something into which the right hon. Gentleman ought to look.

I am all for breaking up the power of the big fellows. In saying that, I know that I am preventing my return to the industry, but I will risk that. I want to see more of the authors, directors, pioneers and budding geniuses, and less of financial movements. Above all, I do not want a State circuit of cinemas. Of all suggestions put forward, that is the worst. I wish the right hon. Gentleman well, and hope that he will carry out some of these ideas and not have to give advice on something about which he personally knows very little.

7.33 p.m.

Mr. Pritt (Hammersmith, North)

I do not want to take long, but there are a few things I want to say, some in answer to the hon. Member for Wood Green (Mr. Baxter). I do not think that enough has been said—perhaps it is a platitude—about the absolutely essential point of having a British cinema industry from the cultural and political point of view—even from the advertisement point of view in order to sell our goods—and also from the point of view of what is rightly called "Our way of life."

The next point I wish to make, on which I shall found some of my arguments, is that the history of the cinema industry in this country has been a tragic example of how capitalism just will not work. The theory of capitalism is that there is a marvellous gentleman called "the risk taker" who must be fully rewarded, but the moment the risk is real he does not take it, and that is why capitalism does not work. Several Members have said that there is no money available in the industry, which is because the risk is a substantial one and "the boys" will not put up the money.

The hon. Member for Wood Green says, "Why not work on the chance of a good picture?" It sounds lovely, but it cannot be done, for no one will give the producer money with which to hire the studio or pay the wages. No one will take a chance or a risk, unless some distributor says in advance that he will put up the money when the picture is finished. The whole thing just will not work, and so the capitalists involved follow the ordinary procedure of carrying on until things are bad, and then come to the Government and say, "Give us some public money, but do not apply any controls." It is the old, old game. I remember very vividly, as one of my earliest recollections in this House, how when the question of subsidies for shipowners was being discussed, shipowner after shipowner got up and said what an excellent thing it was, and Member after Member on the Opposition side read out from the White Paper how much each of these gentlemen were getting quite legally, by way of subsidy.

The answer cannot be nationalisation at this stage, but the answer is that Parliament at any stage should have a proper regard for the interests of the public and not the interests of particular people who want to make a little more money. Very little has been said up to now on what I consider to be the basic problem, although it was mentioned by the right hon. Gentleman and by the hon. Member for Huddersfield (Mr. J. P. W. Mallalieu). I am thinking of the serious misdistribution of the proceeds the public pay at the box office, and not, at the moment, of the Entertainments Duty. The money is divided between the distributor, the exhibitor and the producer. The distributor is a fairly powerful person, and so is the exhibitor, and the fact that they are very often the same person as the producer complicates the picture, but it does not alter it in any way.

Everyone knows that the producer is not getting enough in this three-way cut. He is not getting enough for the simple reason that the distributor has, in substance, two places from which to draw the films he wants to distribute, namely, the United States and Great Britain. He may think that the British film is better, and it very often is—we have had some lovely films—but he knows that the British producer must cover his costs and that the American film has already had its costs substantially covered in the United States, and is therefore available for distribution in this country relatively cheaply.

If he can buy two films of equal merit, one at a dumping price and another at what ought to be the real price, the effect is to depress the price of the home-made article. It is just the same as trying to sell British motor cars in competition with dump priced American cars, although it is much more important culturally when we come to films. The result is that the distributor's ideas of what should be paid for a film is something that will hardly keep the producer alive. That is something which has to be dealt with, and it is no use dealing with it in the airy way of the hon. Member for East Aberdeen (Mr. Boothby), who made the sort of speech I have heard from Tories ever since I was six years old—the rotten way, he says, in which British people do everything; they are extravagant, and they drink tea.

Mr. Wyatt (Birmingham, Aston)

He drinks whisky.

Mr. Pritt

And eats herrings to give him a thirst. If there were twice as much extravagance here as in Hollywood, it would aggravate the situation but would have nothing to do with the basic position, which is that the organisation is such that the producer will never get enough unless there is some kind of Government interference. Not many suggestions were made in the early stages of the Debate and none at all by the Government, for which I suppose we ought to be glad; it is something of a change. Instead of the Government imposing something upon the Labour Party, and putting the Whips on in the Division Lobbies, this time they are asking us what we think. We are getting on.

I would like to say a few words about the remedy proposed by the experienced hon. Member for South-West Nottingham—

Mr. O'Brien

My constituency is West Nottingham. Majorities do make a difference.

Mr. Pritt

I am sorry I got my geography wrong. The hon. Member mentioned, and the hon. Member for Huddersfield followed up, the proposal for rather subtly dealing with a certain amount of the Entertainments Duty in the case of wholly British programmes. I am not sure that this goes a long way, but I do not like to pour cold water on a scheme which has the agreement of the three unions and I would like to see the Government, at any rate, consider it. But I want for myself to go a little further and examine some of the things that fell from the hon. Member for Huddersfield, because I think some of it fits in very well with the argument which I want to present to the House. His first suggestion was that the National Film Finance Corporation should immediately—because this is a very urgent matter—look for some good directors who are not at work, see whether they have scripts to go to work on, and help them, contract or no contract. The great trouble with the Corporation up to now, broadly speaking, has been that it cannot finance anything unless a distributor is prepared to sign a contract under which he will pay real money, and quite a bit of it. as soon as the film is ready.

If we carried out no more than this first suggestion of the hon. Member we would find that when the director had made a film it could not be distributed. We have, therefore, to add something, and the hon. Member for Huddersfield had that in mind, because he went on to suggest that we should establish a public renting corporation, which would take no more than reasonable payment, and let it set about distributing the film. If we get as far as that we shall have gone quite a distance on, I think, the right lines. While he was speaking the hon. Member for Huddersfield was interrupted by another hon. Member, who asked about the circuits through which the films would be distributed. The hon. Member for Huddersfield said, "We must be linked up with some well-disposed circuit, and the best way to do that is to establish what is called a fourth circuit, at any rate, a Government circuit." At that moment all seven Members on the Tory benches uttered a groan, because that interferes with the sacred principle that if an industry does well it takes its profits, and that if it does not do well the Government must come in and finance it but must not say anything about how the business should be carried out.

I agree with the hon. Member for Huddersfield. I feel that as a short-term remedy the Government should see whether independent producers, cooperatives of technicians, or any others are prepared to do the job; should find them studios—plenty are available—give them finance and set up a corporation which will market their films for them, and not allow itself to be defeated by selfish organisations of distributing circuits, but will have a circuit of its own. This will mean, among other things, that other circuits would also be ready to distribute the film. Many criticisms have been made of the exhibitors' quota, about which I do not want to say anything further, for the ground has been sufficiently covered; but with regard to the renters' or distributors' quota, which a good many people desire, I imagine that the Government, in their recent negotiations, gave away so much to the Americans—maybe it was linked up with Marshall Aid, and it might have been inevitable—that it probably is not practicable to seek to re-apply the renters' quota. I myself do not think very much of the renters' quota idea; I think it is swimming against the stream to try to impose from outside, by regulation, on powerful organisations, the duty of doing what is in the interests of the country and against their own interests. I prefer the method of the Government entering a good deal more into it in the way I have suggested. So I am not unhappy about the difficulties of the renters' quota.

The hon. Member for Wood Green talked about the Entertainments Duty. I must not answer anything he said, because it was established that all he said on this point was out of Order; but I wish to say this about the duty: Any attempt either to reimburse or reduce the duty, except under a limited scheme such as was put forward by the unions and the other side, too, will, I think, present considerable difficulties. If we are to reimburse the tax, most of it will go to the Americans, and if we do try to let it go to the industry at home the same tendency that starved the producers' interests in favour of the distributors and exhibitors will operate. If we reduce or abolish the tax the tendency will be to charge the same amount for seats, and thus get more money. Some of that money will stay in this country, but much more will go to America. If we could reduce the duty and see that the prices for seats were lowered by the same amount, so that the public got the benefit, then it would be an advantage for the trade, because if the public paid less for each seat the tendency would be for more people to go to the cinema or for people to go more often. But none of these things is a remedy. What I have suggested is a remedy, and I will not detain the House any longer.

7.48 p.m.

Mr. Kenneth Robinson (St. Pancras. North)

I would like to say, at the outset, that I hope my right hon. Friend the President of the Board of Trade will resist this pressure to give a subsidy to the production side of the industry from the Entertainments Duty. This pressure coming from the spokesmen of a three-tiered vertical combine, two tiers of which are making handsome profits at the expense of the third, is nothing less than an impertinence.

Mr. Lyttelton

Does the hon. Gentleman regard the findings of the Plant Committee on this matter an impertinence as well?

Mr. Robinson

I was referring to the specific request made by Mr. J. Arthur Rank when his balance sheet was published recently. I am not referring to the Plant proposals, although I disagree with them. Mr. Rank's idea was that £20 million should be taken off the Entertainments Duty and given, not necessarily to him, but to the production side of the industry.

Mr. Diamond (Manchester, Blackley)

What my hon. Friend is saying is directly supported by one of the most important conclusions in the Plant Report, which, on page 61, says: … we do not subscribe to any of the proposals whereby part of the proceeds of the duty would be used as a direct subsidy on. production.…

Mr. Robinson

I am grateful to my hon. Friend for making that point. The figure of 36 per cent. is not an excessive one, considering the present general level of taxation, in an industry which is not an essential industry, in the same sense as tobacco is non-essential, though tobacco is much more heavily taxed. The whole problem of the division of receipts between the producer, the distributor and the exhibitor has been confused, and deliberately confused in some cases, by constant reference to the gross takings instead of to the net takings after the deduction of Entertainments Duty. That is the figure which is to be distributed amongst the industry, and the gross figure only serves to confuse an already confused issue.

I should like to give my diagnosis of the troubles which are facing the industry today. I hasten to inform my hon. Friend the Member for West Nottingham (Mr. O'Brien) that I am not an expert. I am a cinema-goer, and keenly interested in the cinema industry, although not financially so. I think I am entitled as such to intervene in this Debate as well as the experts. The causes are, I believe, three in number. The first is the high level of production costs; the second the division of receipts between the producer, distributor and exhibitor; and the third the fact that far too many worthless films are being made, and have been made, which are quite unsuitable for the British market.

My hon. Firend the Member for West Nottingham slid over the question of extravagance and the high level of costs in the film industry. He tried to draw a distinction between extravagance and waste, but I did not gather exactly where that distinction lies. The Gater Report makes clear what many of us have known for a long time, that this industry ever since the war has been living in a cloud-cuckooland of extravagance, quite divorced from the world of reality, and a world in which costliness has become inextricably confused with quality, and economy a sordid expedient which any producer or director should not be subjected to. In this sort of honeymoon atmosphere the artists, the top-rank technicians and executives have all been allowed to exaggerate their own value in terms of cash, until the fatal moment arrives when they come to' believe the fairy-tale.

The honeymoon is now over, because it is abundantly clear that films made at the present level of costs are not going to recover their production costs at the box office, not at any rate on the present distribution of the receipts. We have got to have a drastic scaling down of the top-level salaries, and if we lose one or two people to America, what matter? There will still be enough technicians and artists left in this country to produce an adequate number of films for a reasonable reward. Nor do I think Hollywood's capacity to absorb talent from this country is by any means unlimited at this moment.

There is a contribution to be made by the wage-earners in this industry. I notice that the Gater Report mentions restrictive practices, and I hope in so far as they exist the trade union side will cooperate in removing them, because there is no excuse for them at this critical stage. Equally, there is room for more flexibility in overtime arrangements and even a review of overtime pay. There is the question of demarcation and of the number of men on any particular job.

It is inherent in film production that there are always a large number of people standing around, but it cannot be in the interests of the trade unions, or in the long-term interests of their members, to increase this number to the maximum. I am sure, in fact, they will see that it is reduced to a minimum. It must be their aim to create conditions of security whereby there will be reasonably continuous employment for their members. If concessions are made by the wage-earners, they must be conditional on the other economies I have mentioned. They should be the last people to contribute. not the first.

Then there is this question of efficiency. I welcome the emphasis in the Gater Report on the statistical unit of screen minutes per camera day. It is only a rough and ready yardstick of efficiency, but it is one which we can all understand. It is only by a yardstick like that that efficiency in an industry of this nature can be measured. The figure of 1.29 screen minutes per camera day is appallingly low. Even the Hollywood figure is double that. It is not justified on the score of quality, and I believe it could be doubled without any appreciable loss of quality. I hope that will be one of the aims of the industry in the future.

We are always up against the problem of applying business standards to this industry, which to some extent is a form of art. We must remember that no other form of art involves anything like the expenditure of the film industry. If there is any relationship between cost and quality then it is more likely to be in inverse ratio, rather than in the direct ratio, which seems to be the idea of many in the industry at present. It is no use a director saying he cannot, make a film for £100,000, because he never had that sort of discipline imposed on him. He has never had to try. Such a thing would involve far more complete and detailed advance planning than operates at the moment, and far less striving for a perfection, which is often not noticed when the finished film comes on to the screen.

The other day a 30 second scene was shot 44 times in a studio not very far from London. Do hon. Members think that the finished film would have been appreciably worse if the director had taken the best of the first four attempts? It is as simple a matter as cutting one's coat according to one's cloth. If the possible maximum return from the British screen is, for the sake of argument, £250,000, and the average return, also by way of illustration, is £100,000, then these figures must bear some relationship to the production costs of a British film. The closest analogy that I can think of is the case of the architect. He is no less a creative artist than the film director, but the architect has to work within prescribed limitations laid down by his client. No architect worth his salt, would say, "I cannot build a house for £1,300." He will accept that limit and will make the best job he can, and would probably produce a better aesthetic job than if he had had twice as much money to spend on it.

We are entitled to expect the film director to give us the best possible job within those limitations which present day financial considerations lay down. If these economies cannot be adopted voluntarily by the industry they must be imposed by the people who provide the finance, and by this I mean the National Film Finance Corporation, because it is very clear that they are going to be the main source of finance for some time to come. I am not concerned at this stage with the private financial interests. They must continue to be allowed to lose their money in their own way.

I want also to look at the question of the division of receipts between the various sides of the industry. The Plant Report makes it very clear that the distributor takes far more than his share. In fact, he is the real nigger in the wood pile. He takes out too much for doing too little.

He is also responsible because he is one of the main sources of finance—for so many bad films being made, bad films which also make losses. It is this secondary, but I think more important, function of the distributors, that of acting as arbiters of quality, to which I would call attention. Practically no film can be made unless it gets the "O.K." from some distributing agency. It is this factor which has very largely brought disaster upon the industry. These distributors, and I think perhaps two gentlemen who book for the main circuits, are the people that determine the films that you and I, Mr. Deputy-Speaker, see in the cinema. Perhaps I might quote in this connection a few words which appeared in the "Tribune" on 2nd December, written by Mr. Richard Winnington, who is not only a distinguished film critic, but a man who really understands the cinema and has its best interests at heart. He wrote: Vertical monopoly put paid to the last hope of the struggling British film by placing production in the power of distribution and by eliminating the free play of talent. Artists and audiences are at the mercy of those who view the film only as a commodity and whose understanding of its needs and scope is nil. I endorse those remarks entirely. The only suggestion made by my hon. Friend the Member for Huddersfield (Mr. J. P. W. Mallalieu) with which I disagree, is that I do not think it is immediately essential to have a State-owned circuit. I will give my reasons for thinking so in a moment. Nor do I agree with the Plant recommendation as to the immediate necessity of taking over some of the existing circuit-cinemas and transferring them to independent ownership. I think both those courses are ultimately desirable, but that there are more important things to be done at the moment.

The present problem is to see that all British films of quality get an adequate, and indeed the maximum possible showing on British screens. It is on British screens that the future of British films lies and not in chasing after any will o' the wisp of dollar earnings in the American market. Those may come, and if they do we shall all be delighted: but it is at British screens we must aim in order to get the return of our production costs. The main thing in this matter is the use of the quota. The quota has never been effectively imposed. A constantly-revised quota, keeping in step with production planning and imposed with the minimum of exemptions, especially, as my hon. Friend the Member for Huddersfield said, if armed with a few more teeth than the present quota, could be a vital factor in this matter. It would have to be wielded far more ruthlessly than it has been in the past and the penalties would have to be increased beyond the present derisory figures, which makes it profitable for a cinema exhibitor to evade the quota.

Mr. O'Brien

Is my hon. Friend aware that a special sub-committee of the Cinematograph Films Council has been charged in the past with the duty of going to every cinema in the United Kingdom in regard to the film quota, and that it has agreed upon recommendations to the Minister as to what cinemas can fulfil the quota and what cinemas should be exempted, and as to the percentage of British films that could be shown?

Mr. Robinson

I am aware that there is an enormous number of exemptions from the quota and that the quota percentage has been whittled down to something like 27 per cent. I am also aware that the maximum fine that has ever been imposed for evasion of the quota is £100 which, I repeat, makes it worth while for an exhibitor deliberately to evade the quota. The only way to deal with this situation is through a strengthened and enlarged National Film Finance Corporation. The Corporation has done a good job upon a somewhat limited scale. We shall see some 50 films, thanks to their intervention, that would not otherwise have been made. They have kept independent production alive—and the future is in the hands of the independent producer. The Corporation will now play a very much larger part and it will need more money in order to do so. This need not be too hazardous a venture as long as certain safeguards are adopted. The most important safeguard was referred to by my hon. Friend the Member for Huddersfield, the establishment of a State distributing organisation. It is most important that the National Film Finance Corporation should be in a position to distribute all the films which it finances. For one thing, it cannot afford to accept the qualitative decisions of Wardour Street any longer, it cannot afford to allow the private distributor to take the cream of the takings of those films, and it cannot afford to risk any ganging up on rentals between the exhibitors and the present distributors.

That brings me to the whole crux of the problem. It is one which I hope my right hon. Friend the President of the Board of Trade will boldly face. If the N.F.F.C. is to play the important part in this industry which we hope it will play it must be prepared to impose qualitative standards on the films submitted to it for finance. No one is satisfied with the present artistic level of films in this country. The N.F.F.C. need not itself under- take the task which I have suggested. It will have to set up some panel, in association with itself, made up of people with knowledge and experience of the cinema, writers, artistes and possibly representatives of the general public who go to the cinema. This panel will look at scripts submitted by directors, and also at the directors' past records. It will take all those considerations into account before it recommends finance for a particular proposal. That sort of thing was done by the Ministry of Information during the war, and a very considerably improved standard of films resulted therefrom. It is therefore not entirely a revolutionary idea, but if it is so regarded I would point out that the film industry is in a revolutionary situation.

We have also the British Film Institute, which can render a lot of assistance in this connection. [An HON. MEMBER; "It is dead from the neck up."] It is not dead from the neck up. It may have been so in the past, but if hon. Members will look at it they will find that a very considerable change has come over that organisation recently. After it has had some initial experience, I think the panel I have suggested could do an admirable job. I believe it is an experiment well worth trying.

I had wanted to say something about the necessity for producing "B" films as a training ground for new people and for men of promise, and because of the necessity of getting new blood into the industry, but I have already detained the House longer than I intended. I would say in conclusion that I believe that if my right hon. Friend will not initiate some action on these lines and those suggested by my hon. Friend the Member for Huddersfield, this industry may struggle along a little longer, but it will eventually die.

8.8 p.m.

Mr. Edgar Granville (Eye)

I agree with much of what was said by the hon. Member for North St. Pancras (Mr. K. Robinson). I cannot help thinking that for too long renters and distributors in Wardour Street have had the ear of the President of the Board of Trade and his advisers. When the hon. Gentleman was giving his conclusions on the costs of production, I thought he was describing the French system. I have not been able to understand why we do not try to emulate the very high quality of French films at their extremely low cost.

The hon. and learned Member for North Hammersmith (Mr. Pritt) was the only hon. Member on the Government side of the House who advocated nationalisation of the film industry. I should have thought that the answer to that is that the President of the Board of Trade has made a definite statement that, notwithstanding that this is a monopoly-ridden industry, the Government have no intention of nationalising it. I think he was a little hard on the hon. Member for Wood Green (Mr. Baxter) who always entertains the House with his speeches on the film industry. I felt a good deal of sympathy with his remarks when he was extolling the virtues of or pleading for the soul of the scriptwriter. I shall always feel that the fact that Sir Michael Balcon was unable to retain the services of the hon. Gentleman has given the House of Commons an entertaining Member and the threatre an interesting and successful critic.

I agree with the hon. Member for West Nottingham (Mr. O'Brien) who said that perhaps we have too many Debates on the film industry. We go over the same ground and make the same suggestions, and I do not know that many of them are adopted. One of the difficulties is that very few of us in the House can speak with any real experience of the film industry. It is a complicated, complex and highly technical industry. Instead of having further Debates on the industry, it would be better if the House itself tried to make a film. We might take over one of the empty studios and induce the President of the Board of Trade to become the producer and the hon. Member for Wood Green the director, and let the House of Commons itself try to make a film, if only a film of the film Debates in the House. We might learn something of this extremely complicated industry and our Debates might then be more helpful to its financial future.

Having listened to most of the Debates that have taken place, I feel that the President of the Board of Trade has not had a great success with his policy since he took office. He has just been to the United States and rumour has it that he met Mr. Eric Johnston, the czar of American film producers. I do not know whether he has any last-minute agreement or anything else fresh to pull out of the bag, but up to the present his increased quota, as many hon. Members have said, has been a failure. The tax on American films, which was imposed rather hurriedly as a panic measure, has also been unsuccessful, and no one has yet given us the dollar balance sheet of the Rank venture in the hope of a dollar revenue return from the United States. I cannot believe that this venture could have been undertaken or even the permission of the Treasury obtained without the acquiescence, if not the active support, of the right hon. Gentleman's Department. The result of the three items—the failure of the quota, the failure of the American tax and the failure of the Rank dollar venture—is that the production studios of this country are at an all-time record low.

I do not believe that we ought tonight to be debating the policy of the President of the Board of Trade for films in this country with any feeling that he has achieved a success. One hon. Member said that if the cost of producing a film is not met by the returns secured on the home market, it is bound to fail. We have to be realistic about this in the long run, and unless film producers or the film interests in this country can reach a working commercial agreement with the United States interests, we cannot produce a film in this country. Long experience over the years has proved this to be so. We must take as our guide the revenue we are likely to get from our first or second distribution on the home market. America has a market of 140 million and we have a market of 49 million. One hon. Member said that America can spend very much more money in producing films and break even on her home market and get her profits over here. If we spend more than we can recoup on the home market, we have to take the gamble that we shall get our profits in the United States, and without a commercial agreement and with the assistance of the tax, the quota and the Rank dollar venture, we have failed to do this up to the present.

The internationalisation of air lines used to be advocated in this House. It was said that we were paying far too much money for national prestige in air lines and that in the end we should come to an international air line. I believe that in just the same way the film is international. I believe that in this country we have made a great mistake in trying, by the quota and by other means, through the policy of the Board of Trade to bolster up national prestige for film production as such.

I agree with the hon. Member for West Nottingham that it is no good trying to solve this problem when there is a feeling of antagonism between the United States and Great Britain in this field, and that we ought to form an Anglo-American council and try to get together on the problem. Perhaps that was one of the items discussed by the President of the Board of Trade when he was in the United States. I believe in cooperation. It was proved before 1933 that we can have a successful production policy in this country without the spectacle which there is in the studios today. I should have thought that the quota has proved an absolute farce. I have not seen the latest figures, but I should like to ask the Parliamentary Secretary how many prosecutions have been made over the last five years against exhibitors for the non-fulfilment of the quota.

According to the Press today, Sir Michael Balcon has been invited to act as an adviser to the National Film Finance Corporation. I cannot think of a better appointment. That will be agreed by anyone who has known Sir Michael during the long period in which he has been in association with the film industry. He is a man who understands the pounds, shillings and pence of production. He has been extremely successful throughout the whole of his production career. I look forward with fresh hope now that he is in this important advisory position.

The film industry ought to observe, note and take warning from what is happening in regard to television in the United States and its challenge to the film interests there. Although television gives an opportunity to film interests here to produce 30-minute films for televising in America, television is a great challenge to the colossal film industry in the United States, and in our time, it will be so in this country. I often wonder what happened to Baird television and the great pioneer work which was done. I remember seeing in Wardour Street the Derby being televised about 15 years ago—

Mr. Baxter

It was more than that; it was 20.

Mr. Granville

And that was on the screen. What has happened to all that today. Where is it now? Is it somewhere in the Rank empire? Has the genius of Mr. Baird been lost? We should be allowed to go on with that work. The warning from America is that unless we harness television to our film interests, television becomes a tremendous challenge.

I am glad that one hon. Member took the trouble to set out his views with regard to some rebate of the Entertainments Duty. The right hon. Member for Deptford (Mr. Wilmot) said that he was not in favour of a flat reduction, which I think would perhaps be the general view of the House, but this is a fiscal question and I hope that the Chancellor of the Exchequer will find some way of giving assistance to this industry in the coming Budget. I also hope that the Government will be constructive and realistic about this matter and will set up forthwith an Anglo-American co-operation council.

8.21 p.m.

Mr. Benn Levy (Eton and Slough)

My right hon. Friend the President of the Board of Trade hoped at the beginning of his speech that the discussion would be general and non-partisan. However, I do not suppose that in the event he was unduly surprised when the right hon. Member for Aldershot (Mr. Lyttelton) immediately sought to infer that this catastrophic failure of private enterprise was in some not easily discernible way really due to the mischievousness of a Labour Government.

Looking across at the right hon. Member, I was tempted to admiration and surprise that he should be capable of weaving so insubstantial and gossamer a case. It seemed to me that all he had to say in support of his contention was that although he approved everything which the Government had done to help the industry, and though it was left to a subsequent speaker—the hon. Member for Altrincham and Sale (Mr. Erroll)—to describe this help as interference, he contrived to suggest that the method of this help was somehow injurious to the industry, that the manners of my right hon. Friend had not been good enough, and that if only his manners had been better there would have been no resentment, no conflict with the other side of the Atlantic, no embargo, and the whole of the conflict which did exist, which still exists, and which will continue to exist would have been evaporated by a few courteous smiles. I do not think this was taking the House very seriously.

The right hon. Gentleman went on to suggest—or rather it was implied in everything he said—that in so far as Government interference and Government mishandling were responsible, the industry must therefore have fallen into a state of decrepitude from a state of grace. I rose to ask the right hon. Gentleman if he could tell us when indeed was this golden age of the cinema in England to which he referred. Not surprisingly he was unwilling to give way, but if he had read the Gater Report, he would have realised what I think everybody who knows the industry already realises—that there never was a golden age in the British film industry At paragraph 6 of that report we find these words: At no time have the receipts of producers from exhibition in Great Britain been sufficient over a period to cover the costs of production. That is quite unequivocal, and to suggest that this latest crisis is suddenly due to the machinations of the Government is completely irresponsible.

There are two basic things wrong with the structure of the British film industry. One is that it does not pay, and has never paid, to make films. The other is that even if it did pay, nobody can make films without the kind permission of Mr. Rank or Sir Philip Watter. I should have said that both those things were indisputable. I was sorry, but not altogether surprised, that the right hon. Member for Aldershot, although he made the first point, could not find even a sentence, even a parenthesis, to deplore this virtual monopoly.

The history of the film industry provides an almost classical textbook for the student of private enterprise. Vast personal pickings at the same time as vast aggregate losses, intricate financial manoeuvres, company promotions, optimistic prospectuses, plenty of bankruptcies, plenty of throat-cutting, but hardly any genuine free competition. And then eventually, needless to say, the time comes when the failure can be disguised no longer and then the votaries of this system come running to the Government for protection—tariffs, quotas, loans and now a wholesale demand for indirect subsidy.

The right hon. Member for Aldershot lent his voice, too, to this demand for subsidy. I must say that he did not appear to have examined it or its ramifications at all carefully. He was not prepared to say, or he did not volunteer, how many millions he thought should be remitted of the taxpayers' money into the pockets of film companies. He did not say how that money was to be made good, what alternative taxation he would advocate as preferable—whether for example, a reduction of the food subsidies was in his mind. He merely made a demand that taxation should be reduced without any examination of the. consequences, or whether it would do the film industry any good, or even whether it would cure the handicaps of the film industry.

If one examines the figures at all carefully one will find some interesting things. The first demand for a remission of taxation was for no less than £20 million. That figure was proposed conjointly by those heavenly twins of the cinema firmament, my hon. Friend the Member for West Nottingham (Mr. O'Brien) and Mr. J. Arthur Rank. But let us examine what would happen if that admittedly silly figure were remitted, or rather let us examine the later and revised figure. [Interruption.] It seems more sensible to do so. Even the proponents of this first figure have drawn in their horns and have subsequently suggested that £6½ million of the taxpayers' money would really be quite nice.

Mr. W. Shepherd

I think that the hon. Member would perhaps find that the figure of £6½ million is that now proposed by the exhibitors. I do not think that the producers agree with that figure.

Mr. Levy

Mr. Rank is also an exhibitor, and the interest of my hon. Friend the Member for West Nottingham is predominantly with the employees on the exhibition side of the industry. The point I really want to make is that in order to fulfil the quota we need approximately 80 films a year. These figures are generally accepted It is also generally accepted that £150,000 per picture is a not unreasonable cost in these days and is indeed on the low side. Eighty pictures at £150,000 a picture would cost £12 million to produce. That means that £12 million has to come back from the box office to the producer if he is not to make a loss. How much did in fact come back last year? The figure was £7½ million, so that there is still £4½ million to be recouped.

Would it be recouped if £6½ million of Entertainments Duty were remitted? It would not. Only £850,000 would come back to the producers, because the exhibitors would take their share as would the distributors, the foreign renters and the foreign producers.

Mr. Shepherd

Would the hon. Gentleman say how much he is allowing per film in respect of 80 films as the return per film for the producer.

Mr. Levy

I have not made the calculation per film, but on a film cost of £150,000 and on the basis of the receipts being the same as last year.

Mr. Austin (Stretford)

It is the percentage that the hon. Member wants.

Mr. Levy

Percentage of what? I am not quite clear about the hon. Member's point, but I assure him that the figures I have given are completely verifiable figures. Even if the higher figure of £20 million which was originally proposed were remitted, that would bring to the producer only £2½ million.

Mr. Beswick (Uxbridge)

I understand that one proposal by the producers is that 75 per cent. of the tax to be remitted would go to the producer—and that only to the British producer.

Mr. Levy

That is a different suggestion to which I shall refer later.

Let me say, in passing, that whereas the remitting of £6½ million of the taxpayers' money would produce only £850,000 for the producer, £1½ million could be obtained from the renters simply by halving the rent charged, and halving the rent charged is virtually what is suggested in the Plant Committee's Report. From that source alone more could be obtained that would be obtained from tax remission to the extent I have mentioned.

What astonishes me on reading the report of the Plant Committee, a sober body established to give us full information, is that they should have advocated a tax reduction in this way without pointing out that nothing short of a complete 100 per cent. abolition of the tax would even recoup the losses of producers, let alone afford them a profit. All they put forward is this vague recommendation in favour of some unspecified degree of tax remission without any examination whatever of the consequences. I must say that this report, even more than the Gater Report—it is true of both of them—is sketchy, unthorough and, I am afraid, unconscientious. They just do not supply us with the data which we are entitled to expect.

Mr. Shepherd

Perhaps they did not read the hon. Gentleman's memorandum.

Mr. Levy

My memorandum did not and could not provide the data which is missing.

But even if this tax remission did work, even if the whole taxation could be remitted—and obviously nobody thinks it could—I say quite definitely that we have no right to recommend any remission of taxation whatsoever until we have had a full examination of the figures and are convinced that the industry as a whole is truly unable to finance itself, even if it distributed its takings more equitably. We cannot expect the taxpayer to finance production until we are assured that, in a vertically integrated industry, the other two departments of the industry are not making money to excess.

I have been trying, and in vain, to get these figures. They do not seem to be forthcoming. I put a Question to my right hon. and learned Friend the Chancellor of the Exchequer asking him what were the trading profits or losses of the three arms of the industry over a period of years. The reply I got was that it was not proper to divulge the affairs of private companies. I did not ask for that, and I must say that that was really an unsatisfactory reply. I did not ask for any revelation of the accounts of private firms. I asked for aggregate figures, and to withhold that information was really indirect obstruction of the House in tackling this problem properly, As we have seen, the Plant Committee showed the same delicacy, and the Gater Committee the same.

The Gater Committee was supposed to examine costs. It did examine the costs of plasterers, carpenters and hairdressers and it told us how those costs have risen; but it gave us no breakdown of the front office costs. We know nothing about them. Those figures were withheld. It is interesting to note, and it is often noted, that the people who take most out of an industry are the most secretive about what they take; and so successfully secretive have they been in this case that even after waiting for these two reports we know virtually no more than we did before. In spite of the fact that they produced no figures the Plant Committee said on page 27, paragraph 63—it has already been quoted by my right hon. Friend—

"There cannot in our opinion be any doubt that the balance of receipts left in the industry after meeting the reasonable costs of exhibition and distribution is inadequate to recoup even reasonable production costs of the whole supply of first-feature and supporting pictures required to keep the cinemas in operation."

That seems to me to be the key point of the whole report. That is really what we wanted to find out. Yet we are given no evidence of any kind. We do not know what the exhibitors or the distributors make and it is presumable therefore that the Plant Committee did not know either. How do they come to their conclusion? Presumably they had great difficulty in getting evidence, and that does not surprise me, because what evidence is available seems to suggest precisely the contrary.

One is often told—I have often been told—that in the last few years exhibitors' profits have shown peak records. They have done very well. In fact, if we examine that obscure balance sheet which the Rank Organisation last issued, it would appear that even the Rank company is not doing too badly. Gaumont British, one of its concerns, showed a trading profit of £1 million, after paying debenture holders and fixed loan interest of £300,000; that is, 6 per cent. gross. Odeon Theatres paid an interim dividend of 3¾ per cent. tax free. Odeon Associated Theatres paid an interim dividend of 7 per cent. tax free, and Odeon Properties paid an interim dividend of 14 per cent. tax free. This does not seem to me like penury. Even the consolidated accounts which claim to have made a loss of £750,000 did so only after bumping up the depreciation figure by £200,000, paying debenture holders £750,000 and writing off £2,500,000 for film losses; so that even with record film losses and with normal depreciation, what this figure means is that there would still have been a profit of £200,000.

It is worth noting that this result was reached by an apparently arbitrary calculation of current film assets at £10,500,000. Nobody knows why £10,500,000 was fixed or whether it should have been higher or lower than last year. Indeed, I am very glad that the President of the Board of Trade is submitting this figure for investigation under the Companies Act. I should have thought myself that the whole accounts should have been submitted for investigation, because, after all, they conceal information which it is perfectly proper for the investing public, let alone Parliament, to know. We do not know what figure is represented by distribution interests, exhibition interests or any other interest.

Outside the Rank Organisation also, the Shipman and King circuit did better this year than last, and the A.B.P.C. paid a 20 per cent. dividend after putting £100,000 to reserve; yet the only information connected with all this that appears in the report of the Plant Committee is in paragraph 114, where it says: It is therefore clear that, as compared with the last financial year before the outbreak of war in 1939, the exhibitors who comprised this large sample had paid out in 1947–48 a larger proportion of their net box-office takings in film hire and were left with a smaller proportion for themselves. As a matter of fact they had previously admitted that that proportion is smaller by only 2½ per cent., but they do not relate that 2½ per cent. to the all-important fact that turnover during the period was very nearly doubled, and nowhere in the report do they mention that, in spite of this 2½ per cent., their net profits, after paying Entertainments Duty, were up by 70 per cent. If one thing is more certain than another, it is that nothing in this report proves the case that the industry cannot support itself. Until that is proved, I suggest that no help should be given.

The time for really radical action is overdue. I ventured three warnings some years ago on this subject. One was that if radical action were not taken, then something like this present crisis was inevitable. I warned also against the mirage of the United States market, and that it was dangerous to be fobbed off into delay on that account. I also warned that the danger of the present structure of the industry was that in so far as production rested in one man's hands, change of policy could wreck the industry. That is virtually what we are facing today.

Mr. Granville

Will the hon. Gentleman tell us what radical action he suggests?

Mr. Levy

I am taking rather longer than I meant. I have advocated from the beginning, in conjunction with certain of my friends, the splitting up of the big circuits and that, if necessary, one should be taken over by the State. I still think that that is the right long-term policy, and I hope that my right hon. Friend, when he points to the fact that the two circuits under Mr. Rank no longer fulfil their former functions, will consider that one of them might properly be taken over. But that is a long-term matter, and we cannot embark upon it now.

What can we do in regard to the short-term policy? One thing we can do is to start the State distributing company, to which my hon. Friend made reference, and which would be of financial help to the industry. The present form of short-term help is that granted through the National Film Finance Corporation, but I feel that financial help really should not be given without much more rigorous safeguards. Why should the taxpayers' money be devoted to financing the losing end of the industry and be precluded from taking any part in the profitable end? Every time that the National Film Finance Corporation backs a film, it means that it is almost certainly losing the taxpayers' money and at the same time adding potential profits to the distributing and exhibiting companies. That is a situation which cannot go on, and, therefore, the sooner we have a State distributing company the better.

I hope that, if it does nothing else, this Debate will at least ensure that for a long time hon. Members opposite will no longer have the effrontery to jeer and sneer at the competence of our Civil Service.,

8.47 p.m.

Mr. Michael Foot (Plymouth, Devonport)

My hon. Friend the Member for Eton and Slough (Mr. Levy) has given us a brilliant portrait of the ramshackle film industry as it is at present organised, and I do not believe that very much more needs to be said. My hon. Friend has also torn to shreds the whole of the case, such as it was, made by the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) about the Entertainments Duty, and has generally exposed the flippancy with which hon. Members on the other side approach this question. I think he has also demolished almost all the arguments made in the Debate from the other side.

He has also shown how ridiculous it was that we were being asked from the other side of the House not to mention the name of Mr. Rank in this discussion. We have had a touching appeal from one hon. Gentleman on that side who suggested that it would be wrong to bring the name of this leading figure in the industry into the Debate, and we appreciated that appeal all the more because we recall the reticence with which they sought to keep the name of Sir Leslie Plummer out of the groundnuts Debate. This, however, is a different proposition. because Mr. Rank really has something to do with the film industry, and to talk about the film industry without mentioning his name would be like "Hamlet" without the Prince of Denmark. What hon. Gentleman opposite want to see, I suppose, is a "Hamlet" in which Rosencrantz and Guildenstern would play the sole parts, because they do not want any inquiries to be made into the behaviour of Mr. Rank and his companies.

We are facing a situation in which a great many of the technicians are now out of work, and I believe it is largely because of the positive genius for disorganisation which has been shown in this industry—an industry which, in spite of all the excuses about a small market, Government action and so on, does cater for probably the most popular pastime of the British public. Because of the fact that it is not organised on a better basis, somebody must be held responsible.

Mr. Rank has made clear his responsibility. On 1st November, 1947, despite the charges made by the right hon. Member for Aldershot against Government actions, Mr. Rank's organisation issued a statement in which it was announced that Britain's biggest ever film programme was to be undertaken. More than £9 million was to be spent on that programme, which would maintain the high quality of British films. Nothing whatever was said in that document about the terrible, cruel and harsh Entertainments Duty which was making it absolutely impossible for the industry to survive.

But what is the situation now? Mr. Rank, apparently, is not to be attacked, according to hon. Members opposite, but Mr. Rank is doing some attacking, and we have the right to reply. I do not mean only his attacks on the Government because, perhaps, the Government can look after themselves in these matters, but he has been attacking other people in the film industry. A month or two ago he said: There has recently been a large proportion of bad and mediocre films. And again, The cost of film of all kinds has been excessive. Who is responsible? He also said that there is a great shortage of talent in this country for making films, which remark was repeated, I am sorry to say, by one of my hon. Friends on this side of the House. I do not believe that to be true. The reason it is difficult for the talent to get through is because, as the President Of the Board of Trade and my hon. Friend the Member for Eton and Slough have underlined, it has got to get past two men. It is difficult for talent to arise in such a situation, and that is the real reason why there has not been a continuance of the revival which took place in the latter years of the war. It is a bit thick for Mr. Rank to turn round and say that it is all the fault of the technicians and the lack of talent. Even the coal owners did not blame the pit managers for the mess they made of their industry.

I would also like to say a few words to the Government on this matter. In the past, we have taken the advice of Mr. Rank and others engaged in the industry, but there are some others in the industry of whom we ought to take notice—the people who make the films. Unhappily, we do not seem to have taken much notice of them in establishing committees to look into this problem. It is quite true that there were representatives of the trade unions concerned on the Gater Committee, but sitting on that committee were also people responsible for the extravagance and methods employed by the whole industry. How the President of the Board of Trade imagined when he set up that body that he was going to have a ruthless inqury into the extravagant methods of the industry passes my comprehension.

Again, if we take this independent panel—for which I do not blame the President of the Board of Trade because I think it was set up before he took over that office—which was supposed to be a safeguard, to ensure that the circuit showed any reasonable films produced by an independent producer, we find on that panel representatives of the circuits and distributors who had already rejected the films in their own organisation. It seems farcical that we should continue appointments of this nature to these committees when by making such appointments it means, as my hon. Friend the Member for Eton and Slough has proved, that we shall not get the facts. We have not had the facts to which we are entitled and which should have been available to us in this Debate.

The composition of the Plant Committee was a slight improvement on the composition of the others, which is not a great compliment, but it is extremely interesting to look at the names of the people who gave evidence to that committee. I have here a list of the people who at any rate did not give evidence to the Plant Committee who were advising the Government about the main proposals which they might consider. The names of those men are Carol Reed, David Lean, Frank Launder, Sydney Gilliatt, Laurence Olivier, Thorold Dickinson, the Boulting brothers, Anthony Asquith, not to mention directors from Ealing Studios who were responsible for films such as "Kind Hearts and Coronets," "Scott" and "Passport to Pimlico." None of these people was heard. These are the directors who make the films. They, and not Mr. Rank, are the people who made the British film industry famous, who put it on the map. They are the people with the creative power, and yet not one of them gave evidence to the Plant Committee. Why did they not give evidence?

Mr. O'Brien

I do not think my hon. Friend is giving a fair account of the matter. The directors whom he has named were members of a trade union—the Association of Cine Technicians—and that trade union gave evidence to the Plant Committee on their behalf. Many of those producers, although members of that trade union in another capacity, were employers and members of the British Film Producers Association, which also gave evidence to the Plant Committee.

Mr. Foot

There is a difference between giving evidence through one's general organisation and giving one's individual evidence. These were some who did not give evidence. It strikes me as peculiar that the people to whom I have referred, who are the most famous names in the British film industry, and who have made the British film industry, did not give evidence to this committee. Why did they not do so? They could have gone and given to this committee all the experience they had in this industry. The reason they did not do so was that if they had gone they would have had to reveal their ideas about the film industry, and they would have become known in some way or other to one of the two gentlemen whom they have got to appease in order to be allowed to make their films.

One of the grossest evils about monopoly is that it shuts people's mouths, and until we begin to understand that, it is impossible to understand why we get such pitiable reports as the report which we have before us, and which is supposed to provide the basis for our deliberations. The directors know more about the way costs mount up than anybody else. If we had been able to have the right kind of committee—I know it is not an easy thing to organise—we should have been able to get from directors much more evidence about overhead costs than we have in the report. I was talking to a director who has made six or seven of the best films which have been made in this country in the last seven or eight years. He is now making a film which will cost about £80,000 or £90,000, and afterwards £20,000 or £30,000 will be added to the cost. That additional amount represents the overheads about which he does not know anything. It is certain that that film will get a return. Incidentally, that example proves that it is possible to make films at a lower cost. I am not saying that all films should be made at such a cost, because we want more expensive films at the same time. It reveals, however, that it is possible to provide a stable basis for the industry if only people will find out the facts and ascertain how to relieve the industry of these fantastic costs, and overhead costs in particular.

I should like to refer to one or two remarks that were made by some of my hon. Friends. The only thing which has come from this Debate has been a series of practical, realistic, sensible suggestions from some hon. Members on this side of the House, and I do not refer to my hon. Friend the Member for West Nottingham. I think this series of practical proposals is much more realistic and goes much more to the root of the matter than anything which we have had in the Plant Report. I should like to refer to the proposal which was made by my hon. Friend the Member for Huddersfield (Mr. J. P. W. Mallalieu), that in the immediate future the Film Finance Corporation should see if there are directors available who could start now, or fairly soon, to get some of our studios back into operation and make films. I hope the President of the Board of Trade and the Film Finance Corporation will consider that suggestion.

I do not quite understand the statement of the President of the Board of Trade that half the films now being made have been financed without a previous distribution contract. That astonishes me. People do not always distinguish between a producer and a director. A director who has made two or three films at Ealing studios, for instance, may want to become a producer. He ought to have the right to do so, because that is the way to build up a greater number of people who can create the talent and provide the films we want. It would be a good idea if the Film Finance Corporation would invite one or two of these directors not only to make films themselves with money provided by the Film Finance Corporation, but also to act as surveyors over films which would be made by other persons whom they would guarantee.

It is at this point that we have the great difficulty in the industry; that is the point where the industry touches the artistic side of the whole concern. We have to invent some system whereby a financier has to take the advice of somebody who really knows about film production and about artistic production, and I hope that there will not be a system whereby we have the leaders of the Film Finance Corporation thinking that they can do that job, because that is one of the developments which was primarily responsible for the ruin of the industry which Mr. Rank and his advisers contrived. We do not want an arrangement whereby the Government set up in a business a new kind of gentleman, such as the people responsible for the management of Mr. Rank's affairs, to dictate to different parts of the industry and in particular to dictate to the directors.

I certainly agree with my hon. Friend the Member for Eton and Slough that it is high time we had a much bolder policy to deal with the whole problem. Do not let us have any more committees. Let us think out a few principles which we are going to apply to the industry. It is those principles which some of us, on this side of the House, have been advocating for the past four years. We have said that this kind of combine was bound to lead to a crash; we have said that this industry was semi-corrupt; we have said that this industry had all the evils of monopoly in the sense that it stopped the facts coming out. We have said this for four years and the President of the Board of Trade has been able to argue that he was waiting for a report. Now he has got his report it does not give him the grounds on which to act.

The main proposal of this Plant Report is that we should have a system of competitive buying. That was tried in the United States a few years ago, and it has faded out and been abandoned there because it was unworkable. It seems to me another sign of slackness on the part of the committee that it did not find out what happened in the United States, where this actual proposal has been tried and has been found a failure.

What they are now trying to do in the United States is really to divorce production from exhibition. That is the principle which has lain behind our proposal for the new circuit. I believe that if the Americans are allowed to go ahead with that principle in their country while we hang back and think that we can run this industry in this miserable, private monopolistic method, then the Americans will forge ahead of us and will ruin the British film industry. I believe it would be a disaster to this country to see this industry fade out of existence altogether. It has easily been proved that we could make it function. There is plenty of talent in this industry; there is plenty of eagerness on the part of people through the country to see films. The industry is catering for a pastime which people all over the country wish to enjoy. Surely, therefore, the Government should now consider a much more drastic policy than anything they have attempted in the past four years.

9.3 p.m.

Mr. William Shepherd (Bucklow)

If personal vindictiveness could solve the problem of the film industry then the hon. Member for Devonport (Mr. Foot) would be its most distinguished saviour, but I do not imagine that he, any more than the majority of hon. Members on the other side of the House, has any significant contribution to make towards the solution of the admitted difficulties of the industry at the present time. My hon. Friend the Member for Wood Green (Mr. Baxter) said that this Debate had revealed hon. Members with flashes of insight into the industry and a great deal of confused thought, and that may well be true because I thought that the opening speech of the President of the Board of Trade was very disappointing indeed, and we had another disappointing speech from the hon. Member for Eton and Slough (Mr. Levy). The hon. Member built up an enormous facade on the basis that one could not recover enough money, by remitting Entertainments Duty, to make the production side solvent and he produced some figures which are really astounding. When I asked him to break them down he said he had been supplied with them, he thought they were correct, but he did not quite know what they were.

Mr. Levy

I asked the hon. Member to explain precisely what figures he wanted broken down. He failed to do so and the general feeling of the House was that I should continue my speech.

Mr. Shepherd

I cannot, of course, know what the feeling of the House was; no doubt the hon. Member for Eton and Slough has a different view on that point from that which I have myself. I want to point out to him, however, that he could not have given the figures which, in fact, he gave to the House had he read page 20 of the Plant Report, where there is clearly shown the incidence of Entertainments Duty and the effect it would have if it were remitted on the sum total of British films.

Mr. Wyatt

Will the hon. Gentleman allow me?

Mr. Shepherd

I really ought not to give way any more.

Mr. Wyatt

Sir Arthur Jarratt, the Chairman of British Lion, gave me precisely the same figures yesterday himself, and I imagine that he knows just as much about it as the hon. Member.

Mr. Shepherd

I do not know what is the personal relationship between the hon. Member and Sir Arthur Jarratt. I am concerned here only with the figures that are given in this Report, which demonstrate clearly that all the tedious argument which the hon. Member adduced to the House has, in fact, no foundation.

Mr. Levy

They are precisely the same.

Mr. Shepherd

I cannot really keep on giving way. The hon. Member for Devonport (Mr. Foot) has already taken some of my time.

The President of the Board of Trade delivered a speech which, I think, to some extent reflected the confusion in which he finds himself. It was a speech which was somewhat soured and churlish, in which he brought down strictures upon the exhibitors and the producers, and this mood persisted, and for the rest of the Debate we have had internecine strife amongst hon. Members on the Benches opposite. [Interruption.] I was saying that the atmosphere which the President generated had the effect of disturbing hon. Members behind him, because the first part of the Debate was an unseemly wrangle among hon. Members who support Socialist policy.

Mr. Daines (East Ham, North)

Will the hon. Gentleman allow me?

Mr. Shepherd

I really cannot give way.

Mr. Deputy-Speaker (Mr. Bowles)

The hon. Gentleman may not remain standing or speak if the hon. Gentleman who has the Floor does not give way.

Mr. Shepherd

The President was trying to say that this demand for a remission of tax was some innovation, and that there was no justification for the kind of statements that have been made in the last few months, or—[Interruption.]

Mr. Daines

There are six Tories here now.

Mr. Shepherd

—for the kind of attitude that has been taken up by exhibitors and producers so far as Entertainments Duty is concerned. There is a perfectly reasonable and logical reason why the attitude towards Entertainments Duty has hardened during the last six months. In the first place, the takings of the industry at the box offices have been lowered during that time. Secondly, the percentage of British films has gone up. Now, this industry could continue as an industry if it were to exist only on American films, because the Americans have no need to get that full return which we in this country have to get by virtue of our smaller production area.

The President said that this industry had always been in trouble, and I am inclined to agree with him. During the whole of the life of the film industry on the production side, there has been continuous trouble. It has gone, like the present Government, from crisis to crisis.

Commander Maitland (Horncastle)

Hear, hear.

Mr. Shepherd

The right hon. Gentleman has, in fact, himself taken a strong personal interest in this industry, and it has, perhaps, done worse than any other industry since the war. I hope the House will not draw any connection between those two facts.

I should like to draw the attention of the House to the disparity between the situation 18 months ago and conditions today. Eighteen months ago we were discussing whether we could by Government stimulus, supply more studio space. The President was giving reasons why he thought he ought not to do it. Today the situation is entirely reversed, and we are faced with the question how to keep occupied the studios that we now have. Many reasons have been advanced by hon. Members opposite as to why we have suffered this decline, but there are two reasons on which there is general consent on both sides of the House: first, that the vicious import duty put on to American films by the present Chancellor of the Duchy of Lancaster when he was Chancellor of the Exchequer, was the turning point in the industry since the war; and secondly, that the quota was over-optimistic.

There have been many suggestions as to how this situation could be dealt with. Hon. Members opposite have, in the main, suggested that some form of nationalisation, or some form of Government circuit, would fill the Bill. Now, that is against the recommendations of the Plant Committee, and I think against the common sense of most individuals in this House and in the country, because nationalisation is not likely to provide the kind of atmosphere necessary for the successful operation of a film production industry. My right hon. Friend the Member for Aldershot (Mr. Lyttelton) made what I thought was an excellent speech, pointing out the decisions which the President and this House must take upon the film industry. The question we have to ask ourselves, as those responsible for the industry, is whether we want it to continue. Do we want to have a sucessful and prosperous British production industry? That is the question, and all these subsidiary questions are of little importance compared with that.

Many hon. Members on both sides of the House are content to say: "This is a grossly extravagant industry, and therefore we must do nothing about it until they have cured their extravagance." But what are the facts? No one denies the existence of waste and extravagance in production, but whereas in 1947 the average cost of production of a film was £250,000, it had gone down in 1949 to £150,000, and there is no reason to suppose that the efforts that are now being made will not reduce that figure even further. Mr. Rank and his organisation have installed efficiency experts, and budgetary control in order to reduce costs; and it is perfectly true to say that at the present time films are being produced on a much more economic basis than in 1947.

It is no good our avoiding what is the central fact about production in the United Kingdom compared with that in the U.S.A. We have here a market of only 50 million, and, as the Plant Report says, for all essential purposes we must discount getting any revenue from overseas. Therefore, we cannot judge our own industry by what happens in the United States; we have to have regard to the fact that we have only a market of 50 million people. What is the central feature of the economics of film production at present? It is that there is not sufficient net return from the box offices, either to remunerate the British film producer or, in fact, to make a reasonable return to the exhibitor.

The hon. Member for Devonport produced figures to show that exhibitors were doing very well, and it is true to say that last year a number of exhibitors did do fairly well. It is also true that a number of exhibitors have in recent months been losing money. Certainly there is no amount of money available which exhibitors now obtain which can be devoted to the production of films. [Interruption.] I say that there is no substantial sum of money available out of that part of the revenue which is taken by exhibitors which can be devoted to the use of the producer. It is true that there is probably some portion of the sum now taken by the distributor that can be devoted to that purpose. It is an absolute fact that the net return at the box offices is not sufficient to remunerate the exhibitor, the distributor and the producer.

Mr. Levy

Can the hon. Gentleman give figures to support that view?

Mr. Shepherd

The hon. Gentleman has himself given figures to show that the producer cannot get a return. The exhibitor is getting a return, but not an over generous one, and the distributor is, of course, getting a reasonable return.

The right hon. Gentleman, in a speech which avoided the main issue almost entirely, made hardly any reference to the question of tax, and yet it is true to say that the Entertainments Duty at the present time is four times as heavy on the cinema as it is upon live entertainment. In the main it takes 40 per cent. of the receipts. That is not the entire story, because in a large film production it is likely that as much as £7,000 will be taken in Purchase Tax on dresses and other materials. Therefore, if the seat prices cannot be raised—and I understand that the right hon. Gentleman is not agreeable to seat prices being raised—how does he imagine this industry can continue? What industry could continue if it received only 20 per cent. of the figure paid by the public for its products?

Some idea of the immense difference in Entertainments Duty between 1939 and 1947 is revealed by the fact that in 1939 the Entertainments Duty on the film industry was only £2,500,000. In 1947–48 the film industry paid in Entertainments Duty £18 million. That was a burden which, I suggest, no industry could possibly sustain. If the average film takes £500,000, as it does, it nets the producer only £70,000. That is obviously well below a reasonable cost of production. Some hon. Members said that "The Third Man" was an excellent film. So it is. But how much will "The Third Man" lose for the producer so far as the British market is concerned? It cost £350,000 to produce. If we put the takings at £1¼ million, the producer will get back £300,000 which means that on the British market, at any rate, he has lost £50,000.

Therefore, I say that the President of the Board of Trade must face the issue of whether he is going to make this industry pay or not, and he must face the issue of some form of tax remission. Many hon. Members have mentioned the question of whether a flat remission of tax would fill the bill. Obviously it will not. No flat remission of tax without qualifications will fill the bill, because it will mean that the majority of the increased return will go to the exhibitor. If we combined the system of a sliding-scale above and below the break figure, with a remission in tax, we could divert to the producer the amount required.

Moreover, if we remit the tax, we must make some provision for the efficiency of the industry. If a portion of the tax is remitted to assist the producer, it is reasonable that Parliament and the country should be satisfied that there is absence of waste and extravagance, which has hitherto characterised the industry. I suggest that the procedure might be followed which was followed when we put an import duty on steel in 1932. We then set up an import duties advisory committee to report to the then President of the Board of Trade and satisfy him that the industry was not taking advantage of the protection it received. I suggest that if the President of the Board of Trade thinks of remitting tax as far as the producer is concerned, he should allow a sub-committee of the National Film Production Council to be established to study the production costs of the industry and report to him from time to time so that money is not wasted which might otherwise be saved.

I want to make it perfectly clear that it is wrong to attempt in any way to put this money in some separate pool and plough it back into the industry. It is useless to say that we are going to give subsidies or some kind of assistance to an industry which must lose money. Surely the function of the Government ought to be to create conditions under which the industry can work at a profit, and not to imagine they can help it by the National Film Finance Corporation or any other method. I do not object to the setting up of the National Film Finance Corporation. I think it has served its purpose as a first-aid effort. It ought not to be regarded as the main prop of the industry and as a substitute for economic film production in this country. We want to see film producers going to the City of London and getting their money, which they will get if they are on a sound financial basis.

The Plant Report is a report that, in the main, has been well received by exhibitors, producers and distributors. On the whole, they feel that it is a good report and that its provision ought to be taken notice of, but there are some suggestions which the House would be unwise to accept. The bidding-up suggestion for first runs is a device that has been tried out in the United States and has proved a failure. What would happen if we said we are to have bidding-up for first runs? The big circuits, with their additional economic resources, could always outbid if they wanted. It is not a method likely to succeed.

I do not think for one moment that the circuits are as oppressive to the independent exhibitors as some Members have made out. I do not think they use their powers to the detriment of the small exhibitors, although I agree there is a case for saying that on first runs independent exhibitors who ought to be included are excluded. I suggest that we should get the industry together to try and include independent houses for first runs and perhaps exclude some of the present circuit houses. That could easily be done. There has been a suggestion made that there should be a removal of the ceiling of 50 per cent. as far as the hire of films is concerned. I do not think that the removal of that ceiling and bidding-up is a sound proposition.

A very good idea, from the point of view of the producer and the industry generally, is a sliding scale, with an increasing advantage to the producer over the break figure. If such a scale were introduced it would give the producer a great deal more revenue and, at the same time, safeguard the exhibitor if the film was a bad one. In all these matters we must bear in mind the average film. It is no use talking about a film such as "The Third Man"; we must also bear in mind the average film, and realise that it must make a profit. The man who produces "The Third Man" must make a big profit if the industry is to succeed.

We have come now to what is almost a crisis in the film industry, and something drastic must be done if the industry is to succeed. Today, the President of the Board of Trade has sounded no note of urgency at all; indeed, he gave the impression that things can go on almost precisely as they have done already. The right hon. Gentleman did not suggest what should be done. I believe something can be done, and that if he will take advantage of the information given to him in these Reports, and get the industry together, good results can ensue. Despite the remarks of the right hon. Gentleman about the Philistine nature of the industry, I believe that at present distributors, exhibitors and producers realise that they must do something together or all sink together. The right hon. Gentleman ought to take advantage of the newly found unity in the industry to get all sides together and work out a solution.

If the right hon. Gentleman is able, later, to make some form of tax remission he will be able to get the co-operation of the industry more easily. We on this side do not despair of the industry; it can be made to pay. In this country we can make films of excellent quality, but we ought to realise that the industry cannot be firmly established without the co-operation of the United States of America. It is useless for us to pursue a lonely furrow; we must try to get the co-operation of our American friends. In the past, largely through the mismanagement of the right hon. Gentleman and some of his predecessors, there has been unnecessary fraction between America and Great Britain. We must now devote our energies to seeking co-operation, because in the exchange of films between America and ourselves lies our hope.

I agree with the hon. Member for Eton and Slough (Mr. Levy) that the results so far have been disappointing and that we cannot expect any rapid and substantial increase in our revenue from America. But we must pursue that end as vigorously as we can. In opening the Debate the right hon. Gentleman made a disappointing speech, inasmuch as he gave no lead to the industry. In this hour of crisis the right hon. Gentleman must give a lead. Up to now we have had from him only a long history, coloured to suit his own purpose. Today, people in the industry are very disconcerted. Many who have spent years in the business, and have given it all the skill they have, are now out of work. The right hon. Gentleman must once more set the industry on its way. The hon. Member for Eton and Slough said there had never been a good time. There was a time, just before the end of the war and just afterwards, when the film industry was making enormous progress, when its quality surpassed that of any other nation and when many of us felt that we were really getting somewhere. We can recover that lost ground and we can go ahead. I hope that in his reply the right hon. Gentleman will give to the industry the lead which he failed to give in his opening speech.

9.30 p.m.

Mr. Wilson

I can reply only by leave of the House. There are one or two things which I should like to say about the speeches to which I have listened. This Debate has, as I had hoped, proceeded mainly on non-party lines in the sense that there have been considerable disagreements on both sides of the House. Great interest has been shown in the film industry, at least on this side of the House, though I am glad that towards the end of the speech of the hon. Member for Bucklow (Mr. Shepherd) the numbers on the opposite side of the House increased somewhat from the original figure of four Members who seemed to be interested in the industry at the beginning of his speech. I am sorry also that the hon. Gentleman regarded my opening speech as a disappointment to him, although I am bound to say that if it had pleased him I should really have begun to search my conscience and wonder what was wrong with my policy.

When the hon. Gentleman said that my speech represented the confusion in which I found myself, and then went on to refer to what he described as internecine strife between some of my hon. Friends, I wondered about some of the equally contradictory statements which have been made on the opposite side of the House today. On most of the big issues there has been a lack of agreement on both sides of the House. Certainly, although the noble Lord the Member for Horsham (Earl Winterton), who is one of the brightest stars in the Rank constellation, did not himself speak today, one might assume that he is in favour of the existence of the power of these circuits on which a good deal has been said on this side of the House. Then the hon. Member for Wood Green (Mr. Baxter), in a most stimulating and entertaining speech, made it equally clear that he was completely opposed to the power of these circuits and seemed rather to suggest that he would welcome some breach in their power.

The one really concrete proposal in the speech of the hon. Member for Buck-low was one which I should view with a good deal of suspicion—that we should approach this industry in rather the same way as the pre-war Government approached the steel industry, that if a subsidy had to be given—and he rightly listed some of the dangers of a subsidy—we should set up a kind of import duties advisory committee such as was in operation for steel. It would be out of Order to begin debating the steel industry once again in this House, but certainly the whole record of the I.D.A.C. in relation to steel and of steel in relation to the I.D.A.C. fills me with the gravest doubt about the validity of his suggestion.

The right hon. Member for Aldershot (Mr. Lyttelton) began his speech by reviewing Government policy, which I think he said was one of the three main difficulties with which the industry had had to contend. He said that he supported the establishment of the National Film Finance Corporation. We had his help and support when the Measure went through the House. I understood him to say that, looking back, he thought it was a wise decision and that this House had done the right thing. If there has been one thing on which there has been complete agreement on both sides of the House throughout the Debate, it has been in regard to the key position of the National Film Finance Corporation and the tributes that have been paid to it in what it has achieved in the very few months in which it has been in operation, not only in keeping the film industry afloat but also in bringing some measure of reorganisation, some measure of improvement, some measure of financial control and some improvement in business methods into a considerable number of organisations in the film industry.

But the right hon. Gentleman went on to criticise, as did some of his hon. Friends, the 300 per cent. ad valorem tax, and he also criticised the quota. In my previous interruption I dealt with his suggestion that the United States negotiations had been misled on the subject of the quota. But I cannot think it is any good the right hon. Gentleman saying that I have been wrong in the quota provisions I brought to this House. I was required by Statute to base the figure on the production possibilities and prospects of the industry. On the facts before me 45 per cent., I would still say, was certainly right. In fact, the producers were pressing for 50 per cent. What happened was not that the quota was wrong in relation to the facts before the House, but that production undoubtedly failed to come up to the expectations of the producers. Is that a thing on which the right hon. Gentleman would feel it right to blame the Government?

He stressed three main reasons for the difficulty: Government policy—I do not propose to follow him in that—the small size of the market, on which we would both be in agreement, and also entertainments duty. We have heard a lot about the entertainments duty from hon. Members on the other side of the House, and from some of my hon. Friends on this side. Are we to understand that it is the policy of the Tory Party, if returned, to reduce the entertainments duty and give it priority over other reductions in taxation?—because if that is not their policy then a good deal of what has been said falls to the ground. There was some reference made to the phrase, attributed to me by the right hon. Gentleman, a "sinister agreement" which was all due to the recommendations in the Plant Report. In the first place, I did not say it was a sinister agreement. I referred to "unaccustomed and almost sinister unanimity." While I impute no motives, and while in many respects I agree with the hon. Member for Bucklow, I would like to see a good deal more—

Mr. Lyttelton

Not only agreement, but unanimous agreement.

Mr. Wilson

I would like to see that. But I do suggest that when the two sides of the industry, and even more when the exhibitors join in this proposal, come forward with a policy for the industry which amounts to no more than getting something out of the taxpayer, that is something which, however much we welcome their unanimity, we should view with a certain degree of healthy suspicion.

Whatever our approach, it would be wrong to suggest that this agreement, or unanimity or whatever we choose to call it, is due to the Plant Report, which has only been available to the public for about a week. There has in fact been a new heat on the Entertainments Duty propaganda since the publication of the Rank report. I cannot help feeling, and a number of my hon. Friends have suggested it today, that in Mr. Rank's statement at the time of the publication of his accounts, and in a number of things which have been said since, the Entertainments Duty has to some extent been used as a scapegoat for what has been an unsuccessful industrial production policy. And, of course, once that private enterprise, which has been singularly quiet about the Entertainments Duty in previous years, found this glorious new alibi under which the Government can be blamed for all their misfortunes, it was immediately taken up by the opposition Press who even forgot their criticism of Mr. Rank.

I remember only a year ago the opposition Press in general, and "The Financial Times" in particular, were criticising Mr. Rank most vehemently for what was, by comparison with this year's balance sheet, a most encouraging and satisfactory position. But now the publication of the Rank balance sheet and accounts provided what was even more attractive to the opposition Press in a pre-election period, a stick with which to beat, not Mr. Rank, but the Government—which was a much more desirable thing for them to do.

Mr. Lyttelton

I asked the right hon. Gentleman a question or two, and before he leaves this part of his argument, I hope that he is going to answer them. He is now addressing himself to the Rank accounts and avoiding discussion of the report. May I ask whether he accepts as accurate the computations of the committee which he himself appointed, as set out in paragraph 64 of their report or whether he rejects them?

Mr. Wilson

I think I made it clear this afternoon that we accept most of the main conclusions of the Plant Report and most of their views. But certainly I should want a good deal more time before I could say whether I accept the calculations in that document and also I should need to know—and I think the right hon. Gentleman the Member for Aldershot would need to know before he could be so dogmatic about it—a good deal about what the balance sheets and figures of production in the industry mean.

Mr. Lyttelton

I am not being dogmatic. I am asking a perfectly straight question. The right hon. Gentleman appointed an independent committee on this industry. They have made categorical statements in paragraph 64 of their report. I want to know whether the Government accept those statements. It is not a question of being dogmatic. I am asking a question. I cannot allow the Pakenham technique to have full play.

Mr. Wilson

I made it clear this afternoon, and the right hon. Gentleman took some interest in the sentence I used, that with the industry organised as it is, with the present market as it is, with the distribution charges as they are and with Entertainments Duty as it is—with all those things added together it is certainly true that British film production cannot pay its way at the present time.

Mr. Lyttelton

Does the right hon. Gentleman accept paragraph 64? Answer.

Mr. Wilson

I am certainly not going to say tonight that I will—and I do not think that anyone else in this House is in a position to say whether they will—place the whole of the blame, as to a considerable extent the Plant Committee do, on Entertainments Duty.

Mr. Baxter

Why should the Government at one moment look upon remission of Entertainments Duty as a very wise thing to do with the living theatre and as something that must not at all be done with the films?

Mr. Wilson

That is a question which the hon. Gentleman has frequently put to the Chancellor of the Exchequer. I have no doubt that he can take it up again with the Chancellor of the Exchequer when the right moment comes on another occasion. Certainly, this is not the right time to be debating taxation policy in relation to the living theatre.

Mr. K. Lindsay

May I put a question? I have been sitting here through a lot of this Debate. [Interruption.] I suppose one is still allowed to do that. What I want to know is whether we are to understand now, after two committees have reported, that we do not really know the facts about this industry? Is that the implication?

Mr. Wilson

The hon. Gentleman may. Hon. Gentlemen opposite may. Frankly I do not.

Mr. Lyttelton

May I ask one more question? I really am very sorry to interrupt the right hon. Gentleman again —I try to interrupt as little as possible—but if he does not understand the report or if he disagrees with it, why does the right hon. Gentleman put a Motion on the Order Paper asking the House to take note of it?

Mr. Wilson

If, before interrupting, the right hon. Gentleman had let me finish my sentence, he would not have needed to put a question. I did not say that I did not understand the report. What I say is that I frankly do not understand in total—nor does anyone else in this House, except, of course, the noble Lord the Member for Horsham who signs the balance sheets and will understand them—the present financial position of the film industry. In the absence of a full understanding of the financial position of the film industry, the margin of error on whose accounts for any one year runs into millions, it is extremely difficult for me to say whether I accept in detail the financial and the statistical picture presented in this report.

I should like to say a word about the speech of my hon. Friend the Member for West Nottingham (Mr. O'Brien). I agree with him on the importance of the degree of agreement which we had on the production side of the industry, the Gater Report and methods of reducing costs, but I would not follow him in all that he said about dollar earning abroad. I do not think that for some period after the war, our method of exploitation of films abroad and our method of dollar earning was as successful as it might have been. I think there has been a costly experiment in trying to market films on too wide and broad a basis there, and it has been made clear, as Mr. Rank himself has found in the last year or two, that we can be much more successful with films on a "road show" basis, taking advantage of a long run in order to earn the maximum possible revenue. I think we have been much more successful than we were in the years immediately after the war.

My hon. Friend also referred to the question of quality in the industry, and I was glad to hear him say this. I think it is only fair for me to say that it was he, 12 months ago, who warned this House and the industry about the policy of producing far too many relatively low-cost films without any regard for quality. The hon. Member for Altrincham and Sale (Mr. Erroll)—I am sorry that, in going out for something to eat, I missed what he had to say, and if I misrepresent him, he will probably correct me—drew rather heavily on his imagination, I understand, in drawing a picture of myself being 'phoned late at night by Mr. Eric Johnston. I should like to ask the hon. Gentleman how he came to know that; he must have some reason for saying it, though it never actually happened. The hon. Member also drew a picture of me chasing all over the United States after Mr. Eric Johnston. I do not know why this should have happened. Certainly, I met Mr. Johnston in Washington more than once, and I fixed the date of the next negotiations with him. I met the leaders of the industry. I hope that these meetings do something to improve our relations. Certainly the right hon. Member for Aldershot drew attention to the importance of maintaining the best possible relations between this country, this Government and this industry and those responsible on the other side.

I should like now to deal with what has been one of the most important suggestions made today by my hon. Friends the Members for Huddersfield (Mr. Mallalieu) and Devonport (Mr. Foot), who said that the Government, or rather the National Film Finance Corporation, should seek out and draw up a full list of available producers and directors and make it clear to them that the N.F.F.C. are prepared to finance their activities. I do not think that is really the right way to go about, it. Wherever a director and a producer are ready, willing and able to work together, then it may be that the N.F.F.C. is able to help, and the Corporation is most anxious and willing to entertain any such project for any such producer-director group.

What was one of the most unfortunate things about the industry was the fact that a considerable number of producers, many of them, indeed, brilliant artistic directors, had unfortunately no sense for the business of organisation required in film production, and it is a most desirable thing in every case that there should be some suitable organisation in which both the artistic and the business side will be linked together. There have been—and these have been some of the brightest stories in the history of the British film industry—some very happy associations —I am thinking now of Ealing Studios—between a director and a producer—Sir Michael Balcon—and a business manager who worked with him. If they will come along to the Corporation, I have every hope that it will be possible to assist them in their growing volume of production.

Mr. J. P. W. Mallalieu

Does my right hon. Friend mean that the door is open to them, with or without a distribution contract?

Mr. Wilson

It is impossible to say that in each of these cases, but in the work of the Corporation there has not been any general policy or standard of financial arrangement. Certainly, I would not say that, if they came without a contract or without a distribution arrangement, it would be impossible to get finance; but clearly the extent to which the N.F.F.C. participated in such a scheme would depend to a considerable extent on the prospect of the production ultimately getting distribution, including the possibility of its getting through the tribunal referred to by my hon. Friend the Member for Devonport, which, I agree with him, has been largely something of a dead letter.

Mr. Wyatt

Could my right hon. Friend say who is going to adjudicate on the potentialities of the scripts concerned? As he knows, there is a lot of dissatisfaction at the managing director of the N.F.F.C. vetting scripts when he knows nothing about it, as he is only a business man and not a producer.

Mr. Wilson

If that statement is true, I think my hon. Friend will find some parallels in the Rank organisation. With the exception of the noble Lord, a number of the people at the top of the industry could hardly be called practical trained men.

Earl Winterton

As the right hon. Gentleman has referred to me may I ask what on earth has a private organisation to do with an official one? The charge made against this organisation is that the director of an official organisation was not a business man. What has that to do with a private organisation?

Mr. Wilson

I think the noble Lord's conception of the Rank organisation as a purely private organisation is completely outmoded. I quite agree that it is an organisation primarily responsible to its shareholders, but, of course, in its effect upon the future of this industry, of those who work in it, and of those who expect to see films in the cinema theatres, one cannot regard it as a private organisation.

However, I should like to refer to my hon. Friend's intervention. The reason why I said what I did say is, of course, that it is a fact that the National Film Corporation has, to a large extent, taken over the job which the Rank organisation has been doing in financing a considerable number of producers, and it is relevant to compare the organisation at the top of N.F.F.C. with the kind at the top of the Rank organisation. But I would not agree with my hon. Friend that the N.F.F.C. has been approaching these problems in the way he suggests. The very fact that 50 films have been financed by that organisation suggests that it has approached these problems in a realistic and imaginative way. I think that in the last 24 hours the N.F.F.C. have announced their decision not to rely on their own business and amateur knowledge of films, but that they will call in as their adviser Sir Michael Balcon who is well known not only as the most brilliant, but as the most successful, of our British producers.

Mr. Lyttelton

Who comes out of the Rank organisation.

Mr. Wilson

There are a lot of very good men who have been in the Rank organisation.

Earl Winterton

How very kind of the right hon. Gentleman to say so.

Mr. Wilson

In fact, I might mention one or two who have left the Rank organisation and have worked under the aegis of N.F.F.C. There are Carol Reed, Michael Powell and Emeric Pressburger, Frank Launder and Sidney Gilliat, the Boulting Brothers, Anthony Havelock Allen, Aubrey Baring, Ian Dalrymple, Harold Huth and Paul Soskin.

Mr. O'Brien

Is it in Order, Mr. Speaker, for hon. Members or the Minister to refer to an industry in terms of one man? The British film industry existed for 30 years before Mr. Rank's name was thought of, and will probably exist after his name is forgotten.

Mr. Speaker

I did not hear the Minister make any reference to the industry in terms of one man. Anyhow, I imagine that it is a matter of opinion.

Mr. Wilson

I said this afternoon that it was totally wrong to regard the industry and the Rank organisation as being in any sense coterminous.

I should like in my remaining few minutes to sum up one or two of the conclusions of this Debate. I will conclude with the subject of Entertainments Duty when I come to it. I feel—and some of my hon. Friends have expressed some doubt on this—that one of the principal bottlenecks in the industry must be regarded as the number of producers and directors capable of producing the really big first-feature films and with experience of doing it. In my own view, it would be right for the industry to aim at the production of perhaps 12 or 15 really big first-feature productions—and when I say "big" I do not necessarily mean high cost—each of them capable of an international showing, an industry with a considerable volume of production sufficient to throw up the trained personnel, the stars as well as the directors and producers, and capable of maintaining that level of production until in due course we can hope to increase it.

I think another important part in our industrial development will undoubtedly be what the Americans call co-production: that is the joint production effort between British film companies and American film companies, whether using blocked sterling or dollars or whatever it may be, which helps to assure a dollar market for films produced in this country. Some of the most successful films of the last year or two have been in this sense co-produced, and I am sure it holds out a substantial and hopeful means of maintaining and building up our industry, provided that we maintain our artistic independence.

Finally, I should like to refer to what has been called the main problem before us—the financial position and the Entertainments Duty position. My hon. Friend the Member for West Nottingham put forward certain detailed proposals. I welcome two points in particular about my hon. Friend's suggestions. One of them is that he recognises, and I am sure the industry recognises, that a special effort is needed by the exhibitor to give British films a specially good showing. His scheme was based on special incentives directed towards that. I also appreciate the fact that he looked at the problem of the British programme as a whole and not only at first features. He paid full attention to the needs of the second-feature and supporting programme producers. I think that is another attractive point about his scheme.

But, in fact, as I am sure the House will realise, discriminatory taxation as between countries would almost certainly be contrary to our international obligations, and so, I think, would be the arrangement to hand back immediately after collection some part of the tax to those who were showing purely British films. In other words, the proposal is really no more than a subsidy from our national Exchequer. We have in this country for a very long time rejected the idea of particular taxes being earmarked for particular items of expenditure, with the exception of the Road Fund which, perhaps, is not a very happy analogy to follow. Therefore, it comes to a subsidy. The whole case that has got to be made out is and must be in terms of a subsidy to the industry, and, as I said earlier, in making out that case it is essential to convince the House and the country that that money would be provided with a real guarantee that it would not lead to further extravagance, or, to use my hon. Friend's phrase, which I prefer, that it would not lead to further waste and loss of that money.

The House has agreed that the present economic condition of the industry is far from satisfactory, but I think most of us are agreed that whatever the taxation position at one moment or another, the financial position of this industry is not going to be made satisfactory purely by reducing taxation, much of which reduction would not find its way into production, and that before we can contemplate any question of a subsidy the industry would certainly have to put its house in order.

Question put, and agreed to.

Resolved: That this House takes note of the Report of the Working Party on Film Production Costs and of the Report of the Committee of Inquiry into the Distribution and Exhibition of Cinematograph Films.