CINEMATOGRAPH FILMS (QUOTAS)

HC Deb 30 March 1949 vol 463 cc1293-342

7.28 p.m.

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

I beg to move, That the Cinematograph Films (Quotas) Amendment Order. 1949, dated 22nd March, 1949, a copy of which was laid before this House on 22nd March, be approved. This order fixes the quota under the Cinematograph Films Act for first feature films at 40 per cent. instead of the 45 per cent. fixed last year. The House will have noted that no change is made in the quota of 25 per cent. for the supporting programme. It is my duty to inform the House that this order does not represent an uncontroversial proposal. No quota in this unhappy and divided industry could be uncontroversial. The comments on it range very widely. There is the representative of a union largely concerned with production, on the one hand, who supported a higher quota and said that I had succumbed to pressure mainly from the exhibiting side of the industry; and, on the other hand, there are the exhibitors, a representative of whom pressed for a lower quota and said "Exhibitors have been treated with contempt, and the Films Council ignored. If it is the Government's intention to ruin the British cinematograph industry, then they are going the right way about it." Somewhere between these two extremes the truth may well be found. I recently saw a report in the "Daily Worker" which summarised it under the heading: "Minister gives in to Hollywood." Incidentally, I feel it right to inform the House that I have received no representations whatsoever, official or unofficial, from Hollywood or any other part of America. The quota was fixed by the Board of Trade conscientiously and fairly in relation to all the available facts.

Secondly, I feel it my duty to inform the House that in fixing this figure I have departed from the figure recommended by at least half the Films Council which I am statutorily required to consult. The producers and renters at the meeting of the Films Council were in favour of maintaining the existing percentage of 45 and they were supported by half the trade union representatives. The exhibitors and the other half of the trade union representatives supported a proposal to reduce the quota to 33⅓ per cent. Apart from the chairman, the voting was exactly equal. The chairman cast his vote in favour of a reduction but said that he did not favour a reduction to as low a figure as 33⅓ per cent. In those circumstances and with that division on the Council, it can hardly be represented truthfully that I have flouted the advice of the Council, since it is quite clear that the Council's advice was very sharply divided.

There has, however, been—it is right that I should inform the House of this—some criticism of the very fact that I did not accept what is considered to be the majority view of the Cinematograph Films Council, which was re-established by the recent Act. A typically extravagant article in one section of the trade Press began with a quotation from John Adams in 1789 and continued with a quotation from Thomas Jefferson: The whole of government consists in the art of being honest. It went on: What could be more honest than for Mr. Wilson to abide by the decision of the Films Council; neither to add to nor subtract from their figure? It went on: His innate modesty— which is, perhaps, less controversial— should never allow him to consider himself sufficiently intimately acquainted with all the intricacies of all the businesses in the country to warrant him altering a decision arrived at by the vote of a trustworthy body of experienced people he himself has commissioned. In other words, it suggested that I should automatically have taken what the Films Council said, but by the same token I should have fixed last year 50 per cent., since this was recommended by a clear, though small, majority of the Films Council last summer. Last year when I to that extent ignored the majority advice of the Films Council and fixed quota slightly lower than the 50 per cent. which was then recommended, there was no criticism from those sources that I fixed a wrong quota. I therefore hope that this subject, which is difficult enough, will not be made more confused and difficult by arguments based on the so-called advice of the Cinematograph Films Council.

There are two considerations—there are many considerations but two principal ones—to be borne in mind when fixing the quota. The first is the paramount necessity of building up a sound and healthy production industry in this country. Last year's quota was meant to be an encouragement and incentive to the film production industry to build up their production to the maximum possible figure. Indeed, during the passage through Parliament of the recent Act, I gave an undertaking that I would fix the quota at such a level as would provide a distribution outlet to all British films of reasonable quality. Last summer the quota was fixed, as it has been this year, on a sober calculation of the supply of films available. The second consideration is that in fixing this quota, obviously the Board of Trade and the House must have in mind ensuring exhibitors a reasonable choice of films for their patrons—those who come to the box office—and, therefore, it would be quite wrong to fix the quota, merely in the interests of encouraging British film production, which is too high in relation to the films of good quality which may be expected to materialise during the year.

From the figures discussed in the Film Council, it seems reasonable to assume that during the new quota period the releases of new British first feature films will number between 70 and 80. As against this, a 40 per cent. quota will mean that towns with three cinemas, each changing its programmes not oftener than once a week, can satisfy their obligations with 63 British films between them. As the current year's 45 per cent. quota requires for this situation a total of 72 British films to be shown as first features, compared with releases which are unlikely to exceed roughly 78, the House will see that the new order gives a slightly larger margin as between the number of films available and the number required in these circumstances and therefore slightly more freedom of choice to exhibitors than last year's order, now in force, actually gave. So much for the fixation of the quotas.

Naturally, the House will expect me to give the reasons for reducing the quota compared with last year. It is indeed a great disappointment to me to have to reduce the quota, and I am sure it will be a disappointment to the whole House. I said last year that it was not only my intention to fix the quota each year in accordance with the number of films expected but that I hoped we should look forward to a gradually rising quota year by year, and I had held out the hope that whatever quota was fixed on the first occasion could be regarded as a minimum below which we should not fall. It is, therefore, a great disappointment to all of us who had hopes of increasing film production this year that we have had to fix this somewhat lower quota. I do not want to sound too discouraging about it. The industry is going through difficult times at the moment and if I thought the reduction was anything but a temporary reduction I should feel a good deal more concerned about the position than I do. I must tell the House that I approach the reduction in the quota rather with the idea of reculer pour mieux sauter.

Since I fixed the last quota, production has failed to come up to the expectation which we then had, chiefly through lack of finance. I should probably be out of Order if I went into the whole difficult, involved but fundamental question of finance facilities for the industry. The House recently debated it very extensively in the discussions on the Measure which recently became the Film Finance Act, and since that time the Film Finance Company has played a very great part in filling in the gap which has resulted from the drying up of certain normal and previously existing sources of finance. There is a great deal that I could have said on that subject but tonight we are not debating the present film crisis nor are we debating the degree of redundancy and unemployment nor the number of idle studios we are debating the question whether the quota which has been fixed is realistic in the light of the probable supply of films, and on that subject one obviously cannot say too much about the film crisis.

On that subject I will only say that it is a fact that the big companies in the industry have been drawing in their horns for financial reasons, and it is a fact that the films required to honour even the reduced quota will have to come to a much greater extent than hitherto from independent producers who will need to be financed from sources other than the traditional ones in the industry, particularly from the new Film Finance Corporation. All the background to this crisis—the reduction in costs which is now going on in the industry, the slimming process, a necessary healthy one—perhaps that is at least one of the good things coming out of the crisis—the work of the Working Party on Production Costs, the Portal Committee of Inquiry into distribution and exhibition which has now practically completed the taking of its evidence—all these things are the background to the crisis and, to that extent, the background to the quota, but I do not intend to go into these matters this evening.

However, I want again to emphasise not only the need for reduced costs of production in this industry but the need for maintaining, and if possible improving, the quality of the films which are being made. The recent Hollywood film awards, the "Oscars," have shown that the quality of the best British films is still the best in the world, but I am quite certain that the anxieties which have been expressed by cinematograph exhibitors—who seem to have bombarded hon. Members with telegrams on the subject of this quota—are perhaps even greater on the matter of quality than on the matter of quantity. They may well have confidence that the films will be produced in quantity but they fear—and one must express one's concern on this question—that the quantity will be achieved only at the expense of the average quality and, therefore, of the average entertainment value of the films produced.

Before I sit down, there is one last point I feel it is my duty to make, and that is about the position of certain of the independent exhibitors. The quota is, of course, particularly biting on the circuits. It is essential to fix a relatively high quota if that quota is to be effective on these powerful circuits who, after all, represent such a high proportion of the box office takings of the industry. However, apprehensions have been expressed about the position of the non-circuit exhibitor from whom—not from the circuits —these complaints are coming that the proposed quota is too high.

On that I would remind the House that the Board of Trade are empowered by Section 4 of the Cinematograph Films Act of last year to award reduced quota percentages, or in some cases total exemption from the quotas, to exhibitors who apply for relief and satisfy certain prescribed conditions. Each application must be able to show that, owing to circumstances beyond his control, two or more competing theatres in the same locality as his theatre are showing British films before his theatre can show them. It is at present too early to say to what extent such reliefs will be given in respect of the new quota period beginning next October, but the House might like to know that in relation to the current year we have granted reliefs of varying amounts to altogether 1,471 cinemas, besides awarding total exemption to a further 307.

In those circumstances, I think the House will agree that in most cases, though not in all cases, it will be possible to award reliefs to those exhibitors who require them, and in those other cases where the Board of Trade have no power to award reliefs in advance, but where the exhibitor nevertheless is able to show at the end of the quota period that he did his best to fulfil his quota and only failed to do it because that was "not commercially practicable," his default does not constitute an offence, and the Board can certify under Section 13 of the Act of 1938 that it was due to circumstances beyond his control.

Mr. Emrys Roberts (Merioneth)

Before the President of the Board of Trade leaves that point, can he say whether the provisions for relief from the quota would apply in what is a common case in North Wales, the small town with one small cinema, with no other town near it, on which the quota bears hardly?

Mr. Wilson

We should have to look at the circumstances of each case. It could not get exemption under the Act in respect of the competitive situation of two cinemas in the same town but, of course, it could get relief under the "commercially practicable" Clause. Perhaps I might say a word about that later.

Mr. Blackburn (Birmingham, King's Norton)

Could the President answer one other question? There will be an increased flow of American films as a result of the reduction in the quota. How are those films to be paid for under the Johnson Agreement?

Mr. Wilson

If my hon. Friend is referring to an increased flow of imported American films—not American films made in this country—

Mr. Blackburn

Imported.

Mr. Wilson

—the position under the agreement to which he refers is quite unaffected because that agreement provided that of all the earnings which American films obtain in this country only a certain figure—17 million dollars a year—should be remitted. Therefore, this does not in any way affect the amount of money remittable. It slightly increases the amount of blocked sterling which will be earned and which will be held in this country and disposed of by the means specified in the agreement.

This is a very difficult subject and I am sure the House, which has spent so much time in the past year or 18 months on the subject of the film industry, will share my disappointment that it has been necessary to reduce the quota and will be concerned about the present position in the film industry. I am quite certain that it was right to reduce the quota. It would have been an unfair burden on the exhibitors in the light of the number of films expected to come forward to have required them to show 45 per cent. of their screen time through British films. It might possibly have led, indeed, to a breakdown of the Act if a large number of cinemas could not fulfil the quota that was set. Nor would it, in my view, have been in the best interests of British film production. On the other hand, to have reduced the quota further—to such a figure as 33⅓ per cent. or 25 per cent., as is being advocated in many quarters—would have dealt a grevious blow to British film production in this country.

I can well understand why exhibitors in general are pressing for a lower quota, but it is a fact which they must realise, and which I know this House realises, that the short-term direct financial interest of the cinematograph exhibitor does not coincide with either the short-term or long-term economic interests of the country as a whole. However true it may be that the profits of exhibitors would be increased if they were allowed to show a much higher proportion of imported films, it is certainly true that the economic condition of the country would be gravely prejudiced by such a course. Indeed, it would be dealing such a serious blow at the British film production industry that it might endanger the supply of films to the exhibitors and, in the long run, might well turn out to be opposed even to their interests.

7.48 p.m.

Mr. Oliver Lyttelton (Aldershot)

We recognise on this side of the House that the film position today is sufficiently critical to warrant careful handling, and in anything I have to say, I particularly do not want to make the task which faces the President of the Board of Trade any more difficult, for it is quite difficult enough as it is. However, it is necessary that the House should consider this matter on a fairly wide basis.

First, I think there has grown up amongst exhibitors the feeling that their interests have been rather neglected. At least, speaking for hon. Members on this side of the House, that is not the case. We have had to criticise certain things in the film industry from here hut, after all, the exhibitors have the largest capital investment in the industry, they are those who are directly in touch with the public, and what they think has to be given due weight in the whole picture. On the whole, they want a low quota because in the past their profits have been built up largely upon American films. They are extremely perturbed about the quality of British films which are being produced under a quota which they think is unduly high. From what I gather myself about the industry, the effect of fixing the 45 per cent. quota has undoubtedly been to give some substance to the fears about the quality of British production which, I think, have been formed as a result of fixing too high a quota.

Perhaps somebody from the Treasury Bench will tell me whether what I am about to say is correct. Last year during some of our Debates on the film industry it was said that the takings in this country from the first-feature British film exceeded the takings from American films of similar character. I believe that since we discussed this matter last year the position has rather been reversed and that the exhibitor has some cause for anxiety that the high quota and protected position of the British producer has led to a distinct falling off in the quality of his products. Of course, as the President of the Board of Trade has said, the best of those products, no doubt, are the best in the world; but we must look at rather more than that, and see whether in trying to fill a quota, once 45 per cent. and now 40 per cent., they are able to maintain the same quality. So much for the exhibitor. We must look at his interests as well as those of the producer.

Producers, admittedly, are finding finance extremely difficult and the President's film corporation was formed to try to fill in some of the gaps. But the position of the producer, both independent and otherwise, is certainly serious. The advances which one joint stock bank has made to one large film concern, I think, are greatly in excess of £10 million, and the security which that bank has against these advances largely consists of canned films. That is not the type of banker's advance which is particularly popular in either Lombard Street or Threadneedle Street. The producers in theory want a high quota, which they think will stimulate production and make the gaining of finance easier. It has not, of course, had that effect.

In all this matter the House is in considerable difficulty in trying to strike the correct balance between the interests of the exhibitor, on the one hand, and the producer, on the other hand; the President of the Board of Trade indeed, touched upon this matter. One thing which is certain is that the amount of unemployment which is now begining to be apparent all over the industry is a matter which concerns every hon. Member in this House. When we are trying to find the correct balance between the interests of the exhibitor and those of the producer, including the independent producer, we shall generally find a rough and ready answer by looking at the state of employment and trying to direct our policy so that this so-called redundancy is removed and that our studio space begins to be used again. I will have something to say about that presently.

Besides the exhibitor, the producer and the worker in the industry, there is another most interested party: that is, the Treasury, who are vitally concerned. There is no doubt about whether we are able to afford any increased imports of American celluloid. That, I imagine, is out of the question.

From that I am led, I hope in an equally objective way, to say something—I am afraid some of this will be very critical—about the contemporary history of these negotiations, upon which I really cannot congratulate the Government. We gave what support we could to the Government in making it clear that we could not afford the unrestricted importation of American films. I think that at the time of our first film Debate, the President of the Board of Trade was in negotiation with the Americans. We on this side reinforced so far as we could what hon. Members were saying opposite, that the Government should not give way. The balance of payments crisis was too serious to admit of any playing about with an increase in the amount of remittable sterling earned by American film companies in this country.

At that time we urged—and the hon. Member for West Nottingham (Mr. O'Brien) was also insistent on this point—that every effort should be made to gain an agreement with the Americans—to gain more than agreement in fact; to gain also their co-operation. The result of the President's negotiations was the conclusion of an agreement between Mr. Eric Johnston and himself, which went some way to clear up the mess from the broken plates left by the original penal tax upon the importation of American films. At that time both the hon. Member for West Nottingham and, in a less responsible position, I myself, felt that considerable advances had been made and that there was a possibility of the film business being on the verge of better times.

A great mistake was made at that time, because immediately after the agreement had been concluded, the quota was put at 45 per cent. without any previous consultation at all with the Americans. That was a very immature piece of negotiation. Whether rightly or wrongly—that question really does not arise—it infuriated American opinion; they thought they had not been treated on the square. Much of their subsequent attitude has been dictated by the feeling that the President ought not to have fixed so high a quota so soon after the agreement with Mr. Eric Johnston, without having informed those on the other side of the negotiations. This has nothing whatever to do with our right, which remains absolute and sovereign, to fix whatever quota we think suits British interests. That is not the question. But those experienced in commercial negotiations, especially with the Americans, know that it is far better to put all the cards on the table and tell them what action it is proposed to take beyond the actual negotiations which are in hand, if we want a lasting agreement. I am not saying that the Americans are right in their attitude, but the fact that they did not know what action about the British quota was going to be taken, has led to a number of very unpleasant consequences for ourselves.

As far as the present quota which we are now discussing is concerned, I notice from reports, not only in the Press, which I have received from America that the reduction of the quota from 45 to 40 per cent. has done nothing whatever to relieve the bitterness—I do not think that is too strong a word—which the American film industry have at the size of the quota generally.

Mr. Benn Levy (Eton and Slough)

Will the right hon. Gentleman specify what are the injurious consequences to ourselves to which he referred?

Mr. Lyttelton

I am just coming to that. The result is that we are getting the worst of all worlds in this matter. First, the Americans are extremely obstructive to British films being shown in the United States, with the result that the organisations which want to export films to America are exporting them in the face of an industry which, rightly or wrongly—I do not want to make a smart point about this—feel that they have been treated in rather a smart way by the British Government. Hon. Members who want support for what I am saying can read the speech of an American Senator and others on this point. They feel that they ought to have been told at the time of the negotiations what quota the British Government intended to impose.

That is the first consequence and the second consequence is that there is something like a sit-down strike of American producers in this country concerning the use of the blocked sterling that they accumulated here for films shown in this country and which was accumulated because of the agreement, to which the President of the Board of Trade referred, limiting the amount of remittable sterling to the equivalent of 17 million dollars. I am thinking particularly now of the intervention by the hon. Member for Eton and Slough; the other effect is that the Americans are sullen and uncooperative in this country. So far as I am informed, they are not using the blocked sterling to produce what would rank as British films here in much of the empty studio space available. The consequence of these events is that exhibitors are short of first feature films, the public are definitely put off attendance at the cinema by the quality of the films and the receipts are tending to fall. The consequence of all these things is that unemployment is beginning to be rife.

Taking all these things together, the rather maladroit way in which the Government have conducted these negotiations has resulted in the industry as a whole getting the worst of all worlds. Its affairs, as far as the Government have interfered with them, have been conducted in such a way as might lead one to suppose that the industry had already been nationalised. It gives one very little confidence about the future. Upon one thing there is surprising agreement. Every part of the industry is agreed that taxation is excessive. I do not disguise the fact that I could, by canvassing other industries, obtain the same agreement of consent that their taxation was similarly excessive.

Mr. H. Wilson

It would be similarly out of Order.

Mr. Deputy-Speaker (Mr. Bowles)

The right hon. Gentleman may not discuss proposals to set the industry on its feet, but the proposal as it exists for reducing the quota from 45 to 40 per cent. As long as he is referring to an alteration in the quota, he is in Order, but discussion of alternative plans would be out of Order.

Mr. Lyttelton

I was not discussing alternative plans, but I was saying that if we had to seek agreement from all sides of the industry, we could find agreement on an all-round reduction of taxation. I will leave that point, which is a digression from the main question on which I wish to address the House. I ask the President of the Board of Trade, although I think I know the answer, whether any mention of the 40 per cent. quota was made to the Americans before it was instituted and whether he will consider in future that these negotiations could be arrived at on a much better level if all the actions consequent on agreements with Mr. Eric Johnston and the Hollywood industry were discussed at the same time. In my experience, and I do not want to be pompous at all, the last thing we want to do with Americans, particularly when in commercial negotiations with them, is to leave them with the feeling that something is being held out of the deal and will come along later. They particularly respond to frank and even brutal statements in negotiations. California is a long way from Whitehall and they are not happy about the way in which they have been treated. A great deal could have been done to gain their co-operation if the matter of the size of the quota had been put on the table at the time of the negotiations, but, so far as I know, it was not disclosed. No doubt the President would have been precluded from being too precise on the matter, but the general idea that the British quota was going up very sharply from what it had been should have been stated.

As a result of all this, large quantities of taxpayers' money have to be risked in a very hazardous part of the industry and I hope that the lessons of this mess will be borne home on His Majesty's Government. The time has come when a certain amount of face-losing has to be recognised and that we should try to obtain the co-operation of the Americans. That does not mean—and I emphasise this—that I am advocating any increase in the amount of remittable sterling which at present is the main feature which covers the agreement with Mr. Eric Johnston.

Mr. Gallacher (Fife, West)

What is the right hon. Gentleman advocating? Is he suggesting that the amount of British films shown in British cinemas should be a subject for negotiation with the Americans, or that the Minister should have told them the amount, or the percentage, that Britain intended to have? What difference would it have made if the President had told them the per- centage and if Mr. Johnston objected and the Minister refused to negotiate? Is the right hon. Gentleman suggesting that it should be the subject of negotiation?

Mr. Lyttelton

I am suggesting that at the time of the original negotiation the approximate height of the British quota should have been told to the Americans. They might then have wished other parts of the agreement to be altered. The point is simply that we must deal with the thing on the whole basis over the whole field, and not make agreements about remittable sterling and the amount which Americans are allowed to invest here and the way in which they can invest it, but at the same time keep up one's sleeve the major card in the whole pack, which is the size of the quota. I think it would have been quite possible to maintain a very high quota, just as high as this 40 per cent. with the co-operation of the Americans if the negotiations had been conducted in a different way.

My main reply to the hon. Member for West Fife (Mr. Gallacher) is that I think the negotiations ought to have been conducted so as to get the American blocked sterling invested in what would be a British film and one which would qualify for a British quota. One way or another that has not happened and we must criticise the Government for not having brought that about This is the way in which we should hope to be able to help the British film industry and to help in regard to unemployment, which is now becoming a matter of real anxiety to all those connected with the industry. The intervention of the hon. Member underlines my point. What I want to see is a form of co-operation with the Americans which would induce them to invest rather than repel them from investing their blocked sterling in production of British films in this country, which would come in as part of the quota laid down by the Government. I do not wish to commit myself or my hon. Friends to detailed programmes in relation to the domestic affairs of the industry until the Portal Report comes out, because I think we shall see a number of objective proposals there which I would not like to prejudge.

It is clear to everyone that the industry is in great jeopardy and the first step to take is to secure the co-operation of those who are as much hit as we are in trying to clear up the mess. I ask the President if he agrees that the answer to these questions is, first to re-open the subject with the American producers, to release some of the British film earnings abroad and, possibly, to consider at a very early date some remission of the Purchase Tax which, according—

Mr. Deputy-Speaker

It is out of Order to discuss that.

Mr. Lyttelton

I will confine myself to suggesting to the President of the Board of Trade that he should re-open the question of the quota with the Americans with a view to trying to get them to cooperate in seeing that it is filled by the production of films in this country with the American blocked sterling.

8.10 p.m.

Mr. Eric Fletcher (Islington, East)

I cannot help feeling that the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) has been much less than fair to the President of the Board of Trade in the criticisms which he has made, because I have been reading the speeches which he made when we considered, about this time last year, or a little later, the order fixing the quota at 45 per cent., and also the speech which he made earlier when this House was asked to approve what is now known as the Johnston-Wilson Agreement. It is noteworthy that the right hon. Gentleman and the hon. Members behind him did not a year ago oppose the fixing of the quota at 45 per cent.; nor did they then suggest that there would be any American opposition to the fixing of a quota of 45 per cent., or that there had been any breach of faith with the Americans in fixing the quota at that level. On the contrary, the right hon. Gentleman did not oppose the fixing of that quota of 45 per cent. He merely expressed doubt whether the industry would be able to fulfil that quota.

It is important to point out that when this House was asked to approve the Johnston-Wilson Agreement the right hon. Gentleman criticised it for a reason precisely the opposite of that which is the basis of his criticism today. A few minutes ago he said that the Americans were behaving churlishly because they had a lot of unremittable sterling and they did not seem to be doing very much to assist British film production. That is the sense of what he said. It is curious that when this matter was discussed in June last year the objection he then made to the agreement was that he thought that by reason of limiting the amount of payments that could go to America the American companies would accumulate a great deal of sterling with which, he thought, they would use our studios and make a lot of films, which he thought would be a bad thing for British companies. He said: it is not really in our interests for American film companies to make films which are American in idea, presentation and character and label them as British films, and put them on the open market."—[OFFICIAL REPORT, 17th June, 1948; Vol. 452, c. 742.]

Mr. Lyttelton

What the hon. Member is saying is quite correct. At that time I feared that if too large quantities of blocked sterling were accumulated by American film companies they might then, by competition for studio space, artists, etc., increase the costs of British films. That is the fear I expressed, and I stand by it. The hon. Member is quite correct in saying that I did not anticipate at that time—because I did not know—what attitude the British film industry would take to a 45 per cent. quota. So far from my fears having been unfounded in that direction, something which I did not anticipate has happened. The President of the Board of Trade has succeeded. I think by rather maladroit negotiations, in preventing the Americans investing any money at all.

Mr. Fletcher

I was only trying to point out the inconsistency between what the right hon. Gentleman said a year ago and what he said today. I am not really very interested in whether there is more sense in the criticisim which he made a year ago or more sense in the criticism which he has made today. I am not trying to be disrespectful but I thought it fair to say that because, as the President of the Board of Trade has said, and the right hon. Gentleman has said, this is a rather difficult and intricate subject. It is easy to be wise after the event but it is not easy to prophesy what will happen in this industry.

Mr. William Shepherd (Bucklow)

What is the point of the remarks which the hon. Member has been addressing to the House? Is he telling us that there has been no change in the situation which demands a change in our attitude?

Mr. Fletcher

If the hon. Member will contain himself for a moment it will emerge how relevant what I have said by way of preface and what I am now about to say is to the point which we have to consider tonight. I have observed your Ruling, Mr. Deputy-Speaker, as to what is in Order and what is not, and I will only observe that a great deal could be said about the industry at this stage or at any other stage of its history.

I propose to confine myself to the question of whether we should approve this order or not. Three courses were open to the Government. The quota was fixed at 45 per cent. We could, for the ensuing year, retain that percentage, increase it, or reduce it—to 40 per cent. or some other figure. As the House has heard, different views are inevitably expressed by different sections of the industry as to what is best, or rather what they think is best in their sectional interests. We have to consider what is best in the national interests. Upon that question it is not difficult to be objective. The House will appreciate that whatever be the figure at which the quota for British films is fixed there will be no alteration in the amount of money which this country pays at present to America, because that is fixed under the so-called Johnston-Wilson Agreement at the figure of 17 million dollars plus the earnings of British films in America. That figure remains unchanged whether we have a 45 per cent. quota, a 40 per cent. quota or any other quota.

It was extraordinarily difficult for my right hon. Friend, when he fixed the quota at 45 per cent. a year ago, to know whether the industry could or could not fulfil it. Undoubtedly such a high quota was a great surprise to the industry. I am bound to say, having studied such evidence as is available—and this is very largely a matter of mathematics and statistics which we have to decide tonight—and looking back at the information then available with regard to the number of films likely to be produced, I think that my right hon. Friend was justified in fixing the quota at 45 per cent, a year ago. I do not think it follows from that that he would be equally justified in fixing it at that percentage for the ensuing year. There has been a considerable change in the position since then. The industry has been able to fulfil the quota of 45 per cent., but only just. One of the criticisms I hear from certain sections of the industry is that 45 per cent. has not been a reality because of the large number of exemptions and reliefs that have been granted. I will return to that point in a moment.

It seems to me that in fixing that quota there is no financial consideration involved with regard to dollar payments. One assumes, therefore, that the only object in fixing the quota is to succour the British film production and to ensure that the quota is fixed at such a figure as to enable all British films produced in this country to earn in this country the maximum revenue they can by being shown in the largest possible number of cinemas, thereby earning revenue for the producers of the films, for everyone engaged in the industry and incidentally for the Exchequer. It then becomes purely a matter of mathematics to fix a quota at a figure which will enable all British films which one hopes will be made to be given a maximum showing. On that basis I think that a figure of about 40 per cent. is about right.

The criticism will be made in the future—as it has been made in the current year—about the reliefs and exemptions, unless my right hon. Friend is very careful. He gave a figure, the very large one, of 1,471 cinemas in this country which have already been told that they need not fulfil the 45 per cent. quota. What he did not add was that they have also been told the reduced quota they need fulfil. The House should know these figures. Eighty-two cinemas have been told that they will satisfy the law by a quota of 40 per cent.; 17 cinemas have been told that they need show only 35 per cent. of British films; 412 that they need show only 30 per cent.; 46 need show only 25 per cent.; 30 have been told that they need show only 22½ per cent.; 341 cinemas need show only 20 per cent.; 161 need show only 15 per cent.; and 221 have been told that they need show only 10 per cent. There have been 305 exemptions altogether.

There is a legitimate distinction between cinemas which show the same film for six days and those which show the same film for three days and then make a change. A very large number of cinemas who have been granted reduced quotas show a film for the normal six days. If the object of the quota is to give the maximum assistance to British film production, as I think it ought to be, it follows that no unnecessary or unjustified release should be given, or the quota, which is nominally 40 per cent. or 45 per cent., ceases to be a reality. Granting these reliefs has a double effect. In the old Act, every exhibitor was expected to try to fulfil the quota. If for reasons beyond his control he found he could not do so, he was entitled to apply for relief, quite unnecessarily, because there is no warrant for it in the Act, since by the Act of last year a different system has been introduced. Exhibitors are now told in advance that they will be excused from the quota which we are going to fix tonight, and that they need only have 25 per cent., 15 per cent. or 10 per cent. quota, or whatever it may be.

The effect of that is that those exhibitors, having to show a smaller number of British films, are placed in a much better bargaining position than the independent British film producers whom we are so anxious to assist, but who suffer in consequence because of the numerous and very large reliefs given to so many exhibitors. There is the further result that those cinemas who have this relief from the full quota and consequently are able to show more American films, draw off revenue from the cinemas who are fulfilling a higher quota and showing British films. As a result there is a net loss, which I am told may amount to £1,000,000 a year, to British film production. I hope that although the House will approve this order of 40 per cent., when the operation of the quota for the ensuing year comes to be considered by the Board of Trade care will be taken to review very carefully the conditions in which relief is given. Having regard to the circumstances and to the legitimate views of British film producers in this matter, I hope that there will not be the criticism next year of the large exemptions that occur at the present moment.

May I add one point? In the current year the quota is 45 per cent. While it has been fulfilled, by and large, except in those three-day situations where double the quantity of films is required, it has had an unexpected result. Instead of being a stimulus to British production, instead of studios being filled, instead of there being a demand for studios and a rush to make high quality British films, under the protection of a high quota, the reverse has happened. As we know, studios are empty, there has been redundancy and there has been financial loss. The high quota, although it has been fulfilled this year, has not put the industry upon a basis which would justify the President of the Board of Trade in contemplating a 45 per cent. quota for next year.

What is the reason for that? As we know, it is the difficulty of getting finance. Experience tends to show that the public in this country prefer British films to American films. Statistics show that they certainly prefer good British films even to good American films. On the other hand, I think that they are more critical of indifferent British films than they are of indifferent American films. Whatever the quota which is fixed, we have to look at the reverse of the picture to see whether American films can fulfil their quota. If we fix the quota for British films at 40 per cent., it means that the Americans have to fulfil a quota of 60 per cent. There is no argument that they cannot do it quantitatively. The question is whether they can do it qualitatively, and that is the test that we have to apply to our own films.

The justification for the quota is the fact that because of our limited markets we cannot afford to spend as much money in producing films as the Americans can. Equally we cannot afford to make indifferent films because the British public are critical about indifferent British films. We cannot afford to spend money on them as the Americans can afford to spend money. British film producers are threatened with financial loss. They want the House to realise that if we fix a figure of 40 per cent., knowing that the finances that were previously available by private sources, like banks and insurance companies and others, will no longer be available, then sooner or later, as the House must realise, the corollary to fixing this 40 per cent. quota will be for the Government to give increased financial assistance to enable British film producers to produce films required to satisfy a 40 per cent. quota.

Perhaps I might finally say that I regard these proposals as an interim measure. While I criticise what was said by the right hon. Member for Aldershot in criticising my right hon. Friend, I agree that sooner or later we must try to work out a concordat with the Americans in this matter that will ensure that films of high-class quality are made both here and in America, and that they are made upon a basis on which there will be reciprocal showing both here and in America.

Mr. O'Brien (Nottingham, West)

Would my hon. Friend make it clear whether he is supporting the order or not? Is he facing up to it?

Mr. Fletcher

I thought that I had made my position clear. I am not opposing the order.

8.29 p.m.

Sir Ian Fraser (Lonsdale)

I wish to intervene for two minutes to report what my constituents tell me. Exhibitors in different parts of a considerable area of the North West of England tell me that they cannot fulfil a quota of 45 per cent. They say they cannot fulfil a quota of 40 per cent. Therefore, they visualise that they will have to commit, if not a felony, at any rate a misdemeanour or an offence, if the law says they are to do it. They tell me that they have tried to comply with the law. They have been willing to show good films, indifferent films and bad films, and they have shown films over and over again, but they still cannot fulfil the law.

I am not in this industry, and I am not acquainted with its technicalities. I have not been informed that there is a special arrangement whereby certain cinemas can be allowed to take a less amount, 30 per cent., 25 per cent., and so on. It may be that that would meet the requirements of my constituents. I ask the President of the Board of Trade to issue such a licence to them so that their anxiety may be relieved, or at any rate to explain to us what kind of cinemas do get this lower allowance. As I see it, in a laudable attempt to encourage the making of British films and the saving of dollars, the President has fixed a figure which is too high for all practical purposes. He admits that by coming to this House and asking to be allowed to change his figure from 45 per cent. to 40 per cent. My friends in my constituency tell me that this will not relieve the situation. They favour a quota of 33⅓ per cent. I have no technical knowledge—

Mr. Deputy-Speaker (Mr. Bowles)

The hon. Member cannot suggest any other figure which is above 45 per cent. or below 40 per cent.

Sir I. Fraser

Perhaps, as I have already done so, I may leave the matter by saying that I think this is a bad order, because 40 per cent. is a wrong figure.

8.31 p.m.

Mr. Neil Maclean (Glasgow, Govan)

I consider that proper scope is not being allowed for the matter under discussion. The limit is narrowed considerably, and consequently the full discussion that ought to take place on the situation of the cinema industry in this country cannot take place. I am not questioning your Ruling, Mr. Deputy-Speaker, but I am merely pointing out that we can only discuss a part of what is the actual trouble within the cinema industry. I intend to keep within the strict limits of your Ruling.

The particular quota which has been established and which now, according to the President of the Board of Trade, should be reduced in its percentage is, in my opinion, still too high. As a matter of fact the 40 per cent. which he is now suggesting is in defiance of the recommendations of the organisation which he himself set up, the Cinematograph Films Council. That Council recommended a 33⅓ per cent. quota. The President wishes to impose a 40 per cent. quota instead of the 45 per cent. quota that presently exists. In doing so I consider that he is acting in defiance of the Council he set up and to which he looks for advice and guidance in what he is to do with regard to the cinema industry. They give him advice which he now recognises as partly correct by the reduction he is now proposing, but, he will not go the full distance—

Mr. Deputy-Speaker

I informed the hon. Member for Lonsdale (Sir I. Fraser) that he could not discuss any other than a 40 per cent. or 45 per cent. quota, and that applies also to the hon. Gentleman. This Debate is restricted. It is not restricted by me; it is restricted because the issue before the House is restricted.

Mr. Maclean

If we are to discuss the cinema industry, and what is likely to benefit it, surely we are entitled to take into consideration recommendations which have been made by a Council set up by the President of the Board of Trade.

Mr. Deputy-Speaker

On another occasion perhaps, but not on this one. That is the unfortunate position in which the House finds itself tonight. The issue is very narrow as laid down by the alteration proposed in this order.

Mr. Maclean

In that case I shall reserve my comments for another occasion.

8.35 p.m.

Mr. Edgar Granville (Eye)

The President of the Board of Trade, in introducing this order, referred to the fact that British films had been extremely successful in a Hollywood competition recently and had won several "Oscars." I have listened to most of the right hon. Gentleman's remarks when he has been introducing various measures on behalf of the film industry from that Box, but I do not think that he would have qualified for an "Oscar" on tonight's performance. The right hon. Gentleman has introduced a great number of these orders, and the Board of Trade now has such a great deal to do with these matters that it is not a sleeping partner but almost the chief partner in the film industry. The right hon. Gentleman might well offer an "Oscar" for competition among the many advisers by whom he is surrounded, in order to decide what he is to do in this complex and difficult problem.

I agree with one of the remarks made by the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton). The result of this business is that we are losing the celluloid cold war with the United States interests. This cut of 5 per cent. and the fact that there is a great deal of redundancy in British studios—I believe that unemployment is higher than ever before in the history of the industry—show that either the President's advisers are wrong, or that there is something radically and fundamentally wrong with the industry itself. My impression is that this 5 per cent. cut indicates that the right hon. Gentleman is making a retreat from the policy which he declared in this House when he first proposed the quota. This only emphasises still further what has been published in the Press about the industry in this country being in a parlous condition.

When the 45 per cent. quota was introduced, I was one of those who doubted whether it could be fulfilled. Indeed, I do not think that that quota ever has been fulfilled. If the matter were taken strictly on a legal basis and prosecutions were instituted against exhibitors and renters who failed to fulfil their quota, I think it would be found that no one had fulfilled it. I do not believe that the quota can be fulfilled at 45 per cent. or 40 per cent. I believe this is a bluff and that the right hon. Gentleman, with his various qualifications under the Act, knows very well at the bottom of his heart that it is a bluff and that the industry cannot fulfil the quota. The 40 per cent. quota is impossible unless we can cut costs and improve the quality of the film, produced here.

It has been said over and over again by the hon. Member for West Nottingham (Mr. O'Brien) and others who have taken part in these Debates that we cannot safeguard the future of this industry by quota qualifications. In the end, if we lose, or if we are losing, the celluloid cold war with California, the right hon. Gentleman will have to put all his cards on the table. If he thinks that it is impossible to follow the advice of his advisers, the only thing for him to do is to leave the problem to the people who are concerned with the production, distribution and exhibition-of films on both sides of the Atlantic to come together and try to reach an agreement on their own without the interference of the Board of Trade or Mr. Eric Johnston.

I have said repeatedly when discussing this problem that any attempt to try to build up our film industry on parochial lines will fail, whether the quota be 40 per cent. or 45 per cent. Films are international. I should have thought that the party opposite, with its international outlook on all matters of culture and recreation, would have been the first to admit that. At this late hour I appeal to the right hon. Gentleman to get together with the United States and any other interests and let us have an international agreement which will give the production side of the industry in this country the first real opportunity it has had for 20 years.

8.40 p.m.

Mr. O'Brien (Nottingham, West)

I am sure the House must feel bored by these long and tedious discussions on the film industry which, almost from day to day and certainly from month to month, in one way or another, keep coming before it. Tonight, we are discussing the suggestion from the President of the Board of Trade on how the Board of Trade proposes to deal with the present situation in the film industry with regard to the quota. My right hon. Friend the President, since he took office at the Board of Trade, has done all he possibly could and everything he could think of, to try to encourage British films. I have on more than one occasion, both in this House and outside, paid him a proper tribute and he has the sincere praise of the entire industry for the efforts which he has made.

The right hon. Gentleman the Member for Aldershot (Mr. Lyttelton), apart from his inconsistencies, spoke very fairly and constructively on this very difficult and complicated problem. I think he was a little more consistent in his inconsistencies than my hon. Friend the Member for East Islington (Mr. E. Fletcher), who, I am sorry to say, is not in his place to hear what I have to say. The House will appreciate the difficulties of this industry and the inconsistencies and contradictions within the industry itself. I am glad to note that my hon. Friend the Member for East Islington is returning to his place and will be able to hear what I have to say. I was referring to the fact that the right hon. Gentleman the Member for Aldershot had been mildly rebuked by my hon. Friend the Member for East Islington, who himself is in a very difficult position tonight. It is just as well that the House should know, in order that it can appreciate the difficulties, the contradictions and inconsistencies within the industry itself.

The Chairman of the Associated British Picture Corporation, Ltd., Sir Philip Warter, is in favour of a cut in the quota, but he is against this quota of 40 per cent., while we find that the deputy-chairman of the same Corporation, the hon. Member for East Islington, supports the 40 per cent. quota. That is a matter which is his own business; he may, either as a Member of Parliament, a private citizen or a private cinemagoer, do what he thinks fit. Nevertheless, it is a keen embarrassment to those of us in the industry who have to undertake from day to day the difficult task of sorting out the various contradictions and complications.

There is another difficulty. The President of the Board of Trade, in his opening remarks, said that he was not obliged to accept the advice of the Cinematograph Films Council. He is quite correct, and he has not, on this occasion, accepted the majority advice, arrived at by the casting vote of the Chairman, to cut the quota more violently than he has in fact done. The right hon. Gentleman has himself stated quite rightly that, had he acted on that advice last year, the quota would have been 50 per cent. but he omitted to inform the House that no less a person than a distinguished member of the Cinematograph Films Council, a man who has the interests of the industry at heart from the national point of view and who is well versed in the economics of the film industry—I refer to Professor Sir Arnold Plant—supported the quota at a different and lower level than the quota suggested by my right hon. Friend.

I know, Mr. Deputy-Speaker, that your Ruling has made it extremely difficult for myself and other hon. Members to confine themselves within the strict limits of order, but I wish to endeavour to do so sincerely and will try to compress what I have to say. The difficulty which the industry has to face is this. The quota to assist British films has been in existence for two years—

Mr. Levy

On a point of Order. Are we to understand from what has just been said, Mr. Deputy-Speaker, that your Ruling is that, while we may discuss whether 40 per cent. or 45 per cent. is the correct figure for the quota, we are actually prohibited from discussing whether some other figure should be the correct quota?

Mr. Deputy-Speaker

Yes, that is so. The hon. Gentleman can say that 40 per cent. or 45 per cent. will have certain consequences, but he cannot advocate any other figure except either 40 per cent. or 45 per cent.

Mr. Levy

Surely, however, it is in Order for us to say that we consider that the figure is either too high or too low, without suggesting an alternative figure?

Mr. Deputy-Speaker

I am afraid not. I am sorry, but that is my Ruling.

Mr. Shepherd

Is it not a fact that the President of the Board of Trade referred at some length to the recommendations of the Films Council, and are we therefore, Mr. Deputy-Speaker, out of Order in following the remarks made by the right hon. Gentleman in presenting this order to the House?

Mr. H. Wilson

My references to the Films Council were not an argument for or against the figure of 33⅓per cent. which may have been quoted by them; it was an attempt on my part to anticipate the argument which has been put forward by certain hon. Members who think that the quota which I fixed is wrong because it is contrary to the advice of the Films Council.

Mr. E. P. Smith (Ashford)

On this point of Order, Mr. Deputy Speaker, while I understand that we may be in Order in referring to the figures of 40 or 45 per cent. or any figure in between, should we be in Order in referring to any figure such as x plus or x minus?

Mr. Deputy-Speaker

The hon. Member would not be in Order in referring to x plus or x minus and neither would he be in Order in referring to any figure between 40 and 45. Either the quota shall be changed to 40 per cent. or remain as it is.

Mr. O'Brien

It is just as well that we are dealing with a quota on our speeches this evening as well as with the quota in the order. The British film industry has had a quota for the last 20 years, and during that time some of us have looked forward to an industry that would no longer depend upon a quota. Some of us, both inside and outside the industry feel ashamed that even though the film industry has been buttressed in this way for 20 years, it has even now failed to stand up to the Americans on its own feet. It is a source of considerable disquiet to us that that should be the case.

I agree with most of the statements made by the hon. Member for Eye (Mr. Granville), and with the fair criticisms of the right hon. Member for Aldershot. What is the position which we find today? It is the view of the people concerned in the industry—they may be forgiven if they are wrong—it is the view of exhibitors, distributors, of even of some of the producers, and certainly of the overwhelming majority of those employed in the British film industry—

Mr. McAllister (Rutherglen)

What about the cinemagoers?

Mr. O'Brien

I will come to that in a moment. Before the 45 per cent. quota was established, I was one of those who believed that such a quota would work. I did not support it in the Films Council at the time; at that time, a year ago, I supported a lower quota, which was, in fact, the 40 per cent. now proposed. The chairman of that Council, the Earl of Drogheda, and I were the only two who opposed a 45 per cent. quota; we supported a 40 per cent. quota. But some of us were led to believe—and in this sense we have a real grievance against the producers in the British film industry—by men like Arthur Rank, Alexander Korda, and others that they could support a 45 per cent. quota. In fact, they went even higher, but I cannot mention the figure. They stated that a number of films could be produced, and I hope the House will bear with me a little while I traverse this ground as briefly as I can.

A year ago they convinced the Films Council, and subsequently my right hon. Friend the President of the Board of Trade and his advisers, that they could make a number of films that would meet a 45 per cent. quota. The figure ranged from 109 down to something less, but, in fact, 30 to 40 of the films which they stated were to be made were not made. In that year we thought that the prosperity of the industry would continue; indeed, we thought that it would increase. But what have we found?

This is the position today, after the working of the 45 per cent. quota for less than a year. Looking back, there were better British films made as a whole before the 45 per cent. quota was introduced, and the audiences at the cinemas were larger than they are today. In fact, a few months before the 45 per cent. quota was introduced my right hon. Friend was pestered, worried and nagged by people like myself, by the unions and other interests in the industry, to provide more studio space. So much was the demand for studio space at that time that there was not sufficient studio space to accommodate those who wanted to make films. That was the position shortly before the imposition of the 45 per cent. quota.

Today, this is the position of the British film studio industry as a direct or sole result—I will not say exclusively the result, because I should be dishonest in saying that knowing the industry as I do—of the 45 per cent. quota; it was largely due to that, as I shall explain. The A.B.C. studios at Elstree, owned by the company in which my hon. Friend is interested, had no production according to the Chart last week; Brighton, empty; Bushey, empty; Carlton Hill, empty, and Cookham Dean, empty. All these are small but important studios. Denham that has seven stages and can make a considerable number of films at one and the same time, has two films in production. one, strangely enough, being known as "The Chiltern Hundreds" and the other a retake called "The Lost People." At Ealing there is one film, "Train of Events." The Gate Studio is closed, Highbury is closed, Isleworth is closed. Islington is closed and Manchester and Marylebone are closed, Merton Park are making one or two documentary films, M.G.M., one of the largest studios in Britain, is closed. National is closed. Nettlefold has "Old Mother Riley" and Pinewood has "Poet's Pub," which I commend to my hon. Friends the Members for Ashford (Mr. E. P. Smith) and Eton and Slough (Mr. Levy). Shepperton has one picture. Riverside is closed. Shepherd's Bush is closed, Southall is closed, Teddington is closed, Twickenham is closed, Viking is closed, Welwyn has one picture, and Windsor is closed.

That is a damning indictment of the inability of British producers and the the British film industry as a whole to co-operate and to use the facilities and advantages which my right hon. Friend has given in the last year or two. The facts speak for themselves. That is partly the result of the 45 per cent. quota. [HON. MEMBERS: "Why?"] Let me proceed. The reason for the 45 per cent quota was due, in the main, to the Rank Organisation, with the support of British Lion film distributors, Sir Alexander Korda. It was partly due to their anxiety to provide, and quite rightly so, alternatives in the event of the Americans refusing to send their films over here. That was done shortly after the threat of the imposition of the 75 per cent. ad valorem duty which caused all the trouble. Before that the industry was going on from prosperity to prosperity.

The Rank Organisation, Sir Alexander Korda, and one or two other producers saw in a large quota the possibility of answering the Americans, and they backed the 45 per cent. quota with the support of most of the industry in order to produce the films we thought would meet the situation. We have found that the desire to make a larger number of films has greatly affected the quality of those films. One swallow does not make a summer. My right hon. Friend referred to "Oscars." Great credit is due to those who have succeeded in winning these treasured international awards of the film industry. But the pictures with which those "Oscars" were won, were not made under 45 per cent. quota conditions. I doubt very much whether any picture made under 45 per cent. quota conditions would ever see the shadow of an "Oscar," let alone its substance.

We have to face the fact, whether we like it or not, that the general tendency of British audiences at present is to prefer American pictures to British pictures. I am sorry that I have to disagree on this point with my hon. Friend the Member for East Islington, although he no doubt knows all about his own company. My hon. Friend's company says one thing and the Minister says another, on the same subject. The Minister should be able to check my statement that British audiences, during the past six months or so, have not been supporting British pictures in the way we expected. They say that the quality of British films as a whole is going down. There are one or two films that can be described as good, but the industry cannot be run on one "Hamlet" one "Red Shoes" or one "Great Expectations," however meritorious.

In the field of entertainment there is one thing that even our friends the Russians have failed to do. They have succeeded in everything else, but they have failed to make their own people, and people in the countries they control, see films they do not like, even at the point of a gun. We cannot make people see films they do not want to see—no quota, whether high or low, will succeed in doing that. If we wish to have a successful British film industry, and to maintain and expand it, we must do it on quality. Quality does not mean extravagance, waste and unnecessary costs. We must not aim at an arithmetical quota merely to satisfy ourselves that we have a 40 or 45 per cent. quota of films—which people do not want to see. We must satisfy ourselves: first, that the quota can be met and that what is made is good; second, that the pictures will commend themselves by their own merit; third, that finance is available to stand up to the quota.

I am not convinced, and a considerable section of informed opinion in the industry and the country is not convinced, having regard to what has happened during the past year, that finance is available, or will become available, to meet a 40 per cent. quota. I asked producers three questions on the 40 or 45 per cent. quota, which they failed to answer. In view of the dreadful unemployment in the industry, in which people with 10, 15 or 20 years' service are losing jobs, and studios are being closed, thus causing great anxiety, I asked the producers to submit a list of those films which would be made to meet this 40 per cent. quota. Some of the films they have submitted have already been made, and would do nothing to relieve the employment situation in the British film industry. We asked them if they could name the studios in which these films are to be made, and if they could say, without any specific guarantee but with a reasonable assurance, that if we agreed to this 40 per cent. quota we would see the last of redundancy and the closing of studios. The third question I posed to them was to give an indication of the finances available to finance this quota production. If we are asked to support such a quota, this House is entitled to know or to be reasonably assured that finance and other facilities are available to meet the position.

Mr. Granville

The hon. Gentleman has given us a very imposing list of studios which are closed at the present time, but can he estimate how many of those studios will be opened for the production of films under the 40 per cent. quota which is to be imposed?

Mr. O'Brien

I was going to finish my sentence on that point. The producers did not and could not answer one or any of those three questions. It is my own view as well as that of other people that this 40 per cent. quota will create further unemployment. It will compel the making of further films because of smaller receipts from cinemas which are now losing money on existing quota pictures.

Mr. Blackburn (Birmingham, King's Norton)

Could my hon. Friend tell us why the whole of the producers and renters were unanimous in their view in support of the 45 per cent. quota? Why should they want to cut their own throats?

Mr. O'Brien

That is one of those inexplicable things we find in the film industry, where people do from time to time cut their own throats. My hon. Friend the Member for King's Norton (Mr. Blackburn), as a new expert in the film industry, ought to answer that question himself. Producers may not want to cut their own throats, but they may wish to cut other people's throats. I am on the side of the producers, as are most of us when it comes to standing up to a quota that can be worked, but many of us are convinced in our hearts that they cannot stand up to this quota.

If my right hon. Friend the President of the Board of Trade in winding up tonight could tell us that he is going to guarantee the finance involved to meet this 40 per cent. quota then it is another matter. But this 40 per cent. quota or anything like it will not put into employment one man who is now unemployed. Indeed it may lead to further unemployment. The series of problems can only be solved by taking away the artificial props which this and previous Governments have erected to bolster this industry. The more props that are put up the more disagreements there will be amongst the interests in the industry. I have come to that conclusion regretfully after many years' experience of it.

The time has come when we should tell the film industry as a whole, that they can no longer, or at least after a certain period, expect any Government permanently to assist them. The answer is in our own audiences. We cannot keep our cinemas open for many years to come with British films alone, even if every studio in this country were fully occupied and were producing first-class films. That is an accepted fact which the Board of Trade will not deny. Whether we like it or not, we have to have American films. The people have to like American films and they like good British films. The castigation of "a bad British film" is worse than a castigation of "a bad American film" but nevertheless we shall have to depend upon American films whether we like it or not, for many years to come. I fully agree with the right hon. Gentleman the Member for Aldershot and other hon. Members that we should apply our minds to a long-term solution; to making arrangements or trying to re-open the matter in some way, to avoid a quota—

Mr. Deputy-Speaker

The right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) was out of Order in referring to that matter, and so is the hon. Gentleman.

Mr. O'Brien

I beg your pardon, Mr. Deputy-Speaker. Nevertheless, I support what the right hon. Gentleman the Member for Aldershot said in this matter. I therefore beg the President of the Board of Trade, if it is not too late, to reconsider the 40 per cent. quota in the light of its effect on the producers themselves. There is such a thing in life as saving one from oneself. There is such a thing as saving the producers from their own enthusiasm, having regard to their record last year; there is such a thing as saving the exhibitors even from their concept of the problem; and it is the same with the distributors. I ask my right hon. Friend to have regard to the employment situation as well, and to the thousands who have lost their jobs and to the fact that there is no possibility of their being reabsorbed in the industry under a quota of this character; and to remember that the only permanent solution for the British film industry—

Mr. Deputy-Speaker

The hon. Gentleman cannot go into that.

Mr. O'Brien

I will not use the word "solution." The only way in which we can deal with the matter by quota is to see that quality comes before quantity and that the interests of the entire industry are placed more before those of sections of the industry.

9.7 p.m.

Major McCallum (Argyll)

The hon. Member for West Nottingham (Mr. O'Brien) has shown great skill in keeping with the hounds of Order in dealing with the quota question. I shall endeavour to follow his lead. I only regret that I have not got the experience of this very technical industry that he has, and therefore I hope the House will forgive me if I do not go into the question of the production side of the industry. I merely want to make a few remarks concerning the Scottish independent exhibitors in the cinema industry. I am sure that all hon. Members from north of the Tweed have been bombarded, as I have, with telegrams and letters on the subject of the quota. The President of the Board of Trade said he was aware of that fact.

When the original order fixing the 45 per cent. quota was debated in June last year, I raised the question of the small cinemas and small cinema owners in the landward areas of Scotland, particularly in the Highlands, and pointed out that there were cinemas in that part of the country where there are not only two programmes but three programmes a week. My remarks were greeted with hilarity and levity by hon. Members on all sides of the House, who asked how any cinema could be allowed to change its programme three times a week. We were taken severely to task by my hon. Friend the Member for Bucklow (Mr. Shepherd) because such a thing happened.

Mr. W. Shepherd

Is my hon. and gallant Friend seriously suggesting that we should condition the British film production industry because Scotsmen want to change their films more often than they change their shirts?

Major McCallum

I can assure my hon. Friend that Scotsmen have a point of view to put forward. I now come to the question of the new quota of 40 per cent. We are not allowed to mention any other figure and that will make it rather difficult, but the President of the Board of Trade said that 1,471 partial or total exemptions had been granted in the current year. I remember that in the Debate last June he said that perhaps if there were cases of particular hardship amongst these small cinemas, proceedings might not be taken against them if they did not fulfil their quotas.

I was interested to hear what the hon. Member for East Islington (Mr. E. Fletcher) said in giving that list of the partial or total exemptions, in which he mentioned the figures that we are not allowed to mention now, showing that the holding to the quota was so lax, if I may put it that way, that in over 300 cases there was total exemption from a quota of any sort. I hope that whoever replies to the Debate will give us some information for the benefit of Scottish Members as to how many or what proportion of the 1,471 total or partial exemptions concerns Scottish independent cinemas. While we cannot mention any other figures, that would give us a shrewd idea of what consideration had been given to the plea that I and many other hon. Members from North of the Tweed, on all sides of the House, put forward last June. I would like to put the matter more strongly, but I have not the skill of the hon. Member for West Nottingham in getting round your Ruling, Mr. Speaker, so I must content myself with asking the Minister whether he can give us some idea of what consideration has been given to the independent Scottish exhibitors.

9.13 p.m.

Mr. Benn Levy (Eton and Slough)

I should like to speak briefly in reference to two speeches which have been delivered tonight. As I understood it, the right hon. Member for Aldershot (Mr. Lyttelton) made two main points. The first, which was dealt with by my hon. Friend the Member for East Islington (Mr. E. Fletcher), was that in which he advanced the following proposition. He said that whereas when the 45 per cent. quota was first discussed he had criticised it on the grounds that it would promote excessive American production in this country, he now criticised it on the ground that it had done nothing of the kind. That seems to me to answer itself. His second point did not really deal with whether this was the right figure—

Mr. Shepherd

I think the hon. Gentleman is misstating the argument. The argument of my right hon. Friend was that the films agreement entered into might cause the Americans to indulge in unfair competition and inflate the price of film stars, etc., in this country, not the quota.

Mr. Levy

But surely the point was that the thing which the right hon. Gentleman feared during the previous Debate was the thing whose absence he regretted in this Debate, and it was on that ground that he criticised my right hon. Friend the President of the Board of Trade.

Now, his only other criticism seemed to me to centre solely on how the negotiations had been conducted. This was a vague, nebulous and nagging charge but what it seemed to amount to was that simply owing to my right hon. Friend's lack of skill in negotiations, the psychology of the Americans had been affected and they had become an extremely difficult factor with which to contend. The actual words I think he used were that "they had become obstructive to British films in the United States" as a result of the President's lack of skill in negotiation. Really, that does not seem a very serious argument. In the first place, as Mr. Rank or anybody else could have told the right hon. Gentleman, the Americans always were extremely obstructive and antagonistic to British films in the United States. The difficulty of gate-crashing the United States with British films certainly does not date from the time when my right hon. Friend showed this alleged mal-adroitness in negotiation.

Furthermore, said the right hon. Gentleman the Member for Aldershot, not only had the Americans become obstructive and reluctant to import British films in America, but they had become unco-operative here in England. That point has already been discussed by both my hon. Friend the Member for East Islington and myself. From these two weird allegations the right hon. Gentleman built up the conclusion that here was the root cause of unemployment in the film industry and that the starting point of it all was my right hon. Friend's mal-adroitness in negotiation. Of course, neither that nor the quota itself had anything to do with unemployment in the film industry.

And that brings me to the speech of my hon. Friend the Member for West Nottingham (Mr. O'Brien). He began by attacking, perhaps more in sorrow than in anger, his hon. Friend the Member for East Islington, who is a deputy-chairman and a right-hand man of Sir Philip Warter, one of the bosses in the industry. He felt that his hon. Friend had displayed a great disloyalty in taking a view contrary to that of Sir Philip Warter, but perhaps the hon. Member for East Islington had felt that it was a legitimate liberty to take as he could rely on his hon. Friend the Member for West Nottingham to rectify it and exhibit the loyalty which he himself had lacked. When my hon. Friend the Member for West Nottingham went on to say that the size of the quota was responsible for unemployment, he was interrupted and asked to explain the connection, and he promised to do so. The hon. Gentleman spoke, however, for a great length of time, but he sat down without having done so. It is, of course, a clear case of post hoc non propter hoc, as my hon. Friend the Member for West Nottingham, I am sure, must realise.

The purpose of keeping a big quota is twofold. It is first to save dollars—

Mr. O'Brien

No.

Mr. Levy

Yes, indirectly it is to save dollars.

Mr. Blackburn

Yes.

Mr. Levy

Second, it is because if we lower the quota—I am wondering whether I am in Order, Sir, in view of your Ruling—if taking the two figures, we compare the figures of 45 and 40 per cent., obviously the lower quota must encourage the pressure of American competition. If a quota is a deterrent to American competition, obviously it must be an encouragement to British film production, and I cannot understand how any measure which encourages British film production can itself produce unemployment.

In so far as my right hon. Friend has decided to reduce the quota I am inclined to regret it, unless he will follow the advice of my hon. Friend the Member for East Islington and at the same time as he makes the reduction—which after all is not a substantial one and which we should accept in relation to the new figures which, no doubt, he has at his disposal—I think it would allay a great deal of disquiet if he gave an undertaking that this reduction in quota will be accompanied by a careful overhauling of the exemptions and reliefs to which attention has been called this afternoon. When my right hon. Friend discussed the quota, in June last year I think, he related it to the question of reliefs. If he would relate the two again today and assure us that he will satisfy himself that the great number of exhibitors who are obtaining exemption and relief are obtaining no more than the minimum to which they are entitled, then, I think, the whole House would.readily accept the reduction.

Mr. O'Brien

Would my hon. Friend finish the question to my right hon. Friend by asking, if a 40 per cent. quota is agreed, that an assurance will be forthcoming to back that quota, so that there would be no further unemployment of skilled labour in the industry?

Mr. Levy

My hon. Friend the Member for West Nottingham was at pains on Friday to exhibit that he did not know a very great deal about the theatre; but he really cannot convince us that he knows so little about the film industry that he cannot answer his own question on that subject.

Dr. Morgan (Rochdale)

Why cannot my hon. Friend the Member for Eton and Slough (Mr. Levy) answer it?

Mr. Levy

I can and I will, if you will allow me, Mr. Deputy-Speaker. The answer is that no amount of money such as my hon. Friend is advocating as a loan, or a gift, to the production side of the industry, is any use whatever, unless there is a fairer distribution of the box office earnings between the production, distribution and exhibition—

Mr. Deputy-Speaker

The hon. Member may not go into that.

Mr. Levy

I was afraid I could not. I will instruct my hon. Friend privately later.

9.22 p.m.

Mr. William Shepherd (Bucklow)

I think it would be almost indecent of me to interfere in the internecine strife among hon. Members on the other side of the House. I can only say that it reflects the condition, of the industry itself, where there is no agreement and where all seem to be working against each other, rather than pulling together. I have been disappointed by the speeches of hon. Members opposite. I was disappointed by the extremely naïve speech of the hon. Member for West Nottingham (Mr. O'Brien). To assume, as he tried to lead the House to assume, that all the evils from which the industry now suffers come about as a result of the operation for six months or so of the 45 per cent. quota, is reducing the problem to a simplicity which if does not possess.

Mr. O'Brien

I did not say that.

Mr. Shepherd

The hon. Member says he did not say that, but I think it was the conclusion which the House could reasonably be expected to draw from his remarks. I was also very annoyed by the remarks of the hon. Member for East Islington (Mr. E. Fletcher) who has disappeared. He made great play about inconsistency on the part of my right hon. Friend the Member for Aldershot (Mr. Lyttelton). It is true, as the hon. Member for East Islington admitted, that there has been a change in the circumstances since 12 months ago, and it is true that we are entitled now to take a different view from that which prevailed at that time.

The burden of my remarks tonight is that the time has come to take a slightly different view from that which we expressed when the quota was last discussed. The unhappy and uncomfortable speech of the President of the Board of Trade was an indication of the difficulties in which the industry and the President are placed. We hoped last year that this would be an expanding industry in which there would be more and more British production, in which the quality would go up and in which we should be able perhaps to increase the quota when we came to fix it, as we are now doing. None of these expectations has been realised. Instead of getting increased production we have got lowered production, we have lower box-office receipts and we have to some extent a lower public appreciation of British films. There is slightly less enthusiasm for them now than there was 12 months ago. We are faced with an entirely changed situation.

If I were asked what was the basic cause of the present difficulty, I should say that it was because we did not get the necessary co-operation of our American friends. We shall never run this industry without their co-operation. If any one person is to blame for the position in that respect, it is not the present President of the Board of Trade but the Chancellor of the Duchy of Lancaster. He is the man who set the conditions which were absolutely unfavourable to the British film industry; he is the man who unnecessarily put up the back of the American industry; and he is the man to whom we should address our complaints about the present condition of British films.

Mr. Michael Foot (Plymouth, Devonport)

If all the ills of the industry are due to the Chancellor of the Duchy of Lancaster, will the hon. Member explain why neither he nor his party objected to that proposal when it was presented to the House of Commons?

Mr. Shepherd

The answer is simple. We tried to preserve a national outlook rather than a party outlook, something which I have no doubt will make no appeal to the hon. Member. We were mindful at that time of the danger inherent in that attempt to "put one over" on the Americans, and we did make that clear, but we did not wish in the circumstances to appear to be taking the side of America in an issue in which the two countries were concerned.

Mr. Benn Levy

Did the hon. Member suppose that he was serving the national interest by supporting a tax which he now says is the root of the ruin of the film industry?

Mr. Shepherd

No, I was pointing out that when that was done, we were presented with a fait accompli. We had to appear either to oppose the action of the British Government or give that action some sort of support. I think that we took the proper national view in the circumstances. There is no question about that action having been ill-advised and having caused much ill-feeling between this country and the United States. Until we get co-operation between the British film industry and the Americans, we shall get nowhere, and until we get something like co-operation within the industry itself in this country we shall get nowhere.

Mr. Speaker

The hon. Member is referring to general policy and not merely to this order.

Mr. Shepherd

I merely intended to say that the disunity that is shown in the industry today is reflected in the demands for different kinds of quotas which we have seen put forward by various parts of the industry, and which have been expressed by Members in this House. We must get some sort of unity in this industry in this country if we are to get anywhere at all.

It is obvious that we must have some sort of quota at the present time. The hon. Member for West Nottingham looks forward to the time when there will be no quota. We should all like to see the British industry operating without a quota. We should like to see it in so strong a position that a quota was completely unnecessary. At the moment, a quota cannot be avoided, and we must direct our attention to what that quota ought to be.

The issue before the House is simply whether this quota of 40 per cent. is likely to lead to a resumption of American activity in film production in this country and whether it will assist in getting British films shown in the U.S.A. Whether we believe it is right or wrong, there is at the moment a sort of war between the British interests and American interests so far as films are concerned. At this moment an excellent British film, "Quartet," is being shown in New York in a cinema holding 250 people. "Hamlet" is being shown in a cinema which holds even less. Therefore, we have to consider, in discussing this question of a 40 per cent. quota, whether it will make for a reconciliation between the American interests and the British interests, because that is paramount at the present time. If we pursue a course which is antagonistic to our American friends, the industry in this country will never really get on its feet.

I suggest that this quota, although it is reduced from 45 per cent. to 40 per cent., is perhaps not best calculated to achieve that end. I hope that the President of the Board of Trade will do all that he can in the next two or three months to try to get some agreement with our American friends. What is happening now is damaging to the interests of both the American and the British industries, and unless we get some reconciliation, we shall see no improvement in our position. I should have liked a figure other than the present percentage. I cannot say what it is, because that would be outside the rules of Order. But in the circumstances I hope that the House will accept the figure proposed, and I hope that the President will bear in mind the para- mount importance to the industry of getting American co-operation.

9.32 p.m.

Mr. H. Wilson

I can reply only by leave of the House, but as some very important matters have been raised, I hope the House will allow me to intervene again.

The different views expressed tonight, which, once again, have cut right across party divisions, have demonstrated the extreme complexity and difficulty of this subject, and also the fact that the industry itself is so sharply divided on this question. I have not heard any strong opposition to the order, certainly not from the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) and the hon. Gentleman the Member for Bucklow (Mr. Shepherd). They have, of course—and it was only fair that they should—criticised the various aspects not of this order, but of the previous order. They have stressed the high importance of good relations with the American film industry, and with that I am in complete agreement. I think, however, that it is fair to say that neither of them indicated any strong opposition to the actual figure which has been fixed.

The hon. Member for Bucklow, a year ago, generously endorsed the 45 per cent. quota and I do not think that he is really suggesting that the 40 per cent. quota is wrong. The main criticism of the right hon. Gentleman the Member for Aldershot was that I fixed too high a quota immediately after the Johnston Agreement last year without consulting the Americans. I do not know how far I shall be in Order in following that point, but as it was developed at considerable length by the right hon. Gentleman, I would say that I did warn the American negotiators that I should fix the highest possible quota figure. I could not give that figure at that time, or even indicate the figure I had in mind, because I had no specific figure in mind, and by statute I was required to consult the new Films Council, which could not be set up until the Act was passed.

I am sure that on the occasion of making the quota now before the House, the right hon. Gentleman would have been the first to complain—or some of his supporters would have complained—if I had come to the House and said that I had negotiated this quota before placing it before this House. I am most desirous of developing good relations with the cinema industry of the United States. I think I may claim that the agreement last year certainly did do a lot to develop good relations with that industry after the difficulties which followed the tax and the boycott. But I am not sure that it would lead to good relationships with that industry if I were to regard myself as under an obligation to consult them about the fixation of this quota before it is laid on the Table of the House.

The right hon. Gentleman asked me whether this quota was mentioned to the Americans. I can certainly tell him that it was not negotiated with them. But the Americans were told—I thought that it was right that they should be told—that I had to fix the quota by 31st March. Indeed, it required the assent of both Houses if any change were to be made. They were told that if they had any representations it was hoped they would make them in good time so that I could give them the fullest consideration before the quota was fixed after the Films Council had met. In fact, no such representations were received.

Mr. Lyttelton

I am only seeking in this matter to try to get the right hon. Gentleman's assent to the general proposition that we should try to bring the Americans along with us now. I think that it would do a great deal of good if he could say something in that sense, as I think he is doing now.

Mr. Wilson

I have already answered the right hon. Gentleman's point. Certainly, I would welcome much greater production by the American film companies in this country at present, and I am sure that the whole House would, though I must once again remind the right hon. Gentleman, as did my hon. Friend the Member for East Islington (Mr. E. Fletcher), that the main theme of his criticism of the agreement last year was that the Americans were likely to produce too many films in this country and drive out our own producers I cannot accept the view he put tonight that it was the fixing of the 45 per cent. quota a year ago which caused this sudden change of attitude on their part and led to them becoming—and I use a phrase which I would not for one moment endorse— sullen and unto-operative. I do not accept that view at all.

When the right hon. Gentleman suggests—and I think this was supported by the hon. Member for Eye (Mr. Granville)—that I should reopen the subject, I am not quite sure whether he means that I should reopen negotiations on the quota for the coming quota year, namely, the quota which is at present before the House. Quite apart from the fact that once it has passed this House I think it would be beyond negotiations of any kind, the Act requires six months' notice. Since it has to come into force on 1st October, it would mean that the negotiations would have to take place and the assent of both Houses of Parliament would have to be received by Friday of this week. That, of course, is not a practical proposition.

I am quite sure that the right hon. Gentleman, if he for one moment considers the position of the two industries, will realise that there are difficulties facing the American industry which it would not be proper for me to discuss tonight. They are facing possible changes in organisation as a result of a legal decision which makes it difficult for them to negotiate either with the British Government or with the British film industry. The recently planned visit of the British film producers to America was postponed at the request of Mr. Johnston because of these self-same difficulties. My hon. Friend the Member for East Islington and the hon. Member for Lonsdale (Sir I. Fraser) raised the question of the special quota and the exemptions and reliefs. In answer to the hon. Member for Lonsdale, who wanted to know if his constituents can get special relief, I would say that each of them has to make a special case before the appointed authority. Naturally, I cannot give any indication of what would be the result of their attempting to make such a case.

My hon. Friend the Member for West Nottingham (Mr. O'Brien) made a speech which I must say disappointed me. It was very different from the sort of speech we have heard from him in the past. I do not know what has caused this sudden change in his attitude. He has recently been supporting increased production, but tonight he was speaking from an entirely different point of view. Although he has great experience of this industry, I suggest that he was not at his best tonight. He was completely wrong to suggest that the present situation is due to the 40 per cent. quota.

Mr. O'Brien

Partly due.

Mr. Wilson

Or even partly due. If it is his argument that the falling-off in box office attendances is due to the low quality of the films produced under the quota, he, with his great knowledge, must realise that, since the quota was only announced in the middle of June and did not come into effect until October, it would have been practically impossible to get the films produced under the quota in order to have an effect on the attendances and the finances of the industry. Therefore, as he suggested in his concluding words, the financial difficulties of this industry are far more deep-seated and more fundamental than is suggested by that rather simple explanation. That I think covers the point put by the hon. Member for Eton and Slough (Mr. Levy) and by the hon. Gentleman himself.

I regret that the hon. Member for West Nottingham has tonight been so frank about the proceedings of the Films Council set up under the statute. He has, in fact, given us very freely all the arguments which he put to the Films Council, but not all the arguments of the other side, as represented to the Council.

Mr. O'Brien

On a point of Order. I am sorry to interrupt my right hon. Friend, but he himself referred to proceedings in the Council and reviewed the way in which the vote was taken. I merely commented mildly on the same point which he had introduced.

Mr. Wilson

With respect, I think there is a great difference between what my hon. Friend said and what I said. What I did was to give a summary of the facts, so that the House might realise that the Council was equally divided, and I showed how the Council divided at the end of that discussion. What I think was a little unfair of my hon. Friend was to give in full all the arguments which he put at the meeting of the Films Council, and that it was not possible to give any of the arguments of other interests represented on the Council, either the arguments which were put to him in that discussion or the point of view of the producers or renters or that of the other trade union. He seemed to have been satisfied by giving only his own argument. I suggest that another point of view must have been put at the Films Council, and I think it would be wrong that this House should be unduly swayed by what he said was the argument put forward at that meeting.

My hon. Friend said that we must have regard to the unemployed and those who will lose their jobs as a result of the quota. I would say that the whole House is deeply concerned about the unemployment in this industry, though I do not think anyone believes that it is being increased by a high quota. Rather is this high quota an encouragement to certain producers and certain people on the financial side to go on producing. I have heard it said that there were independent producers who were considering going on, but, if this quota had been fixed at any other figure, which I am not now able to discuss, their production would have come to a stop, because they would not have been certain of a showing.

The hon. Member for Bucklow asked me about the prospects of exemptions in respect of Scottish cinemas. I am sorry I have not got the figures here tonight, and I think it would take a little time to extract them, but if the hon. Member will put down a Question I will do my best to get the information for him. Similarly, regarding the question put by the hon. and gallant Member for Argyll (Major McCallum), on the consideration given to the independent Scottish producers, if he wants the information I hope he will put a Question down.

The Order now before the House represents a setback to all of us who were hoping for a continually expanding production to enable the industry to settle its other problems—financial and distribution problems, and all the rest. I hope, not only that this quota can be realised without hardship to anyone, but that we can look forward to a reversion to a higher quota in the reasonably near future, and to seeing a firmly-established British film industry.

9.44 p.m.

Mr. Blackburn (Birmingham, King's Norton)

With your permission, Mr. Speaker, before saying a few words on this order, I should like to withdraw what I said in some remarks which I made on the last occasion when I spoke in this House, and in which I repeated what I now know to be incorrect information which I had received as a Member of the Committee of Inspection in the liquidation of the Royal Mail Steam Packet Company, to the effect that Mr. Baldwin had intervened in regard to the prosecution of Lord Kylsant. I wish to withdraw that statement, since I now know it was, in fact, incorrect.

I only want to say a few words about this Measure tonight, but I am afraid they will be very different from what has been said by most hon. Members, although I agree in general with what my hon. Friend the Member for Eton and Slough (Mr. Levy) said. Quite frankly, I would vote against this Measure tonight if it came to a Division, and I certainly give a mental vote against it here and now because I feel that we have not had a realistic atmosphere on this subject. We have all the resources in this country, and all the men to fulfil the 45 per cent. quota. No valid reason has yet been given why the 45 per cent. quota should not be fulfilled in toto. We have the men, the resources, and the studio space. We have heard in detail from my hon. Friend the Member for West Nottingham (Mr. O'Brien) of the vacant studios available; he read them out one after the other. Why cannot the Government requisition that space and see that we produce the films for the quota?

I am very anxious to keep strictly in Order, following your Ruling, Mr. Speaker, that we are only entitled to discuss the 40 or the 45 per cent. quotas, and the consequence of those quotas. The consequence of a reduction to 40 per cent. is undoubtedly that 5 per cent. more American films are going to be imported into this country. How are we going to pay for them? The President of the Board of Trade said quite frankly that the only way is to accumulate sterling balances. We have to pay interest on those balances as investments; we have to pay 4 per cent. to the United States in respect of some of those inverted sterling balances accumulating as a result of the reduction of this quota from 45 to 40 per cent. In other words, there is absolutely no escape from the fact that to some extent we are still putting the importation of American films before meat. I say that this country wants meat before American films. I was very much encouraged by the general tone of my right hon. Friend's remarks tonight because I do not believe that he likes the reduction from 45 to 40 per cent. He indicated that quite clearly tonight, and I welcome the fact that he will get it back to 45 per cent. as soon as he possibly can.

Mr. H. Wilson

I should not like those last remarks of the hon. Gentleman to go out uncorrected. The change in the quota does not mean any change in the dollar situation, and does not mean more films in the place of meat. That remark is really completely wrong, and I think it must be contradicted.

Mr. Blackburn

My right hon. Friend was not in his place when I was making my remarks. I made it perfectly clear that I accepted his statement, in reply to my previous intervention, that there is no increase in respect of the 17 million dollars because it is always already exhausted, but only in respect of the accumulation of sterling balances. These sterling balances can be invested in this country in a number of ways, and interest is paid to the United States in respect of them at, say, a rate of 4 per cent. Therefore, in respect of the interest on the sterling balances, we are undoubtedly increasing the amount of money that is leaving this country. The point has been made over and over again; I think that it was made only last week by the "Economist" or some other paper.

Mr. H. Wilson indicated dissent.

Mr. W. Shepherd

Will the hon. Gentleman say what is the basis of this 4 per cent.? I thought sterling balances only attracted interest at the rate of one-half per cent.

Mr. Blackburn

The President of the Board of Trade allows sterling balances to be invested, for instance, in the hotel industry. If the Americans have an interest in the hotel industry, they are therefore able to obtain interest upon their investments in this country. There is absolutely no doubt about it. I think the right hon. Member for Aldershot (Mr. Lyttelton) was right in his original remark. We do not want an American film industry built up in this country. Surely, we in this House ought to be fighting to have our own film industry and nobody else's. Therefore, it seems to me that everyone ought to feel—and here I agree with my right hon. Friend because I think he expressed the right sentiment—thoroughly sad to confess the fact that we cannot produce this 45 per cent. quota.

I wish to say only two more things. The first is, and it is the most important, that all the producers and renters appear to be unanimous on the subject—they want to retain the 45 per cent. quota. This decision—and my hon. Friend the Member for West Nottingham knows it—is a sacrifice of British production to the interests of the exhibitors and the interests of the Treasury. There can be no doubt whatsoever about it, and the President of the Board of Trade has admitted it, that the producers and the renters on the Cinematograph Films Council were unanimously in favour of retaining the 45 per cent. quota. I know of no one on the production side not in any way associated with distribution who would not like the 45 per cent. to be retained. I believe that this failure to fulfil the 45 per cent. quota is something about which we all ought to feel very deeply, and I shall continue to press the President of the Board of Trade to get back to the 45 per cent., arid also to a quota above that figure, so that we may at least, and at last have our own British film industry and not someone else's.

9.52 p.m.

Mr. Gallacher (Fife, West)

I must take this opportunity, even if I lay myself open to the possible charge of being a fellow-traveller to support the hon. Member for King's Norton (Mr. Blackburn). The hon. Member for West Nottingham (Mr. O'Brien) said that the unemployment in the film industry was caused by the quota. It was not the quota and not the tax, but the American illusion. Rank and Co. laid the foundations for the ruin of the industry and mass unemployment, by enormous expenditure on films in an attempt to gain the American market. It is an illusion; they will never get it, and so the job we have to do is to get the film industry built up in this country.

It will be a shameful thing if the film industry is neglected, because it is such an important industry. An old Member of this House—he has gone now—John Burns of Battersea, was down on the Terrace one day with some visitors from America. John, in his very dramatic way, led them over to the parapet and said, "The Thames," and one of the young Americans replied, "It is not up to much. It does not compare with the Hudson." "Sir," John said, "that is liquid history." There is not only liquid history but terrestrial history in this country. There is no country that has greater opportunities for the making of films which will be of the greatest value, not only from the point of view of entertainment but from the point of view of education and inspiration.

Mr. Speaker

We are not discussing the film history of this country, but whether the figure shall be 45 per cent. or 40 per cent.

Mr. O'Brien

Will the hon. Member say why it is that the Soviet Government do not show British films?

Mr. Speaker

I think that that is going wide of the Debate.

Mr. Gallacher

Like the hon. Member for Eton and Slough (Mr. Levy), I shall have to tell the hon. Member the reply in private. It is quite an easy matter, and there is no reason why an arrangement should not be made. The 45 per cent. quota can quite easily be fulfilled. The important and vital question was raised only by the hon. Member for King's Norton. The hon. Member for West Nottingham wasted time with a lot of trashy nonsense. It is quite obvious that he is becoming Americanised which is the big danger. There are so many people in the industry who are becoming Americanised. I say that the 45 per cent. quota can easily be fulfilled. The studios are there, the men are there, the scripts are there and all the material is there. Let the Minister take over the control of the studios and set the men to work, and then we can get real development in the British film industry.

Question put, and agreed to.

Resolved: That the Cinematograph Films (Quotas) Amendment Order, 1949, dated 22nd March, 1949, a copy of which was laid before this House on 22nd March, be approved.