§ "Provided that where the Commissioners are satisfied that the average gross weekly takings received do not exceed one hundred and twenty-five pounds, entertainments duty shall not be charged even if the requirements of paragraph (a) of subsection,(1) of section seventeen of the Finance Act, 1948, are not met."—[Mr. Vosper.]
§ Brought up, and read the First time.
§ Mr. Vosper (Runcorn)
I beg to move, "That the Clause be read a Second time."
I shall not detain the House long on a matter which has been discussed earlier today, but this Clause refers to a specific category in the entertainments industry which, to my mind, suffers undue hardship at the moment and which was not fully covered by the new Clause moved earlier. I refer to the small man in the entertainments industry, the man who has a hall or cinema with a seating capacity not exceeding 400. The House will recall that in the Finance Acts of 1948 and 1949 provision was made to give complete exemption from tax in the case of small halls with a seating capacity not exceeding 400 in boroughs, urban districts or parishes with a population under 2,000 or, alternatively, riot exceeding 640 to the square mile. That has given tremendous encouragement to the entertainments industry in rural areas.
It has at the same time, however, as the Chancellor well knows, created many anomalies. We have at the present day the example in two towns in a certain county, one of which qualifies under this provision for complete exemption while the other pays the full rate of tax, with the result that all those in the adjacent area are drawn to the cinemas or halls with the lower rate tax, which can put on better shows. Again, we have the case of a hamlet which is, in fact, part of an urban district—but in all other respects is a village—and, therefore, does not qualify for this exemption. There are many examples of anomalies known to hon. Members. This Clause is designed to remove this anomaly by extending exemption to all halls and cinemas provided the takings do not exceed £125 a week. There are some 250 in this category.
158 Apart from the anomalies under the present legislation, these establishments at the moment have suffered a very great increase in their costs. They have, during the past 12 months, had an increase of 7 per cent. in their wages costs. They have had a 10 per cent. increase in other costs. Unlike the larger cinemas or larger halls, they have during the last 12 months suffered a decrease in attendances and a fall in takings of some 8 per cent. Naturally, it is the smaller people who suffer when there is a falling off in admissions, and they also suffer proportionate increases in costs.
Since tabling this new Clause, I have had over 100 letters from the owners of such buildings. They all tell much the some story, and they all come from the owners of the family businesses. I have no reason to doubt their sincerity, and many of them, in fact, are borne out by facts and figures which tell their own tale. Some of these places did show a loss in the year 1949. Many more will show a loss this year despite the introduction today of reduced rates, and none of them are making a sufficient margin to pay for the repairs that are necessary, to pay for any improvements that are necessary; and, most serious of all, they are not making a margin sufficient to provide a decent living for their owners. They have no alternative at the moment but to carry on and try to put more capital into their businesses. They cannot reduce costs because the wages are fixed for them and other costs are limited by licensing regulations. They cannot raise prices, because if they were to do so, they would drive away the attendances they have at the moment.
Mr. Leslie Hale
I wonder whether the hon. Gentleman will explain one thing which I do not understand, as I want to understand the new Clause. Suppose in a small village there are two adjacent cinemas or places of entertainment with a seating capacity of 200 each. Suppose one place of entertainment puts on a good show and takes £150 or £160 a week, and suppose that the other place of entertainment puts on a very had show and takes £110 or £120. Is it the hon. Gentleman's proposal to exempt the inefficient show from tax and tax the efficient one? Or what is the proposal?
§ Mr. Vosper
I suggest that the point the hon. Gentleman raises is a purely 159 hypothetical one. If we introduce this concession it will encourage efficiency in both halls, I think. At the moment the owners of these places, if they put up their prices, will drive away the attendances they have; and in any case, under present conditions, they have to pay half their takings to the Exchequer. The only alternative left to them is to shut up shop, which many of them probably should have done some time ago. They have been carrying on in the hope that something in the way of relief would be forthcoming, but I do not think that the reduction in duty we have had early today will be sufficient to encourage them to carry on much longer.
It may well be that they are an uneconomic proposition; that they are providing surplus entertainment capacity that we do not need. If that is the case, it is much better to be honest about it and to say to them "We do not need you "rather than, as at the moment, encouraging them to go on a little bit longer in the hope that something will be done for them. Many of the instances I have in mind are very well known to the Chancellor and to other hon. Members. The cases I have had represented to me are evenly divided between constituencies on both sides of the House. All these people say that, despite the recent reduction, if something is not done soon they will have to close down.
I understand the administrative difficulties, and the argument that this rural concession has gone as far as it can go, and that if we were to continue increasing it there might be no limit. I suggest that it is possible to get over the difficulty. We should be able to make provision to enable these small places of entertainment to play their part in our life and to earn a living for their proprietors. If the limit of £125 gross per week is not a possible one, I am sure that we can arrive at some possible alternative. In the Finance Bill Debate last year the Chancellor said, when pressed on a similar proposal, that he would watch matters closely. I hope that watching matters closely does not merely mean that as we have had an over-all reduction the case has been met, because, even though these men will benefit as to the larger part of the recent reduction, 160 I do not believe that their case has been met to any appreciable extent, and if we are to keep them in business, as I believe we all want, we must do something further to implement the pledge given. I ask the Chancellor to consider this matter further, and to do something for these small men, who are very often the pioneers of the entertainment industry.
§ Mr. Arbuthnot
I beg to second the Motion.
In seconding this Motion, so sympathetically moved by my hon. Friend, I should like to draw attention to one special set of people. We have already accepted the principle that the small man in the cinema industry is deserving and needs such assistance as we can give by relief from taxation. But to give the relief in the form that it is given today—that is to say, by exempting cinemas with fewer than 400 seats, or exempting cinemas in the sparsely populated areas—does not cover the whole position.
I wish to draw attention tonight to those cinemas operating in areas which are slightly above the population standard that brings exemption, but in which, although above that population standard—that is to say, they have more people in the area—the shift system largely operates. In those areas it will mean that, however good the show that the cinema proprietor puts on, he will not be able to draw the audiences which will enable his cinema to pay. For that reason I feel that there should be some standard over and above the seating capacity and the population limit which would allow the small man in the cinema industry to be given the exemption which this House has accepted in principle as his due.
§ Mr. Jay
I think that we all realise that some of the small cinemas and halls have been faced with a special problem. We have taken two important steps that go a long way towards meeting that problem. First, by the Finance Act, 1948, as the hon. Member for Runcorn (Mr. Vosper) recognises, we exempt from Entertainments Duty altogether a cinema or other entertainment—because it was not confined to cinema entertainment—in buildings seating not more than 400 persons in rural areas. That was not mainly an attempt to assist cinemas as such, and I think that it is rather illogical to extend 161 the argument in the way in which the hon. Gentleman is now extending it, and to make that a case for giving similar relief to small buildings catering for entertainment in other than rural areas.
The real purpose of that exemption was to give assistance to entertainment in rural areas. The case for doing so was partly because it was felt that rural areas and small villages had not the same facilities for variety of entertainment as the larger towns, and, secondly, because the provision of entertainment in areas of that kind and in villages is in various ways more expensive. Therefore, we were seeking to help the rural areas for that reason, and that argument does not justify the extension which is now being requested. Indeed, as in many of these cases, a concession of this kind is immediately made a pretext for pressing the Government to go one further.
§ Mr. Vosper
The point I made was that this concession resulted in the disparity between those now exempt and those who now pay the full tax.
§ Mr. Jay
The anomalies which would follow from the hon. Gentleman's proposal would be considerably worse than those which now exist at the border line. For instance, on his proposal, as I understand it we could have a cinema in the street of a large town, seating just over 400 people, which would pay Entertainment Tax, and another cinema nearby, seating less than 400 people, which would be exempt from tax. I should have thought that it might be argued that that was a worse anomaly than even those that now exist.
That was the first contribution which the House made two years ago to this problem. Secondly, of course, in the scheme announced by my right hon. Friend the President of the Board of Trade last week, and the new Clause which he moved today, we have made a very substantial concession to the small cinemas. By this new concession we are abolishing Entertainments Duty on seats up to and including the 7d. seats and reducing it by a 1d. on all seats above 7d. and up to and including 1s. 6d.
In the smaller cinemas, there is a higher proportion of cheaper seats than in the larger cinemas; therefore this new concessions is in itself of considerable benefit to the small cinemas both in rural and 162 in other areas. Indeed, it could be argued that it is generous in that respect to the exhibiting as opposed to the producing side of the cinema industry. It was partly because we recognised that the smaller cinemas have not found things very easy economically in the last year or two that we felt that was justified. Having made both these contributions to this problem, we do not feel that there is any justification for going further at this time. Therefore I am afraid that we cannot ask the House to accept this new Clause.
§ Lieut.-Commander Braithwaite
I am sure the House is indebted to my hon. Friends for proposing this Clause. The Financial Secretary made what I thought were one or two quite legitimate points. He also made the sort of response one gets from Financial Secretaries of all calibres at all times. He stressed previous concessions, but skated rather lightly over some of the anomalies that have arisen. After all, the House of Commons exists for the purpose of an annual review of these financial matters. Two years have now elapsed since the concession was made to the small cinemas in rural areas.
We had a Debate a little earlier when an attempt was made, not altogether successfully, to point out the chief anomalies in this matter. May I submit that one of the difficulties which has arisen is in the definition both of small cinemas—I know this includes other entertainments as well—and what is, in fact, a rural area. I feel that the time has come for the Government to have another look at this definition. It was defined by population—a quota, if I may use that term—of 640persons to a square mile.
§ Lieut.-Commander Braithwaite
I am obliged to my hon. Friend whose statistical mind remains unimpaired. It is, as I said, 640 persons to a square mile. But some astonishing anomalies exist as a consequence. There are two seaside resorts in the West Country—and here, Mr. Deputy-Speaker, if you feel in cinema language that this is where you come in, I apologise; but they do throw a very revealing light on this topic. I am referring to Exmouth and Sidmouth, which are very similar towns. Whereas Exmouth has 5,000 to an acre, Sidmouth has 11,000. I put the case of a group of four cinemas in Exmouth which, after 163 paying Entertainments Duty to the tune of £18,500, which is no small contribution for a small town, find themselves making a trading loss of £2,700 on the year.
The real trouble with which the House is confronted, is not so much this definition of where a rural area begins and ends, as the undue weighting of taxation upon the entertainments as such. It surely does not make sense for a commercial undertaking with four small units to contribute to the Exchequer to the extent of £18,500 and at the same time to make a trading loss. We feel that the time has come for a revision, not so much in terms of what is urban and what is rural, as in terms of the weighting of population as such.
We have come to that stage in our proceedings where half a loaf has to be accepted, although in this case I think it works out at one-fortieth of a loaf, as being preferable to no bread at all. I suggest to the Government in all seriousness that if they want this Entertainments Duty to work fairly, the time has come for reconsideration of this weighting of cinemas of 400 seats, not so much in terms of rural and urban areas, but in terms of the weighting of population. Surely the time has come for a reduction in the deadweight of this Entertainments Duty.
§ Question put, and negatived.