§ First, the Entertainments Duty. Hon. Members will recall that during the debates on the Finance Bill last year my right hon. Friend gave an assurance that he would, in the course of the year, undertake a comprehensive review of the whole structure of the duty. When I succeeded 989 him as Chancellor of the Exchequer I continued this work. I now have a number of proposals to make. This duty now brings in about £40 million a year. There can be no question of abandoning a yield of this order of magnitude. Entertainment is not in itself an unreasonable object of taxation and I must obviously continue to look to the patrons of entertainment for a substantial amount of revenue which I should otherwise have to collect in some different way.
§ On the other hand, there have been many changes since the duty was introduced in 1916 and, indeed, since it was last revised in 1954. Some forms of entertainment are expanding. As they expand they affect the profit of the other types. In particular, television has, in recent years, grown to be a powerful competitor with other entertainments and I have had to consider whether it is bearing a share of taxation comparable with its rivals. I have not overlooked the fact that anyone who buys a television set pays a substantial amount of Purchase Tax upon it. But there is no tax on its use comparable with the tax on the admission price to a cinema. I am satisfied that a fairer balance in the taxation of these competitive entertainments is desirable.
§ I accordingly propose that an Excise duty of £1 should be levied on each combined television and radio licence which at present costs £3. There will, of course, be appropriate rates for the comparatively few cases where television licences are issued at something different from the standard charge. This new duty will not, of course, apply to licences for sound reception only. The new duty will operate from 1st August and I estimate that it will yield £6¼ million in this financial year and £8 million in a full year.
§ Now as to the rest of the Entertainments Duty. This duty is at present charged under three scales. The highest scale applies to the cinemas, which in 1956–57 contributed about £34 million out of the total revenue of about £40 million a year from the whole duty. The lowest scale applies to theatres and other living stage entertainments, while sports are charged at intermediate rates. No one has pretended for some time that the present arrangements for the duty are logical or satisfactory.
§ A distinguished author, poet, and playwright, who, for many years, enlivened 990 our debates from a place on the front bench below the Gangway, has recently commented that, "You cannot remodel a mess". The Committee will not expect me to share—or at least not to express— such severe strictures. Nevertheless, amid the various claims of sentiment, tradition and economics, I would not say that it is easy to judge the right path to follow. After hearing a deal of evidence, and considering with great care all the arguments that have been advanced by the many interests concerned, I have come to the following conclusions.
§ First, I propose that the living theatre should be freed from duty altogether. The cost of this, including certain other entertainments at present charged under the first scale, will be £2¼ million in the full year. Secondly, I propose that all sports should be freed from duty altogether. This, with other entertainments charged under the second scale, will cost the revenue £3½ million. Thirdly. I propose that the cinemas should be relieved of duty to the extent of about £6½ million. I propose to achieve this by substituting a much simpler scale for the present complicated scheme. The new scale will be 50 per cent. of the amount by which the total admission price exceeds 11d.
§ The exemption in favour of indoor entertainments in rural areas will continue to be necessary to cover cinemas in such areas and I propose to widen its scope by raising the population limit from 2,000 to 3,000. In this way it will be possible to help a number of villages and rural areas which are within the purpose of the exemption but which are not, at present, within the letter.
§ These changes in Entertainments Duty will operate from 5th May and will cost £12¼ million in a full year or £11¼ million this year. The net cost, allowing for the extra revenue from the television duty, will be £4¼ million in a full year and £5 million this year. The resolutions will also provide for the revision in simpler terms, though to much the same effect as now, of a number of other statutory provisions relating to Entertainments Duty.