CINEMATOGRAPH FILMS BILL [Lords]

HC Deb 27 February 1957 vol 565 cc1232-333

Order for Second Reading read.

3.35 p.m.

The President of the Board of Trade (Sir David Eccles)

I beg to move, That the Bill be now read a Second time.

This Measure comes to us improved by Amendments from another place, and hon. Members will agree, I think, on reading it, that the language in which it is drafted is admirably lucid and straightforward. But, if the text is clear, the subject with which it deals is not. I have been looking back through HANSARD, and I see that the difficulties of producing films in Britain rouse fresh debates at frequent intervals. I see, too, that many hon. Members are experts in this tangle of domestic finance and international competition. I am far from that. I am a novice in this business, and at first sight I wondered why we should have this Bill at all.

In my early days in the City of London I heard the late Mr. Solly Joel say that everybody ought to have a stake in the entertainment business, because the only things one could be certain that men would pay for in good times and in bad were wine, women and song. Alas, experience has taught me that Mr. Joel's advice was good for the Chancellor, but not so good for the youthful investor. The truth is that show business is as risky as it is popular, and that is why we have to have this Bill.

Inside the film business there are two distinct industries; there is the production of the films and the exhibition of the films. This is a producer's Bill, but we must not forget the exhibitors. Indeed, I think that some hon. Gentlemen are likely to argue that rather than help the producers through this Bill it is more urgent to help the exhibitors through the Budget. I think, therefore, that I should begin with a word about the cinema exhibitor who lives on his net earnings after the deduction of all taxes and such-like. It is, in fact, the same to the exhibitor whether his gross takings are reduced by the Entertainments Duty or by a combination of the Duty and the levy. Lately. his net earnings have been declining, and that has become a serious threat to the existence of a number of our cinemas.

My right hon. Friend the Chancellor of the Exchequer, having had the advantage of fathering the Bill as President of the Board of Trade, is aware of this situation, and he has authorised me to say that in his Budget he would take account of the consequences of Clause 2—that is, the Clause which fixes the limits of the levy and makes it statutory—together with the other considerations which the exihibitors have brought to his attention.

At the same time, it is right to distinguish between the chicken and the egg; between the supply of good films and the level of attendances at the cinemas. Assuming that we do want a proportion of British pictures to be shown in our cinemas then, unless there is a steady supply of such pictures—and they appeal to the public—no reduction in the duty will save the exhibitors, subjected as they are to growing competition.

Therefore, if we concentrate today on the production of films we are, in a sense, putting first things first. If the Bill takes a cut from the box office and, in return, better films are produced, that will be a good bargain for the producers, exhibitors and the Chancellor. Every film is made to measure.

Mr. John Rankin (Glasgow, Govan)

Will that be used by the Chancellor as a get-out from the statement to which the right hon. Gentleman has already committed him?

Sir D. Eccles

My right hon. Friend does not intend to get out of any of his statements.

I was saying that the characteristic of a film is that it is not mass produced. It is an individual production. How much it will earn in cash depends on the fickle taste of the public and, as with all show business, there are bound to be some expensive failures. Because a film can cost such a lot of money, the size of the home market is an important factor in the stability of the production industry concerned. Here, as we know, the Americans have had a big advantage over us.

It has often been said that Hollywood can cover all its costs in North America and can, therefore, look to earnings overseas as pure profit. We also know that Hollywood has had its own troubles, and in recent years the competition of television has forced large and, I think successful, changes in the making and showing of American films. Nevertheless, one quarter of all the cinemas in the United States have closed. British cinemas are also hard-hit by television. Some picture houses have gone out of business and some are hanging on with great difficulty, but I hope that tomorrow morning they will feel more cheerful—[HON. MEMBERS: "Why?"] Because I have said that the Chancellor will take account of Clause 2 in his Budget.

Mr. Rankin

Will he reduce the Entertainments Duty?

Sir D. Eccles

There is no other way that he can do it.

Mr. Frank Beswick (Uxbridge)

Will the right hon. Gentleman repeat his last few words?

Sir D. Eccles

I said that the Chancellor said that he would take account of that. The hon. Gentleman can wait for the Budget, when he will see what it means.

Mr. Douglas Jay (Battersea, North)

Surely the President of the Board of Trade will elucidate his words? Did he or did he not say that the only way the Chancellor could take account of the consequences of this part of the Bill was to reduce Entertainments Duty? It is very important.

Sir D. Eccles

I should have thought that it was very difficult to think of any other way. The right hon. Gentleman is very ingenious and perhaps, with his experience of the Treasury, he can think of another way. If so, no doubt my right hon. Friend will be grateful for his suggestion.

Today, what we are doing is helping the cinemas by considering how the number and quality of films which they can show can be improved. We know that the public have liked the best American films. That is a legitimate demand and the problem is both to meet it and, at the same time, build up an efficient, thriving British film industry.

For the second purpose, we have devised three instruments, the quota reserved for British films in each programme, the National Film Finance Corporation, and the levy. The Bill is concerned with all three, Part I with the levy, Part II with the N.F.F.C., and Part III with the quota. I want to say about the quota that the present Bill was an opportunity not to be missed of making this form of protection safe for ten years. That is done in Clause 14. The details of the quota legislation will be fully discussed with the interests concerned and the producers, distributors and exhibitors can be assured that all their points of view will be carefully examined before these details are settled. This reserve quota is a sort of built-in form of protection, but it is not enough to ensure the finance necessary for an efficient British film industry.

What other form of aid can we give? One first thinks of a tariff, but, unfortunately, a Customs Duty on films imported into this country is a clumsy weapon, not to be recommended, because nobody can say at the time of entry what a film is worth, and therefore, one cannot impose an ad valorem duty. It is also undesirable to give British films a direct Government subsidy. Subsidies are a game which two can play, as we saw last week when we discussed the anti-dumping Measure, and the House knows that it is British policy to eliminate all artificial aids to exports in all countries. Accordingly, Clauses 10 to 13 are designed to remove the taint of subsidy from the National Film Finance Corporation. I will say something about the Corporation when I have dealt with the levy.

The logical basis of the levy as a form of assistance to British films is that it is collected from the receipts of all films shown in this country, but paid only to films made in this country. In that ingenious way, foreign films which have entered this country without a Customs Duty make a contribution to British film production.

Mr. Beswick

Is that quite true? Is it not payable to films made, for example, in a colonial or dominion territory?

Sir D. Eccles

It may be in some cases, but I am not sure. We will certainly look at all those questions when we come to make the new regulations.

Up to now, the levy has been voluntary and is expected to yield about £2½ million this year. That represents a considerable achievement in voluntary co-operation. It has imposed an increasing strain upon the exhibitors, and the industry told my predecessor that it would not be possible to continue the voluntary levy after this year. That put the Board of Trade in a difficulty. We were faced with the choice of abandoning the levy altogether, with all that that would mean for British film production, or making it statutory. I am sure that we are right to have chosen the second course and in Part I of the Bill the levy is made statutory.

Clause 2 fixes for the next ten years the upper and lower limits of the levy at £5 million and £2 million. This is done to give producers and exhibitors outside figures on which to base their long-term plans. For the first year's levy, which we intend to start next October, again so that the industry may have something definite to work on, we have chosen the figure of £3¾ million, which is £1¼ million more than the voluntary levy is likely to yield this year. All three figures are, in a sense, guesses about future costs and about future levels of demand and output. They are open to argument and no doubt we shall discuss them in Committee. This afternoon we have to settle the point of policy. Do we really believe in the future of British film production? Is it worth putting any more money into this business? Those are the essential questions to which I hope the House will give a unanimous answer.

I should like to review quickly the position as I see it today. In spite of the competition of television, British films have been gaining some ground both in the home market, where I am told that the 30 per cent, quota is frequently exceeded, and overseas. We have a good market in the Commonwealth. Little by little British pictures are winning a toehold in the United States.

Mr. Rankin

Very little by very little.

Sir D. Eccles

They are earning £1 million a year in the United States.

Now we have put our hands to the European Free Trade Area. As I am sure hon. Members know, the film producing countries who are members of O.E.E.C., like ourselves, protect their local markets from crushing American competition. Just how films will be treated in the coming negotiations with Europe I cannot yet say, but I can say this: Her Majesty's Government would like to see free trade in films. Then the best pictures will win, and with this Bill on the Statute Book our producers would have the necessary backing and security to do well in the expanding markets across the Channel. Those producers whom I have consulted about the European Free, Trade Area welcome it and think they will do well out of the opportunities which will certainly arise.

I therefore look upon the levy not as a form of statutory assistance to bolster up a wilting industry but as a good speculation on a progressive section of British show business. Of course, the House is being invited to take part in a gamble, but it is not an unreasonable gamble, particularly because the international opportunities are increasing. If we had merely our home market to look to, with a possible decline in bookings, it would be a doubtful gamble, but if we add to it the expanding opportunities overseas I think it is a reasonable gamble.

One must ask the question whether the figures in Clause 2 relating to the size of the levy are well chosen. I have thought a great deal about this, I have consulted a great many people, and on the evidence which I have been able to get, £3¾ million for the first year is about right. That is to say, it should be a stimulant but not a drug to efficient production. I should also remind the House that if the Entertainments Duty were reduced the producers would get a further sum, since a film earns a percentage of the box-office takings after deduction of Entertainments Duty. I am sure the possibility of that interesting bonus will not be far from hon. Members' minds.

I turn to some details of finance. When the Labour Government set up the National Film Finance Corporation there was no levy. The risk was, therefore, great that a film would fail to earn enough to cover the cost of production. Under those conditions it was not surprising that the Corporation was to lend only to producers who could not get their money elsewhere and that in doing so the Corporation made losses.

The voluntary levy, when it came in 1950, improved the prospects of recouping the money advanced for production. If this Bill becomes law, the levy will be statutory for ten years, the amount of the levy will be increased immediately, and, thereafter, it can be increased to twice the sum collected voluntarily or reduced if the industry shows that it does not need so much money. In future, therefore, the Corporation should have a very fair chance of making both ends meet. Now that the levy is to be statutory. there is no reason that it should not aim at the status of an ordinary institution not in need of further Government help.

In these new conditions we have thought it right to provide for the sale or the winding-up of the Corporation should it prove that this special form of finance is no longer needed. As I said earlier, the provisions in Clauses 10 to 13 make it clear—and it is necessary to make this clear—that the Government do not intend to subsidise the production of films through the Corporation.

A word about the Corporation itself. From more than one quarter I have heard how well the Corporation has discharge its duty and how highly it is regarded by the producers. To get the other side of the picture I asked the able Chairman of the Corporation what he thought of the producers. Bankers usually know more about their customers than their customers think they do. I put these three question to Sir Nutcombe Hume: first, were production costs still extravagant? Secondly, were the British film producers technically efficient? Thirdly, assuming that this Bill became law, did he see the output of new films rising or falling?

His replies were reassuring. He said that most of the extravagance had been squeezed out by stricter financial control. As to the level of efficiency compared with that of Hollywood, he said, first, that it was not true that the Californian climate gave the Americans a start which we could never make good. That bogey, he said, had been disposed of. Secondly. he said, British techniques and know-how were getting better all the time. We had some first-rate technicians and artists coming along, and on a value-for-money basis—and this is what one seeks to find out from a banker—it was now definitely cheaper to make a picture in England than in America. Indeed, he believed that American companies would continue to produce here for reasons of cost alone.

I must interject, however, that British production is still handicapped, perhaps a little less than it was before, by restrictive practices. There is no room for such practices in our challenging times. Those who cling to them risk the destruction of the industry they serve, and it would be well if they remembered that we shall soon have to compete not only with American costs but also with European costs.

Finally, I asked Sir Nutcombe Hume whether, in consequence of Part II of the Bill, he contemplated any change in the Corporation's policy towards borrowers. He pointed out that, provided costs did not rise, film production would become a little more attractive on account of the increase in the levy. He said the Corporation had no intention of changing its policy. It would continue to help starters in film production and it would not turn away any deserving applicant. In his view, the number of first and second feature films produced was more likely to rise than to fall. He was, however, emphatic on one point: he said that more vigorous salesmanship abroad was essential to the healthy expansion of this industry.

I thought that the House would wish to have this information from the Chairman of the Corporation because, for obvious reasons, there is no means of securing a worthwhile guarantee from producers that they will make a definite number of films over the next few years.

Mr. Glenvil Hall (Colne Valley)

All this is very interesting. Did the Minister ask the Chairman whether he could visualise a time when the Corporation would cease to exist for lack of applicants?

Sir D. Eccles

Indeed, no; the Chairman was optimistic about the number of projects for making films which he would receive. I have looked at the queue which is now at the door and I would tell the right hon. Gentleman that it appears that over the next year or two production is going to go up; before the Bill is on the Statute Book, indeed.

Mr. Glenvil Hall

The projects will need financing.

Sir D. Eccles

They will need financing, true, and it is the purpose of the Bill to make it easier for them to get that finance.

I think that the Chairman would also agree, if I put it to him, that it is part of our policy that the independent producer should get the money to be able to survive and compete, and he undoubtedly will see that that occurs through his lending policy.

Coming back to the levy—it will be collected by the Customs and Excise who, in Clause 4, are given powers to obtain the necessary information. The House will have noticed some words in Clause 2 3, b) which were inserted in another place. The duty is there laid upon me to have regard, in determining the amount of the levy, to the prevailing economic circumstances of both producers and exhibitors. I am also bound to consult the Cinematograph Films Council before regulations are made setting out the terms of the levy.

This is an important point, because it it here that I shall be able to do something for the small cinemas. Representing, as I do, a county seat with small towns and rural areas, I am aware that the small cinema has particular difficulties, and I hope that the regulations to be made under Clause 2 will provide for exemption and relief for exhibitors upon whom the levy would bear harshly.

The levy will be distributed by the British Film Fund Agency, which is to be set up under Clause 1 and will be composed of three persons not connected with the industry. They will work under regulations which will be made under Clause 3, after consultation with the Council, and those regulations will be subject to an affirmative Resolution of Parliament. As the House has seen in the Bill, the grant to the Children's Film Foundation Limited will continue. I think we would all agree that that is a good thing. The Parliamentary Secretary will have more to say later about the composition of the Agency and the way in which it will work.

I should now like to say a word about the general prospects of making pictures in Britain.

Mr. Stephen Swingler (Newcastle-under-Lyme)

I have listened to the right hon. Gentleman very carefully upon the subject of the levy and its distribution. He said, earlier, that he was against any form of subsidy for film production. Will he explain to the House what is the difference in principle between this Bill and a State subsidy? The levy will now become a tax similar to Entertainments Duty, enforced upon all exhibitors, and the revenue will be distributed to the producers under regulations made by his Department. What is the difference in principle between that and a State subsidy paid out of taxation?

Sir D. Eccles

I would agree with the hon. Member that if one is at the receiving end a £5 note from anywhere is a £5 note. But if one's business is to define what ranks as a Government subsidy—and that is necessary in regard to negotiations with other countries—this Bill does not provide a Government subsidy and it therefore has some advantages which only those who conduct these discussions can appreciate. I admit that I am new to them myself.

I was about to speak about the future of making pictures in this country. It is true that, up to now, our cinemagoers have preferred American films. That is why we have had to have the 30 per cent. quota. It is also likely that the Americans will beat us in making spectacular and grandiose pictures, which cost a very great deal of money. But in this country a quiet revolution in taste is going on. I saw it at first hand at the Ministry of Education. Everybody knows that, compared to a generation ago, our children are better fed and better dressed, and their parents are buying better furnishings and taking more interesting holidays. But something else is happening. The school children of today are learning at an astonishing pace about art, music and drama.

It is only when these children are grown up and have made their own homes that we shall see the full results of the new awareness of what is good to read, to hear and to see.

Mr. Beswick

Does the Minister agree that he should make one very important exception? I agree with most of what he has said, but does not he also think that many children today are being despoiled by the average film shown on television, especially on I.T.A.? Does not he think that that is something which ought to be taken into account?

Sir D. Eccles

At any age there will always be some vulgar and bad things made and shown in one way or another, and no doubt there are some now. I was merely observing that, in my view, the trend is towards better taste. The enthusiasm for British ballet which is now so marked is, I think, a portent of what might well happen in other fields of art and entertainment. What the radio has already done for music the screen has still to do for the visual arts.

Will the film industry, seizing its chance, be found on the side of this revolution in taste? That I cannot foretell, but I hope that the House will agree that to anticipate, express and encourage the higher standards of our boys and girls coming from the secondary schools the film industry will need to give new and young men and women a chance as producers and script writers. In the final analysis this industry will stand or fall by the quality of our artistes.

No one can be sure how, in ten or twenty years' time, the public will prefer to be entertained. We do not know whether they will prefer the live theatre, the cinema, television, plain or coloured, dance halls or fun fairs. What is certain is that show business, like everything else, will become more and more international, and that that country will hold its own which has looked after its artistes, musicians, writers and players. In a small way that is what the Bill is intended to do.

Mr. George Jeger (Goole)

I have followed the remarks of the Minister with great care, and I am in agreement with almost all that he has said, but I find it difficult to square what he has just said with his policy of "treating them mean and keeping them keen." How does that apply to our artistes at present?

Sir D. Eccles

I was just about to say that I had not forgotten that films belong to Commerce rather than to the Arts. They are not made for museums; they are made to make money. Therefore, the producers must stick to the old themes: sex, crime, military exploits and practical jokes. Those always have been the stuff of drama, from "Henry V" to "The Battle of the River Plate", and from "The Taming of the Shrew" to "High Society".

What does change, and changes right round from good to bad and from bad to good, is the art and the taste with which these immortal themes are presented. We have been going through a bad patch, I think a very bad patch, in public taste, but I believe that taste is now improving in this country. If that is true, the British film industry is well placed to respond to the higher standards demanded by the public. Not only at home but abroad are there prospects of freer trade in films. Why should not this country become an international centre of film production. financed here, and drawing its personnel from our own excellent talent and from overseas? That is the aim that we ought to set before the industry.

The summary of my argument for the Bill is that it assists generously the cash side of what may be a most interesting ten years in British film production. Paying due attention to the risks involved, I commend the Measure to the House as a calculated speculation.

Mr. Harold Lever (Manchester, Cheetham)

Has the Film Finance Corporation become possessed of any scrip or shares by reason of the powers granted to it in the 1954 Act?

Sir D. Eccles

I shall have to ask the Parliamentary Secretary to give the hon. Gentleman that information, because I have not it at this moment. When my hon. Friend winds up the debate, the hon. Gentleman will no doubt get the answer, if he is here.

4.12 p.m.

Mrs. Eirene White (Flint, East)

On this side of the House we welcome the Bill which the President of the Board of Trade has placed before us; at least Parts I and II of it. On Part III our feelings are a good deal less cordial.

As the right hon. Gentleman has said, the main object of the Bill is to assist the production of British films. As one who has had some connection with this industry for a number of years, through the Cinematograph Films Council, I am very glad that the state of British film production is a good deal healthier than it was some while ago. It is only fair to pay some tribute to the very close concern shown for the industry when we were in office by the late Sir Stafford Cripps and by my right hon. Friend the Member for Huyton (Mr. H. Wilson), both of whom took a very keen personal interest in the affairs of British films. I can only hope that the present holder of the office, who admits that he is a novice in the matter, will follow their very good example.

The British film industry is faced with a number of problems, many of them of long standing. The President of the Board of Trade has touched upon some of them. We have not, as the American industry has, a very large home market from which we can be reasonably certain of getting an adequate return. Our tax position is far less favourable than in the United States. I do not wish to anticipate the speech which I hope I may be able to make, with the kind co-operation of the Chair, on the Budget. I will not go so far as the right hon. Gentleman has gone in anticipating the Budget Speech of the Chancellor of the Exchequer; but it is clear that a debate on the Bill would be completely unrealistic unless we had assurances about the tax position.

At present, the British film industry has to face not only this very heavy tax burden but the competition of television. No one can yet say just what the relationship will be between the cinema and television. I think that many years will pass before television can show pictures in any way approaching in quality the pictures that one can see in the cinema. Both in reproduction and in general quality I doubt whether television will ever seriously rival the best cinematograph films.

The cinema has some obvious advantages over television. It is incontrovertible that one does not get the same thrill holding hands in front of a television set as one does holding hands in the cinema. I do not know whether the right hon. Gentleman has ever experienced that simple pleasure, but if he has he will know what I mean. However, the cinema cannot live on courting couples alone. There is no doubt that exhibitors are facing very serious difficulties and feel that they are being ground between the upper and nether millstones of television and Entertainments Duty. It is against that background that we have to consider the Bill.

The right hon. Gentleman gave us what I could not help feeling was an extract from a prize-day speech that he had not had the opportunity to deliver before his change of office. He skated very rapidly over some of the problems inherent in the Bill. For example, we are very much concerned about the timing of the Bill, in more respects than one. I shall be glad to have an explanation about the intentions of the Government during its remaining stages. Part II ought to come into effect not later than midnight on 8th March, that is to say, on Friday of next week, because the National Film Finance Corporation ceases to exist legally, as I understand, when the Cinematograph Film Production (Special Loans) Act expires, which it does on 9th March.

If that is so, we should have been told by the right hon. Gentleman why either we have to take all the remaining stages of the Bill between Monday and Thursday next week—Friday being private Members' time—or the powers of the National Film Finance Corporation expire. I understand that we may get the answer at the end of the debate, but we are entitled at the opening of the debate to the courtesy of being told why the Government have failed to obtain this legislation in time. [Interruption.] Oh, perhaps we can have the explanation now. Well, come along.

We ought to be told. I gave way to the Parliamentary Secretary. Either the National Film Finance Corporation must be indemnified—for the salaries of its staff, for example—when it ceases to exist as a legal entity, or it must cease operations altogether for a couple of weeks at least. Whatever the position, the House is fully entitled to an explanation of this situation. After all, the Board of Trade has known since 1954 that the National Film Finance Corporation was due to expire on a particular date. Surely it was within its capacity to obtain its legislation in proper time.

That is one muddle. The other muddle is over Part Ill. It was monstrous of the right hon. Gentleman to slither over this position by saying that the Bill was an opportunity not to be missed to extend the quota provisions of the Cinematograph Films Act. Nobody wants the quota provisions not to be extended, so far as I am aware. We support the continuance of the quota, but anyone with experience of the industry knows there are difficulties, which have been evident for some years, over the operation of the quota.

Again, it has been perfectly well-known in the Board of Trade that the Act governing the quota is due to expire in 1958, and that legislation was, therefore, required. It seems to me to be really scandalous that there should be such delay over this. We are asked here to pass a Bill which includes, among other things, in Clause 3, a definition of classes of British films, so that we can in one case discuss what is or what is not a British film for purposes of the levy, but we cannot, at the same time, discuss what is or what is not a British film for the purposes of the quota, because that legislation is not ready. There has been ample time to discuss all these matters with the associations in the trade. Everybody has been perfectly well aware that a time table was needed; everybody, apparently, except the Board of Trade.

We have no guarantee when legislation will, in fact, be introduced. We are told that talks are to begin with the industry next autumn, but no one has so far, at any rate, given us any guarantee when the actual legislation is likely to come about. I think I should say that my right hon. and hon. Friends and myself, when we come to the Committee stage of the Bill, will introduce Amendments to Part III to try to limit the time, so that we may have some assurance of legislation actually being produced, and not being put off because of the congestion of the Parliamentary timetable, which is the usual excuse. We are entitled to say, on the timing and management of this legislation, that we feel very dissatisfied with the way in which it has been handled.

Having said that about the manner in which the Bill has been introduced and the deficiencies in it, I now turn to the main purposes of the Bill, with which, as I have said we are in general sympathy. It is only natural that we should be, because the two parts of substance in the Bill are, of course, concerned with matters which were introduced by the Labour Government. The levy, admittedly on a voluntary basis, and the National Film Finance Corporation were both steps taken by the Labour Administration, and we believe that both were very helpful ideas for promoting British film production.

The President told us why it is now necessary to have a statutory provision for the film production levy. I know that there are certain sections of the industry which would very much prefer that there should be a direct Government payment instead of this rather roundabout method of picking up a remission of Entertainments Duty with one hand and handing out the levy with the other. We realise that the voluntary scheme, which has worked for some seven years, has now reached a point at which it would be difficult to continue it.

I should like, however, to pay tribute to the trade for the work it has done for the past seven years. It has done an exceedingly good job, and I refer both to those who have served on the body dealing with the levy and also the renters, for example, who have given particular help in certain instances, without which it would have been even more difficult to run a voluntary scheme, than it has proved to be. It is only right to pay that tribute to the trade.

At the same time, I think we recognise that something of a statutory nature is needed. I wish myself that it were possible to eliminate all this extremely elaborate machinery of collection and distribution which we are setting up in this Bill. I wish, also, that it were possible to give a greater degree of certainty to producers than I think will be possible under any form of levy, but I will return to that point later. I recognise that we are under certain obligations internationally, and that this is presumably the best way to deal with the situation.

Therefore, on balance, we accept the levy in principle, although we recognise the force of the objections which have been made by certain sections of the industry, in which it is said that this is an extremely elaborate and expensive method of doing something which those affected would prefer should be done much more simply.

Having said that we accept the principle of the levy, I cannot pretend that we are entirely convinced about the machinery which is proposed for dealing with it. Clause 1 of the Bill sets up an Agency, which is to consist apparently of three wise men, none of whom has any connection with the industry. I had some little experience of the affairs of this industry. I have never had any financial or professional connection with it, but I have had a good deal of experience of the way it has worked from my membership of the Cinematograph Films Council, and I will say most emphatically to the President of the Board of Trade that I do not believe that any body such as this Agency can be expected to work efficiently without some advice from those who have first-hand and up-to-date knowledge of the trade.

This is a most complex industry, which is riddled with anomalies of one sort or another, and I was completely unconvinced by the arguments put forward in another place that this work of the Agency in paying out money from the film production fund would be purely an accountant's job. It may appear to be so, but so many things that appear simple when one first looks at them in the cinema industry turn out to be extremely complex. I have had discussions with some of those who have been responsible for administering the present voluntary fund, and they assure me that it is far from being purely an accountant's job. It is not just cut and dried. It is not the case that what is needed is a certain set of figures and the making of the necessary calculations, and that is the end of it.

I will give only one example, and it is one which, I know, has been very much worrying those who have been running the voluntary scheme. It is the common practice in the trade for films to be booked as a complete programme; in other words, one has the first feature and the supporting programme as well, and the whole thing is offered as a complete programme. The sum is paid to the renter for the programme as a whole. Who is to decide on the sub-division of the total rental? Who is to know whether the sub-division is really what it ought to be?

This may be very important, because one of the two or more films may be eligible for a payment out of the fund and the others may not. We might quite easily have the position in which there would be at least the temptation to load one film; in other words, to pay a greater proportion of the rental on that film than it would normally be entitled to to obtain a higher levy payment. That is something which, however competent he may be at his jab, an accountant simply could not judge.

This question of what is the true rental for a particular film is a very difficult one. One has to know a great deal of what current rentals are. One has to know something about the ups and downs of film fashion, and so forth. It is not a straightforward matter. I put it seriously to the President of the Board of Trade that he ought not to accept the argument that the work of the Agency can be done by persons who have nothing to do with the industry. I think it was suggested that a lawyer, an accountant and a retired civil servant would be the ideal triumvirate. That really could not do the job satisfactorily and nor would the trade have full confidence in such a body. It is important that the trade should have confidence in the Agency.

From the more negative point of view, if there should be any persons who feel tempted to do a little bit of adjustment in film rentals they would be much less likely to do so if they knew that some of their trade brethren were aware of what they were doing. Therefore, I think it would be a very useful precaution to have persons who are active in the trade associated with the Agency. That is to say, if we need an agency at all. We on this side of the House are not fully convinced that we do need one. Why should not the Board of Trade itself carry out these functions with the advice, if it so wishes, of a committee of the Cinematograph Films Council, or alternatively, of people selected from nominees put forward by the trade?

On the quota legislation, which, again, on the face of it, may look as though it is a pure accounting matter, we have that system working, and I think it is working reasonably well. The Board of Trade administers the regulations, but it has the advice of a committee of the Cinematograph Films Council, which has full knowledge of what goes on in the industry. So far as I can judge as a lay, independent person that work is carried out perfectly satisfactorily.

I am not at all convinced by the arguments put in another place that we need the Agency as a body because its members have to be the trustees of this fund. I should have said that there is much more to be argued in favour of running this directly by the Board of Trade with adequate trade advice. In any case, whichever method one chooses, the question of adequate trade advice is really important, but I felt it was brushed aside far too cavalierly in arguments in another place. I am certain that the trade does not believe that this mechanism can be worked satisfactorily unless there are people with close knowledge of the trade associated with it. I hope very much that the Minister will have second thoughts on this matter. We do not feel at all happy about the main point in Clause 1.

When one turns to Clauses 2 and 3 one is struck by the fact that a very large sphere is to be dealt with by regulations. Primarily, this is an enabling Bill; there is very little written into the Bill. We are asked to agree to a Bill in the most peculiar circumstances. We are asked to pass it knowing that it will be impossible to carry out, unless the Chancellor of the Exchequer takes certain action about which we can have only the most limited assurances. We are also asked to pass a Bill which is very indefinite as to what will be done in some very important particulars.

Matters dealt with in Clauses 2 and 3 are the very kernel of the Bill, but we have had very little assurance—in fact, virtually none—as to what the Government have in mind about the regulations. If one takes the regulations which the Board of Trade is to make, there is the whole question of exemptions to consider. The right hon. Gentleman evidently has a soft spot for some of the smaller cinemas in his constituency. That is well and good, but we should like to know more than that. We should like to know on what sort of principle the exemptions are to be based. Surely the House is entitled to be told something of what the Government have in mind, even if we cannot be given the full terms of the regulations.

It is less than fair to ask us to pass a Bill of this kind without being more specific as to what principles the Government propose to follow in making regulations. There are certain exemptions at present under the voluntary scheme. Are those exemptions the ones which, in general, are to be followed under the regulations? What is to be the position of certain special people? As a Welsh Member, for example, I have in mind the miners' welfare cinemas. I should very much like to know what is intended about those. They serve a particular social purpose in mining areas. If we are asked to pass a Bill of this kind we should certainly be given some further information.

Another thing which is left completely vague is that the Board of Trade is to make regulations about what the Customs and Excise is to collect, but what is to happen if someone does not pay the levy? Is there to be a sanction and, if so, what kind of sanction? Under a voluntary scheme it is a different matter, but this is to be a statutory scheme. We should be told what the Government have in mind if for some reason or other exhibitors say they are not able to pay the levy. Under the voluntary arrangement renters have made certain concessions to exhibitors who have not been in a position to pay. Obviously, that can hardly be expected under a statutory scheme, but we should be told what the Government think about it. We have been given so little detail on all this that it is very difficult for the House to make up its mind.

When we turn to the other side of the picture, the paying out side as opposed to the collecting side, the matter is left completely vague. In fact, it is left even more vague than on the collecting side. Under Clause 3, by regulation the Board of Trade may do various things. It is not even mandatory, but is permissive. We are not certain that the Board of Trade will even be obliged to make regulations to deal with certain extremely important matters. To give an instance, there is the whole question of defining classes of British films. I do not want to go into that in detail, because I think that some of my hon. Friends may wish to raise it, but it is extremely important to know whether certain films which now are considered to be British films ought to participate in the levy without any further conditions whatever being made.

It has been suggested that they should participate in the levy only if a certain proportion of their takings for showings outside the United Kingdom are remitted to the United Kingdom and there are various other considerations. I do not propose at the moment to go into the merits of those various ideas, but I think that at least we ought to be told what is in the mind of the Government. We have been told practically nothing at all. Perhaps the Government have nothing in mind.

Then there is complete vagueness as to whether the Government propose to continue, to modify, or to extend the present arrangements whereby certain films receive more than the basic amount of levy. Possibly the Parliamentary Secretary is not even aware of this, as he is looking a little puzzled. He may or may not know that at present short films are paid at two-and-a-half times the normal rate. Discussions are going on in which it is suggested that not only should short films be paid at more than the normal rate, but second feature films should also be entitled to a larger proportion of the levy.

There is a good deal to be said for that, because second feature production has met very great difficulties in the last few years. There is much to be said for supporting British second feature production, if only because of the depths of inanity reached in so many of the American second features. In fact, my husband refuses to go to a cinema is he thinks that there is any danger of his having to see an American second feature.

Second features are also very important as a training ground for the younger producers, directors and actors. There is much to be said in principle for some extra support for second features—and possibly, also, for additional support for the short films, both of which, on present booking arrangements, have difficulties in getting an adequate return. But the Government should tell the House whether or not such arrangements are to be extended. We are really being asked to vote on something so vague that it is not fair to ask hon. Members to pass an opinion on a great deal of the Bill, so I hope that we shall have something very much more specific than that vague cultural homily from the President of the Board of Trade.

The other principal point in this part of the Bill is the levy, and its amount. In fairness to the right hon. Gentleman, I must say that he was quite frank about this. It was a guess, a compromise between, presumably, what the producers say they want and what the fund has hitherto produced. There is a considerable difference of opinion in the trade as to whether the actual amount of the levy should be written into the Bill—that is to say, the floor and the ceiling; the £2 million and the £5 million as the minimum and maximum.

If, in the next ten years, we are to have the same degree of inflation as we have had in the last six years, then, of course, these figures may become entirely unrealistic, but the amount of the levy, of course, is important not only from the point of view of possible future inflation, but because the amount that any individual film producer may obtain from the levy depends on the number of British films that are made in any one period.

If, as we hope, the number of British films is increased, the amount that each individual film may collect from a fixed sum is pro rata diminished. This is, therefore, a very serious matter; and particularly serious if the number of what are called Anglo-American films is increased and they take a larger share of the pool. That being so, I am not sure that it is very wise to write into the Bill a ceiling of £5 million. It is at least debatable as to whether that figure should not be higher. On the other hand, there is something to be said for keeping at least some Parliamentary control over this business, so it is arguable that one should write something into the Bill. That is something upon which we should, again, have a chance to debate at length in Committee.

Another thing which concerns me very much in this part of the Bill is what happens if the Board of Trade estimates that a certain amount is to be produced by the levy and that amount is not reached. Under the voluntary system, of course, we have never yet come anywhere near to obtaining from the levy the amount which it was estimated to produce in any particular year. I do not know whether the Board of Trade may calculate it more effectively, but at least we should be told what happens if that Department says, "We estimate that in such-and-such a period, such-and-such a rate of levy will produce so much", and, in fact, it produces either more or, as has been the experience in the past, considerably less. We should be told what the Government have in mind in such circumstances. We have not had any indication so far.

Another vital matter is the amount of notice to be given to producers of the amount of levy they may at least hope to obtain. As we all know, film producers require rather long notice. They generally say that they need at least 18 months' notice before they can go forward with their production plans with some assurance. Nothing I have so far seen in the Bill indicates what notice they may expect to receive.

They were told in the autumn that they might expect £3¾ million for the October 1957–58 period. Are we to take it that by next October the industry will be told what is to be the rate of levy for the October 1958–59 period? There is nothing in the Bill to give any such assurance, but perhaps we may be told what the Government intend. As the whole object of the exercise is to give assurance of stability to producers. that is one of the things which they ought to be told so that they may know, as far as possible, where they stand. On all these matters—and there are many others that my hon. Friends will raise—we need information before we can fairly be asked to give an opinion on Part I of the Bill.

I come to Part II, which deals with the National Film Finance Corporation. As I said earlier, we on this side are gratified to find that the Government are anxious to prolong the life of the Corporation. at any rate for a year or two, but, because of Clause 12, we are not quite certain how long they really want to keep it going. We are also gratified to know that the President of the Board of Trade has obtained satisfactory answers to the questions which he put to the Chairman of the Corporation. 1 may say that some of the satisfaction at those answers is due precisely to the setting up of the Film Finance Corporation by my right hon. Friend. The fact that extravagance in production has been cut down and that there is better and tighter accounting in many sections of the industry is directly due to the activities of the National Film Finance Corporation.

The whole point of setting up such a body was, of course, to foster the independent producers, and as far as possible to encourage some adventure, some experiment in film production; and to give a chance to the younger producers and directors who have not yet made their name. It would, therefore, be very unfortunate if the N.F.F.C. were too much restricted in its activities. For that reason we are very much concerned with the way in which Clause 11 has been drafted, because it gives us the impression that there may be undue restriction on the activities of the Corporation.

It is true that it has lost money in certain directions in the past, but that is surely inherent in the job given to it. Here, I am not speaking of the peculiar case of British Lion. I do not know whether the President realises that in Clause 11 he is looking over his shoulder at British Lion but, in fact, that is what he is doing. That was a peculiar, once-for-all operation, and I do not think that we should judge the Finance Corporation on it.

It is also true that money was lost on Group 3 activities, but I think that Group 3 was very worth while and I was sorry that some restrictive action was taken there. The Government have said that they wish the Film Finance Corporation to continue. On the other hand, by Clause 12, they make the proviso that it can come to an end and be handed over to an unspecified private body. That seems to us to be very odd indeed. We shall need to spend a considerable time, at a later stage, looking at both Clauses 11 and 12 because, we on this side of the House are extremely suspicious of both of them.

It may be argued that there should be some extension of the powers of the Corporation, that it should even have its powers extended in the field of distribution or exhibition if it so wished; and there is a case to be argued on that because no one can pretend that there is not still a very strong monopoly element in the distribution and exhibition side of the industry. I would not dispute that this Bill might be an occasion for arguing that point.

In any case, we are extremely anxious that nothing should be done which would prevent the N.F.F.C. from doing what it was intended to do, which is to help the more adventurous production of British Films. The Government in this seem to me to be adopting the same sort of attitude as they have adopted with the Colonial Development Corporation, of trying to turn a public body into a conventional finance house, and that was not the intention when N.F.F.C. was set up.

I come to Part III of the Bill. As I have already said, I think that it really is scandalous that the Board of Trade has not arranged its business so that we could have discussed Part III as it ought to have been discussed; that is to say, giving us a chance of looking into the whole question of the possible amendment of the quota at this time instead of having to wait indefinitely to discuss it at some future period about which we have had no firm assurance whatsoever.

As the Bill stands, there is no need to have further legislation until 1968 and, knowing what the Parliamentary timetable is like, some of us are sceptical whether we shall have any further legislation before 1968.

Mr. Rankin

Not with a Tory Government. We must have a Labour Government.

Mrs. White

If we had a Labour Government we should do many things better.

We have a number of detailed criticisms to make of this Bill. We feel that we ought to have been given far more specific information and assurances on many of the points that I have raised and on many which will be raised by my hon. Friends. In general we give our support to it, but that support is, naturally, conditional on what happens in the forthcoming Budget. We are really being placed in the most extraordinary position of being asked to pass a Bill without any possibility of real assurance as to the financial basis which will make it viable.

I cannot for one moment pretend, and the President of the Board of Trade did not pretend, that this Bill could possibly stand without some adjustment of the Entertainments Duty. The whole business of the levy and of the duty has been inextricably interwoven from the very start. I have here the original Memorandum of Agreement of 29th June, 1950, and there it was put down quite specifically that the two things went together. So our welcome for this Bill is, as I say, conditional, but subject to what may be done in the Budget, and to its being adequate, we are glad to support the Bill. I hope that it will continue for the next ten years the policy of assisting the most valuable efforts of British film producers.

4.55 p.m.

Colonel Sir Leonard Ropner (Barkston Ash)

Over a period of nearly thirty years now, a party appointment has brought to me very many pleasant contacts with the film industry. But when the affairs of the industry have been discussed in this House I have not previously been called upon to proclaim an interest; indeed, I have had none. My present association with the Rank Organisation, however, necessitates conformity with the recognised practice of proclaiming a personal interest, and that I do.

The Cinematograph Films Act, 1938, together with the Cinematograph Films Act, 1948, comprise what I think is generally known as the quota law. As the hon. Lady the Member for Flint, East (Mrs. White) remarked quite rightly, in the light of experience obvious defects have become apparent in the quota law. Consequently, the Government in another place have given a definite and specific pledge that the Board of Trade will consult with the film industry this autumn and that thereafter—and I think that the pledge given was as soon as possible thereafter—amending legislation would be introduced.

I make these preliminary remarks to illustrate the fact that this Bill, the Second Reading of which we are considering this afternoon, does not attempt to deal with many of the problems which confront the film industry. Nevertheless, it is an important Bill. It deals with many important points which will affect over a period of ten years the comparative well-being of this important industry. It is an important industry not only for the men and women who are employed in it, not only for the 3 million men, women and children who go to the cinema every day of the week, but it is nationally and internationally important. I am sure that there is an element of truth in a statement made some years ago that the United States was a third-class Power until the invention of the cinema.

The Bill, as the President of the Board of Trade has pointed out this afternoon, is primarily designed to help the film production section of the industry, and I can say at once that it is welcomed by film producers. As the President of the Board of Trade also pointed out, the Bill seeks to encourage in three ways the production of British films. Firstly, under the provisions of Part I, producers will henceforth obtain financial support from the proceeds of a statutory levy; secondly, under Part II, the powers of the National Film Finance Corporation are extended for ten years; and, thirdly, under Part III, the film quota legislation is extended for a similar period.

I should like to make a few remarks about the three parts of the Bill, and, with the permission of the House, I will take thorn in the reverse order. At this stage I have very little to say about Part III of the Bill. I have already referred to the promise—and the hon. Lady the Member for Flint, East also referred to it—given by the Government in another place, that there willl be consultations with the industry and thereafter amendment of the 1948 Act. I think I should add that it is hoped that the amending legislation will not only be introduced but will become law before October, 1958, so that the new period may start after the existing unsatisfactory position has been rectified. That hope has been expressed by both producers and exhibitors, but, in due course, I think that my right hon. Friend the President of the Board of Trade may find somewhat divergent views expressed concerning what should be the exact definition of a British quota film.

I have even less to say about Part II of the Bill. This Part does not concern exhibitors. It is generally welcomed by the producers. Although it is welcomed by the producers, I think that the Producers' Association may have quite considerable amendments to suggest to it.

Now I come to Part I of the Bill. I feel sure that during the Committee stage the President of the Board of Trade will regard with sympathy all the Amendments which will be proffered with the object of improving its provisions. For instance, both producers and exhibitors attach great importance to direct representation on the British Film Fund Agency. That point also was referred to by the hon. Member for Flint, East. I suggest, with humility, to my right hon. Friend that during this and the further stages of the Bill he should remember that the industry can draw on an accumulated fund of experience gained in collecting and administering the Eady Levy. I feel sure that my right hon. Friend will be well advised to be receptive of advice given to him from all parts of the House during the passage of the Bill.

In one respect the Bill gives rise to a little apprehension. I am sorry to have to keep referring to the words of the hon. Member for Flint, East, but she has already said a great deal of what I wanted to emphasise. The hon. Lady was right when she said that, to a large extent, this is an enabling Bill. Powers are to be taken to issue Regulations which will have the force of law, but they are not capable of amendment when they come before the House. I hope that my right hon. Friend will not prove averse to ensuring that there is adequate consultation with the appropriate sections of the film industry before the Regulations are issued.

As I have already said, the Bill is welcomed by film producers, somewhat naturally perhaps, as during this year no less than 20 per cent. of the film producers' revenue has come from the British Film Production Fund. It is not surprising, therefore, that producers welcome the change from a voluntary levy to a statutory fund. But what about the exhibitors? What do they think about it all, for their view is important? They will play an important part in the collection of this statutory fund. It is the exhibitor who must find the money. The cash must come from box office receipts; and not only cash, but more cash.

Last year the Eady Levy collected about £2½ million. During the first year the Agency must collect £3¾ million, that is £ 1¼ million more than the voluntary levy is likely to collect this year. In the following year the Agency will have the power to compel, or try to compel, exhibitors to pay an amount of no less than £5 million, or double the sum being collected today. The question arises, will exhibitors be able to find the cash? I suggest that the answer is "No," unless a substantial reduction is made in the Entertainments Duty.

The incidence of this duty, levied as it is on gross receipts, is at present far too high. Owing largely, but not entirely, to the burden of Entertainments Duty, no fewer than 200 cinemas in the country closed their doors during last year. Of the total sum of about £40 million collected from all sources in the form of Entertainments Duty about £33 million was collected from the film industry. It is an astonishing fact—I am almost tempted to assert that it is a ridiculous fact—that of every £1 taken at the box office 6s. 5½d. goes in tax, and only 5½d. remains as the net return to the exhibitor. In the light of those figures I feel justified in repeating the question which I posed a few moments ago.

Mr. Harry Randall (Gateshead, West)

Would the hon. and gallant Member mind repeating those figures?

Sir L. Ropner

Certainly. Of every £1 taken at the box office, 6s. 5½d. goes in the form of Entertainments Duty, and out of each £1, on the average, the net return to the exhibitor is 5½d.

Mr. Beswick

The hon. and gallant Gentleman means after all expenses have been paid?

Sir L. Ropner

Yes, the net return. I said the net return. I think that the general meaning of that is after expenses have been met.

I was saying that in the light of those figures I feel justified in repeating the question I asked a few moments ago—what do exhibitors think about this Bill? In the first place, they want more films than they are able to get at present. Exhibitors want more good films, and exhibitors in this country want more good British films. To achieve this exhibitors are willingly prepared to help British producers, provided that it can be said in all fairness that they are in a position to do so. They will not be in that position unless there is a substantial reduction in the Entertainments Duty.

I suggest that during this Second Reading debate the Chancellor of the Exchequer should on this occasion anticipate his Budget statement. The whole world—at least, everybody in this country—knows that there is going to be a reduction in Entertainments Duty.

Mr. Rankin

Is there?

Sir L. Ropner

I am absolutely certain that that is so. The President of the Board of Trade has to all intents and purposes said so this afternoon. Why not give us, if not an accurate, at least a rough indication of by how much the duty is going to be reduced?

I think the hon. Lady the Member for Flint, East was perfectly right when she said that this debate and all subsequent debates on the Bill will have an air of unreality unless hon. Members know at the time when the discussion is taking place the extent to which the Entertainments Duty is going to be reduced.

The producer, as I have already proclaimed, will be pleased to receive the proceeds of this statutory levy. The least that the Government can do—and I suggest that they do it this afternoon is to tell the exhibitors by what amount they will be relieved of taxation so that they may be enabled to make the contribution which in the future the Government will compel them to make.

5.12 p.m.

Mr. Frank Beswick (Uxbridge)

Like the hon. and gallant Member for Barkston Ash (Sir L. Ropner), I, too, have an interest to declare in this industry, but it is not a commercial interest. It is simply that of an individual who likes to go to the cinema when he has a chance, and who has some conception of the potential value of the British film industry as a contributor not simply to the commercial standing of this country but to the development of taste and other values of our social life.

The other reason why I have tried to catch your eye, Mr. Deputy-Speaker, is that I believe that in my own constituency I probably have more men and women who make a living in the film industry than in any other constituency in the country.

There are one or two things which always strike me when I speak to those people in my constituency, and I speak now not so much of trade union organisers but of those whose job it is to work in the studios. First, they have an interest in the industry which is beyond that of the mere possibility of earning their bread and butter. Of course, they are interested in that, but in addition they have a very keen and lively interest in the contribution which their industry can make to the welfare of our country.

That interest is equalled, I think, by their uncertainty about the outlook in the industry. One thing which has bedeviled them during the years has been the lack of a stable basis for the film industry, and I am sure we all hope that this Bill will go some way, when it becomes law, to giving all of them greater confidence in the future of their industry.

Another fact which has impressed me when I have had an opportunity of talking to those people is that they have absolutely no confidence in the present Government's handling of the industry's affairs. I am not saying whether that is justified or not; it happens to be true. That is the impression that I get when I discuss these matters with them. I am bound to say that had they been here this afternoon and heard the President of the Board of Trade introduce this Bill, they would not have had their confidence re-established.

The President of the Board of Trade appeared to be most certain of the contents of the next Budget statement. He seemed to me to be quite definite that there was going to be something of value in it. But there were occasions when he appeared to suggest that he was not absolutely certain what was going on inside the film industry or what, indeed, were the implications of this Bill.

My hon. Friend the Member for Flint, East (Mrs. White) covered almost the whole of the ground that we have to consider when dealing with this Bill, and we are all grateful to her for the very comprehensive review which she has made. I hope that later on we shall get some answers to some of the questions which she posed.

There are one or two other points that I should like to underline. I jotted them down, though not in the sequence in which they appear in the Bill. First, I was greatly struck, as apparently was my hon. Friend, by the fact that the President of the Board of Trade paid no heed at all to the fundamental problems and difficulties of this film industry. He paid no regard to the problems which are created by the near-monopoly character of some sections of the industry. In particular, the producers are up against the fact that their customers in this country are limited practically, to all intents and commercial purposes, to two buyers. It is this feature of the set-up of the industry which worries those engaged on the production side of films.

How can we break down the problem which is created by this near-monopoly? Many people feel that the National Film Finance Corporation's responsibilities can be so widened that through the medium of that organisation we can break down this monopoly. I was greatly concerned at the fact that not only did the President give no indication of the sort of encouragement that he was prepared to give to the Film Finance Corporation to expand its responsibilities, but that the references he made to it rather suggested that he will be very happy indeed when the time comes for it to wind up. He was very gracious in his earlier references to the work that has been done by the Corporation, but then he went on very hurriedly to refer to the provisions for the dissolution of the Corporation and rather gave the impression that it would be possible for the Corporation to do its work so well that it would work itself out of a job. I hope that when the Parliamentary Secretary replies, he will counteract the impression which the President gave, no doubt unwittingly.

A lot of people, I have no doubt, will pay a tribute to the work of the Corporation, but I think we ought to go further than that. We ought to say that it has a value in this field of its own account. It is not an emergency ambulance measure any longer. If it is successful in financing film making, then, as a finance organisation, as a finance house, it has a value even though it has been set up by Parliament and has not sprung up in a City of London as a result of the homilies given earlier by one of the City friends of the President of the Board of Trade. I think it was Mr. Solly Joel to whom the right hon. Gentleman referred.

We should like to know whether the Government will encourage the Corporation in going beyond the sphere of financing film production. With its present interest in or responsibility for the British Lion Corporation, it now has studio and distribution facilities. There is an organisation through which the Finance Corporation could develop useful and necessary services beyond its more limited responsibilities. Could the Parliamentary Secretary say a few words about this? Would the Government be pleased to see the Corporation developing this work of distributing films and providing adequate studio facilities to film producers?

Further consideration must be given to the definition of British films for the purposes of quota and levy. The President skated over this problem rather quickly, and it would have been useful if he had discussed it a little. The one reference he made to it was to say that the levy was payable only for films made in the United Kingdom, but, of course, that is not in fact so. Indeed, it is very far from being the case. It is possible for a film to be made, but not in the United Kingdom, which does not employ any United Kingdom personnel at all, which could yet qualify for income from the fund. The hon. Member for Cheadle (Mr. Shepherd) seems to be surprised to hear this, but it is so in the case of a film made in any studio in British territory overseas.

Mr. William Shepherd (Cheadle)

In that case, yes.

Mr. Beswick

But the President emphasised that it was the United Kingdom. There is a very important point here. There is a difference between the United Kingdom in this context and a Dominion or a Colonial Territory. I am at one with those who would like to see the Commonwealth and Colonial Territories developing in all things with a common practice, but there is not a common practice here. For example, the Colonial Territory in which such a film might be made has no obligation under the quota system; it has no obligation under the old Act, the Cinematograph Films Act. 1948, and it will have no obligation under the present Bill to show any percentage of British films. Nor, indeed, does any film shown in that territory make any contribution to the fund; there is no percentage received by the fund from the showing of such a film in Colonial Territories. Yet, if the film is made there, by that very fact the Colonial Territory is entitled to draw out from the fund, if. of course, it exhibits in the United Kingdom. The Parliamentary Secretary takes my point, I think. There is here something which could usefully be looked at again.

I should next like to mention the proportion,or type, one might say, of genuine British personnel who work in a film which is accepted as a British film for these purposes. We may as well be frank about this. Far more frank things have been said about the United States in this House during recent weeks than I am going to say. I feel, therefore, that there is no reason why I should not say what is in my mind, and what I believe is in the minds of many other people, namely, that some of the United States productions shown on the cinema screens of this country do no good to anyone, neither to the reputation of the United States nor to the minds and morals of the British people who look at them.

What I wish to do is to keep out a lot of these American films. At the same time, we should encourage the production of really good and genuine British films to replace them. I really cannot understand the party opposite, which was prepared to ignore the United States and make a war in Suez, having as its battle-cry, "Independence of the United States", but which, when it comes to a really useful and constructive piece of work in the making of British films is afraid to say anything about the undoubted problem which is created by the size, influence and resources of the United States of America.

This is a challenge to us. We must face it. We must see to it that on our screens we have more good British films and less of this degrading trash which comes from studios in the United States. I make no apology for saying that. I am disappointed that the President of the Board of Trade, who made such an issue of British independence when it came to waging a war, has had nothing at all to say about the importance of British independence in this form of cultural activity. I hope that the Parliamentary Secretary will say something about the definition of British films. What are we thinking of? What do we really mean when we talk about a "British film" within the context of this Bill?

Some reference was made during the course of the President's speech to films shown on television. The President made a remark which I thought was a little strange; he said that the number of films made had advanced in recent years despite the challenge of television. The fact of the matter is that films shown on television and films shown on cinema screens are all films. They come from the same industry, they can be made by the same people and processed by the same technicians. It is in Our interest to promote the production of British films for showing on the television screens equally as it is in our interest to promote the production of films for showing on the cinema screens.

I did venture to interrupt the President when he was making his most interesting observations about the development of taste in this country. I agree with him that, taking the last fifty or one hundred years, no matter how we regard the social life of this country, there has been an improvement in taste. I speak now as the father of children. I do not myself look at the television set, but I have children who do, and I am surprised at some of the stuff they tell me they have seen on the television screen. There was a most extraordinary example, referred to in the correspondence columns of The Times the other day, of a film shown in the children's programme about the death penalty, about hanging people. This sort of thing is wrong, and it is something which, if we have any belief in cultural values and the development of a proper standard of taste, we ought to take into account when encouraging the production of films.

Has the President of the Board of Trade considered the possibility of so amending the Bill that the producer of a good British television film would have a claim from either this fund or, if it is administratively to be preferred, a separate fund contributed to in some way by exhibitors on the television network? I believe that it would be possible, and I regard it as something into which we should inquire very closely.

Moreover, on this subject of taste and showing the British way of life on screens overseas, I am told that there is a very big unsatisfied demand from, for example, the television network in Australia for British films, and I learn today with some interest that, despite all that the Government have done in the Middle East, there is a demand even today from the television company in Bagdad for British television films. We have not, however, got the right type of British television film to send to them.

This is most important. It does not matter to me whether, in the development of films, the emphasis is on television rather than on the cinema in the future; in either case it is important, and in either case it is going to be important in the formulation of the British character.

Mr. Swingler

Would my hon. Friend comment on this point? The actual flow of money into the fund which is available to be paid out to producers is based on a calculation of the attendances at cinemas. How could he apply that to television?

Mr. Beswick

It is an administrative point. If we accept the principle of what I am saying. I am sure that we can overcome the administrative problem. In fact, I suggested that it might be overcome by creating a separate fund to which exhibitors on the television screen might contribute and from which British producers might get a percentage.

The method of payment from the levy is bound up with what has just been said and on this point my hon. Friend the Member for Flint, East had some interesting observations to make and some relevant questions to put to the Parliamentary Secretary, to which I hope he will address himself. As my hon. Friend rightly said, payment to the producer is based upon box office takings. But of the complaints of producers is that it is possible to produce a first-rate British film which does not get a fair showing on the circuits because of the monopoly character of those circuits. I should like to see a method by which producers could be given some assurance that their production costs would be met if there was anything in the nature of a trade boycott against the exhibiting of their films by the big circuits.

I am aware of all the difficulties. Quite clearly, one cannot give any sort of guarantee to people who might produce only a poor film. It is, however, a problem to which we might devote attention. The Italians, I believe, considered the question and produced an organisation whose task it was to assess a film for quality. The Italian film thus received its subsidy based on a formula related to quality rather than to box office takings.

I recognise that it would be a difficult job for any body to be given the task of assessing the cultural merit of a film. Nevertheless, this is a problem which ought to be considered and I am very sorry that the President did not recognise that the existing apparently simple method of payment from the levy produces anomalies, some of which, at any rate, we should try to eliminate.

I should like to say a final word about the levy. The President of the Board of Trade said it was essential that the industry should have something to go on. He meant that producers must know with reasonable certainty what they would get back from the fund. The right hon. Gentleman proceeded, however, to say that all this was a matter of guesswork and of argument, and I agree with him. Under the system envisaged by the Bill in its present form, the producer has nothing whatever to go on as far as budgeting ahead is concerned. I am not at all certain that it would not be better for the Government to set aside a definite sum of money from entertainment tax receipts for the film producers, instead of starting at the beginning of the year with some kind of percentage which we can only guess will result in a certain sum of money at the end of the year.

Like my hon. Friend, I welcome the Bill, with all its faults. I only hope that as a result of Amendments it will be an improved Bill at the end of our deliberations, and since so much of its importance will depend upon the regulations, I hope that the Parliamentary Secretary will be able to assure us that they will be brought before the House before they are given the force of law.

5.35 p.m.

Mr. Arthur Tiley (Bradford, West)

I am glad to follow the hon. Member for Uxbridge (Mr. Beswick), and I shall declare the same interest in the debate that he has. The big-wigs have spoken at the Dispatch Boxes, the giant from Rank's has thundered and departed, and now we get an ordinary cinema-goer entering the debate. I hope that the House does not feel that we are in the double-feature class.

I was utterly devastated by the first few words of my right hon. Friend the President of the Board of Trade in introducing the Bill. A week or two ago, when I read the Bill for the first time, strangely enough I understood it. I felt that, after eighteen months in this House, at last I was learning to understand these Bills which are brought before us. To my horror, however, my right hon. Friend began his speech by saying that the Bill had been specially drafted in simple form. Apparently I have, after all, made no progress whatever.

After sitting for many weeks in Committee on the Rent Bill, it is a very nice feeling to sit in the House today during the Second Reading of a Bill to which both sides are bidding welcome. The Opposition will bemoan the fact that there is no Clause 9 in the Bill to win any of the outstanding by-elections. Indeed, in comparison with the Rent Bill, Clause 9 of this Bill is a poor and tawdry thing.

Both sides of the House welcome the Bill, because it will give stability and not merely promises. That is why the trade and industry are behind the Government and are not opposed to them and not losing confidence in them, as the hon. Member for Uxbridge suggested. I will not follow the hon. Member into his peregrinations on Suez, neither will I share in his crashing attack on the culture of our great allies in America. In the remarks made by the hon. Member, I found nothing that would be helpful in our friendship with America.

We welcome the Bill because it produces and gives stability to the future of this important industry. It is an industry of great variety of employment; I doubt whether any other of our industries contains such a variety of jobs. It is entertaining and educational, and it lends itself adequately to the portrayal overseas of the British way of life.

No one can doubt the need for the levy. We pay tribute to the work of the Opposition, who, when in office, introduced the voluntary levy, because it has created a healthy industry. We are producing better films, and the day has gone when people automatically went to the cinema on certain nights of the week.

It is rather strange that we in this House, in the quiet of the debate, should be dealing with this glamorous and world propaganda machine which is the film industry, especially as hon. Members, on both sides, are amongst the least frequent cinema attendees in the whole population. None of us ever has the time when in London to visit the cinema, and when we are in our constituencies we are so busy dealing with political problems that the recreation of this wonderful scientific entertainer and means of education is denied us. Of course, it is very proper that in the cool and calm of this debate we are assisted in giving a sane judgment on the Bill.

Because of competition and by the help of the voluntary levy, we have improved and are improving British films which have been and are being made, and that is a very good thing. Competition comes, too, from our increased educational facilities. Because of those increased educational facilities, which my right hon. Friend was so right to enunciate, through the spread of our educational system, children are being taught to lead fuller lives, and consequently the habit of going to the cinema automatically will die in the future. Therefore, there is need for this permanent buttress to stabilise the production of films.

Moreover, since the voluntary levy was introduced, more British films have been sent abroad. I hope the President will make sure that the collection and administration of this compulsory levy will not swallow too much of the income. We have already paid tribute to the work which has been done on an economic basis while the levy was voluntary. There is need for economy in the administration of the fund and of the Agency.

It was so refreshing, but frightening at the same time, to read the first lines of Clause 1 of the Bill, which say: …there shall be established, in accordance with the provisions of this Act, a body corporate to be called the British Film Fund Agency… It is a refreshing change from the boards. We have created boards for so many things, and boards are boards, but boards by any other name are just as dangerous unless a watchful eye is kept on their economy.

I wonder where the first sod is now being cut for the new building which will become the Agency' headquarters. I wonder how many staff there will be, how many cars, and how many trips abroad will be undertaken to inspect foreign film actresses. We shall unquestionably have staff and cars and pensions schemes and expenses.

There are to be three media to deal with the administration. There will be the Board of Trade, which has its part, and the Customs and Excise with its part, and there will be the new British Film Fund Agency to do its part. I hope—and I am being very serious about this—that the most watchful eye will be kept on this administrative machine, because now, when labour is such a scarce commodity, one wonders, with the creation of all these boards and so on, who, for instance, will drive the train and who will make the cloth.

Some of my correspondents in their letters infer that the levy is not Tory policy. I cannot see why. Who pays? Now I have the reply to the hon. Member for Newcastle-under-Lyme (Mr. Swingler), who called for a subsidy. Who pays? Not the Government. but the customer at the paybox; you, Sir, and I and all of us. We are all denying ourselves a little, making ourselves a little poorer, to provide the money which will be necessary to ensure full employment and a healthy industry to meet competition from abroad.

Mr. Swingler

I agree that the voluntary levy was not in the nature of a subsidy, but now the levy is to become a tax, and I cannot see any difference between the new statutory levy and Entertainments Duty. Indeed, there is no difference. It is still a tax for the purpose of sending money to the film producers. I do not see the difference between that and a straightforward subsidy found out of taxation.

Mr. Tiley

The main difference is, of course, that if it were a tax and a subsidy it would be merely a transfer of money by the Chancellor of the Exchequer. This levy is to be money which comes out of the hon. Member's pocket and mine at the paybox. All of us contribute. Moreover, we shall contribute according to the price we are prepared to pay for a seat. Like the hon. Lady the Member for Flint, East (Mrs. White), I have had many happy times in the ninepennies. I should have liked to have followed the hon. Lady today. It was such an attractive change from the ordinary course of Out debates to see the hon. Lady taking part in debate on this glamorous subject and being so technically perfect. Her speech was enjoyed by us all. It would have been a pleasure to have followed her to the pictures.

The reason for the Bill is not far to seek. It is our crippling taxation system. What a complicated economy we are building. The Government take £33 million from the exhibitors alone, and then we go to all this fuss and have to have three media, including one new one, to collect and to pay out money for an industry which needs from £3 million to £5 million to be kept in it—for what? For production.

It is a repetition of the same mistake made at present throughout the whole of our industrial economy, the mistake by which so much money is drawn by taxation out of industry as to kill the incentives to production within industry itself; so much so that industry—certainly this industry—can no longer fight its own battles, and the Bill is evidence of that.

I hope that when the Bill is in Committee—and all Bills are improved in Committee—we shall be able to ensure that we are fair to all those engaged in this industry. It was inferred in debate upon the Bill in another place that there were two units, two sides, and that we could not legislate to make one side pay money to another. That is not so. We are dealing with one major and large industry with three separate units and I hope that we shall be able to make the Bill a little fairer to all the three units.

For instance, Clause 2 provides for certain exemptions to be made. I was very glad to hear from my right hon. Friend that small cinemas which cannot possibly pay this levy will be exempted. There is another matter which arises from Clause 2 and which ought to be considered farther. Due to the actions of the combines, some of the films, for which all the cinemas will be contributing part of the levy, are not easily available to the independent exhibitors, the small men. I can see nothing in the Bill which would prevent a scaling of the levy through regulations to take into account the fact that the smaller, independent exhibitors are not in the same position as are the larger combines to obtain main issues of the best films.

We ought to look again at television. It will be a great pity if many of the smaller cinemas are to have to pay this levy to help the production of films which are shown on television, which obviously will keep people away from their own cinemas. Before the debate started I went to the Library and glanced through the Radio Times and I.T.V. News to see how many films are being shown this week on I.T.V. and the B.B.C. Television Service. I had not time to analyse the films, but I discovered that there are no fewer than 25 films to be shown this week on television. It is a tremendous number. We are not going to the cinema two and a half times a week. If we look in at our television sets we go 25 times a week. Some method ought to be found to make television pay its proportion of the cost of this great work of providing films. I am sure it is not beyond the bounds of possibility.

Mr. A. E. Hunter (Feltham)

The hon. Member should bear in mind that the B.B.C. and I.T.V. pay for the films they show. The film companies do not let them have them for nothing.

Mr. Tiley

Yes, I know. The hon. Member is very kind to be so helpful, but not so kind to think me so dull that I do not know that. I must be making a speech betraying bottomless ignorance if he felt it was necessary to make that intervention. Of course, cinemas pay for the films, too. They rent them. Perhaps the hon. Gentleman did not know that? In addition to renting the films, they are to pay this levy.

Another thing which strikes me about the Bill is that all the inspections and all the restrictions seem to be directed at the exhibitors. All the supervisions and the penalties are aimed at exhibitors only. Why cannot we in some way even out the burden of responsibility for making this Measure succeed? The producers are not even told to produce films, and we know from some of their past extravagance in production that they need to be supervised in some way. It was very encouraging to hear my right hon. Friend say what he did about the Budget and the influence that it may have on the Entertainments Duty. I think that he only said "may".

All of us, on both sides of the House, are upset by the plight of the small cinemas. We are told that about a couple of hundred will close in this twelve months. We know also that those that remain are shabby and need essential repairs for the comfort of their patrons. Those who engender enthusiasm for the maintenance of the live theatre in the West End ought to go to the provinces. One never hears the West End theatre mentioned in my city. Our people never see it. The only time that the city sees Olivier is when they see his name advertising a certain cigarette.

The giants of the West End theatre have only themselves to blame if we in the provinces protect or try to protect our cinemas in our villages rather than the West End theatre, because out in the wilds and in the suburbs we can reach for the stars with Bader, climb Everest with Hillary and Tensing, discover the South Pole with Scott and win the Battle of the River Plate with Harwood. These are all things which are denied to the provinces by the West End theatre.

When the Bill was read a Second time in another place, a noble Lord mentioned a hoarding in the centre of London which portrayed a very beautiful woman. He said that it was coarse and obscene. She is a lovely creature. We must cater, I know, for all tastes. One man's meat is another's poison. Some collect antiques and some collect pin-up girls. I would prefer to see Anita on a hoarding than an advertisement for inner cleanliness—for "a thing of beauty is a joy for ever".

Our life will be poorer if the action which we hope will be taken in the Budget in connection with the Entertainments Duty is not taken. Our life would be poorer and less colourful without all these cinemas in the provinces. As I have said already, it is fine to join in welcoming the Bill, away from all the bitterness of party strife. I hope that the House will give it a willing Second Reading and that we shall improve the Bill in Committee.

5.55 p.m.

Mr. John Rankin (Glasgow, Govan)

I hope that the President of the Board of Trade realises by now that he put the House in considerable difficulty this afternoon when he stated that the Chancellor will take note of the statutory levy. He went a little further, and told us that the way in which the Chancellor was bound to take note of the levy was by reducing the incident of Entertainments Duty. The right hon. Gentleman raised some queries in our minds when he gave a promise that there would be a reduction in tax. Did he mean that the reduction would compensate for the increased amount which was coming from the statutory levy, or did he mean that the decrease in tax would be more in accord with the amount that was presently being asked for by the exhibitors?

As we are being asked to give a Second Reading to a Bill the future of which, on the operational side, depends very largely indeed on what will be done about the Entertainments Duty, we hope for a little further elucidation of what the President of the Board of Trade said today before we part from the Bill. The right hon. Gentleman posed the question to the House, "Do we believe in the future of British films?" I think that on both sides of the House the answer would be an unqualified "Yes." If we consider the actors and actresses, born and trained in Britain, such as Stewart Granger, Jean Simmons, Audrey Hepburn, and Charles Laughton, and a whole host of other star artistes in Hollywood productions and other young actors and actresses at home, we see that we have the material among the men and women in the profession. When we look at films like "Sinbad," "The Cruel Sea" and "Richard III" we must realise that the work of our film-makers is second to none in the world.

We have the men and women, therefore, and we are producing the goods. Where does the handicap lie? It lies in the fact that in America, with a circuit of 20,000 cinemas and a weekly attendance of 70 million people, £10 million is taken away in the form of tax from the cinema industry, whereas in this country, with 4,500 cinemas and a weekly admission of about 20 million people, £33 million are taken from the industry every year by the Government. That is the real handicap to the progressive evolution of our cinema industry. Compared with America, our industry is most unfairly treated by the Government, who take from it more than three times the amount of tax that is taken from the industry in America and levy that tax on a cinema audience that is only one-third the size of the audience in America. From that point of view, I hope the Parliamentary Secretary will be able to add a little more to what the President gave us on the question of general cinema taxation.

The President is pleased with the amount that we are earning from the showing of our films in America, and so are we all, but I should like to know which circuits are showing our films. When we debated the cinema industry on a Motion of mine a year ago, my information was that British films were being banned by American circuits, and that was not then disputed. Now the President tells us that we are doing not so badly. Where? Is it in the small specialised theatres? Is it on the American television circuits? We know that "Richard III" had a lucrative booking there. Is that where we are earning the £1 million? I imagine that that is the source. If that is so, it should be made clear by the Government that the £1 million to which the President referred is being earned not in the American cinema circuits but in the specialised art theatres and on American television.

I support the view which has been expressed by some of my hon. Friends about the National Film Finance Corporation. I deplore the happy sort of way in which the President of the Board of Trade seems to look forward to the demise at some future date of the Corporation. I am sure that he will meet very strong resistance from this side of the House, and, judging by some of the speeches made by hon. Members opposite, I imagine that we can hope for support from there for the retention of the Corporation. I want the powers of the Corporation not to be restricted or abolished, but to be expanded, because I feel that there is a great opportunity in this country for the creation of another circuit under public ownership which will act as a stimulus to the two great circuits, Rank and Associated British Cinemas, which now exist.

When the President referred to the need for the film industry to be on the side of revolutions in taste and culture, I sought to intervene to put a point to him. Not only is there an improvement in taste and culture, not only are public standards rising—we should encourage that—but the technique of film showing is changing. I wanted to ask the President whether he will lend the weight of his authority to the revolution which is now taking place. Will he do what he can to assist the introduction of Cinemascope and Cinerama? People are demanding these things, just as they are demanding a high level of film entertainment.

However, the introduction of Cinema-scope into a cinema demands a capital outlay of £5,000 or £6,000, and thus it is ruled out for many of the types of cinema which have been mentioned. The Cinerama installation in a cinema means a capital outlay of £62,000.

Mr. H. Lever

Thank goodness. I wish it were more.

Mr. Rankin

I completely disagree with my hon. Friend, and so do the general public. One London cinema which introduced Cinerama found there was a great response which indicated that the public wanted it. Not many cinemas can afford a capital outlay of £62,000 to introduce such a system, but the Government can help cinemas to develop, not merely along the lines that the President indicated but along the lines of having better and more up to date techniques, by taking less in taxation from the industry.

As has been said, the Bill is a peculiar mixture. Clause 1 is so simple that it does very little, and that is probably why some hon. Members have found it so easy to understand. It does nothing, in fact, and we have to wait for a Statutory Instrument before it can operate. Clause 2 also depends upon the operation of a Statutory Instrument. Clause 3 becomes alive only when a Statutory Instrument comes into effect. Also, it is tied up with Clause 8 so that Clause 8 seems to be indirectly dependent on the Statutory Instrument. Clause 12 will begin to operate only when the Government introduce Regulations which bestow the required power. Consequently, a quarter of the Bill deals with matters which are subject to Regulations, the terms of which we do not know and which we must accept or reject as a whole when they come before us.

I want briefly to examine the way in which the Entertainments Duty and the voluntary levy came to be married. Whether or not it has been a happy marriage is a matter for debate. The voluntary levy was introduced on 16th June, 1950, and as a result of that the Entertainments Duty was reduced by ½d. on all seats up to 1s. 6d. at a cost to the Treasury of £1,650,000 in a full year.

Prices of the 1s. 9d., the 2s. 3d. and the 2s. 9d. seats were raised by 1d. in each case and Entertainments Duty increased at the same time by ½d. on each of those prices. From that increase the Treasury gained £1,350,000. So, as a result of both proposals, the Treasury lost £300,000 in a full year and it was anticipated that in a full year the exhibitors would benefit to the extent of £3 million. Out of the ½d. that exhibitors gained, ¾d. per seat sold, at prices exceeding 3d., had to go to the British Film Production Fund. So from the beginning the tax and the levy were allied.

A week later, Sir Wilfred Eady confirmed that view when he told an exhibitors' delegation that "levy and tax were the shape of things to come". It was clear from that that unless the levy was accepted, there would be no tax concession. Speaking in the House at that time, my right hon. Friend the Member for Huyton (Mr. H. Wilson) paid tribute to the attitude of the exhibitors in these words: …I am certain that what they are doing to help the British film production of this country will, in the long term, redound to their own benefit as well as to that of film production."—[OFFICIAL REPORT, 29th June, 1950: Vol. 476, c. 2500.] I ask the Minister tonight whether he accepts that view, stated when the voluntary levy came into operation. If he does not, will he say so?

What are the bare facts of the situation today? What was the reward of the exhibiting side for its attitude which was so highly commended? During 1956, 225 cinemas were closed and now the A.B.C. circuit is threatening to close some of its cinemas, I believe 30, and the Rank Organisation is also doing the same. If the big circuits cannot keep their halls open, what chance has the small independent exhibitor? Is this the reward that the cinema industry is getting for its devotion to the public interest which far transcended any considerations of finance or short-term views?

What is to be done to help the exhibiting side and, therefore, the producing side? It is said by some that we are seeking not merely to help exhibitors and producers, but to save them. My first suggestion is that the levy should be paid out of what is taken in Entertainments Duty. The Government are already taking enough from the industry. Let the Government collect the Entertainments Duty and then pay the producer out of that tax the amount which will be collected by the statutory levy.

The Minister says that that is a subsidy and that we cannot have a subsidy for this industry. In another place we were told that the public would give an old-fashioned look at a subsidy for film production, but, of course, the public pays a subsidy, because every time a person occupies a 1s. 6d. seat, he pays ½d. of his admission price to the producer. If there would be an old-fashioned look if a subsidy, as the Minister calls it, were given to film producers, then my view, substantiated by that of a noble Lord in another place, is that it is completely wrong to force one trade by law to pay a tax to another; and that is what we are now doing. The Minister will remember that the acceptance of the voluntary levy was conditional on the promise given by Sir William Eady to the exhibitors that levy and tax would go together. That was the shape of things to come.

My alternative suggestion is one with which the Minister is perhaps familiar. It is that on all seats there should be 1s. free of tax, the balance being divided, so that 33⅓ per cent. is payable as tax and levy, which, according to the promise given in 1950, go together. That would mean that 66⅔ would go to the industry. Thus, if a person paid 1s. 9d. for admission, 1s. would be free of tax, 3d. would go for tax and levy, and 6d. would go to the industry. The 3d. could be apportioned much as it is now, 2¼d. going to the Chancellor, and ¾d. going to the Eady fund.

If the Government agreed to that, they would do three things. They would, first, honour the promise made by Sir Wilfred Eady on behalf of the Government of the day, that the levy and tax would go together; secondly, they would avoid the mention of subsidy and the possible infringement of G.A.T.T., which I believe is one of the drawbacks to paying the levy out of the Entertainments Duty; and, thirdly, they would give an enormous boost to the small exhibitor and to the cinema industry generally.

I am sure that the Minister already realises that it is quite clear that the exhibiting side cannot provide more than it now provides for the Eady fund, because attendances are diminishing, and yet that is what is being asked of it. If by law it is to be forced to do that, then there must be a considerable reduction in Entertainments Duty, or a collapse in an industry of high social and cultural value and with an important use as a means of communication between Government and people.

I know that hon. Members in all parts of the House want to speak in the debate, and I do not want to say any more at the moment. Later, we shall have an opportunity in Committee to talk about the quota, about which I should have liked to say something, and about the Anglo-American film agreement, to which reference has been made and which calls for amendment to help the production of British films. The quality of some American films has been referred to, and there is no doubt that through the Anglo-American agreement we could control the kind of films which come in from America. If we did that it would give an impetus to our efforts to help the production of better quality British films. I hope that we shall have a chance of developing some of these points in Committee.

I agree generally with the purposes of the Bill, and trust that it will help both the production and exhibiting side of the industry. I am certain, however, that if that end is to be achieved considerable alterations will require to be made in Committee. I hope that the Minister is observing that that has been said by hon. Members not only on this side of the House but also on his, and that, as a result of this part of the consideration of the Bill, he will attune his mind to the thought that if the Bill is to be as helpful to the industry generally as I am sure he wants it to be Amendments will have to be made. I hope that he will co-operate in this endeavour in Committee.

6.21 p.m.

Mr. John Howard (Southampton, Test)

Enough has already been said to show that the production side of the film industry needs support. The Bill is founded upon that assumption; indeed, it is quite apparent that British films could not be produced unless means were available of financing them. The exhibiting side obviously needs the product to fill its screens, and if it is not assured of a supply of British films it will have considerable difficulty in putting on a programme for each week of the year. It is also important from the national viewpoint to ensure that British films are shown throughout the world so that the rest of the world may have an opportunity of seeing the British way of life and of appreciating our outlook.

The Bill is realistic in that it recognises that without financial aid we shall have to wave goodbye to the British film production industry. Having recognised that fact, we must obviously find ways and means of supporting the industry satisfactorily. Very wisely my right hon. Friend has decided to continue with three tested and proved props upon which film production rests at the moment. Each of these props has a part of the Bill devoted to an exposition of its rôle.

The first prop is the film levy, which is taken from the exihibitor and paid to the producer. The second prop is the finance over and above the levy—that which is necessary before a film can be begun. That is provided by the National Film Finance Corporation. Thirdly, we have the quota system, which ensures that there is a place for British films on our screens. I believe that many exhibitors have difficulty in meeting their quota requirements and are excused from doing so because of the insufficient supply of British films.

Although the Bill may be thought to be concerned primarily with the film producer, who is on the receiving end, it is also of very considerable concern to the exhibitor, on the paying end. In the past, the exhibitor has recognised the importance of sustaining the production side of the industry by accepting a voluntary levy, about which the hon. Member for Govan (Mr. Rankin) spoke at some length. The exhibitor also recognised that it was necessary to translate the voluntary levy into a statutory levy and, as we will see from the Bill, the period envisaged for this levy is ten years.

The cinema proprietor is the man who projects the glamour from the film studios—about which my hon. Friend the Member for Bradford, West (Mr. Tiley) spoke in his amusing contribution to the debate—and, at the same time, collects from the general public the price of admission, which includes the levy. Since the exhibitor has to provide the means of keeping the production end of the industry alive it is very important that we should bear in mind his ability to pay. My right hon. Friend the President of the Board of Trade referred to the chicken and the egg. The exhibitor has been called the goose which laid the golden egg.

In fact, it is true to say that the exihibitor lays four eggs. His first egg contains Entertainments Duty; his second, the film levy; his third, film hire, which goes to the distributor and producer; and, finally—a very small egg—there is a little profit for himself. My hon. and gallant Friend the Member for Barkston Ash (Sir L. Ropner) is no longer in his place, but I noticed that when he referred to a profit of 5½d. accruing to the exhibitor from each £1 paid at the box office he omitted to add that not only the profit but also depreciation and rent has to be met out of that very small sum.

Not all these geese are continuing to lay their eggs. The exertion of laying the first three has been too much for about 179 geese in the past year, these being represented by cinemas which have closed. The problem of closures is a serious one. With each closure the cinema concerned provides no further eggs for the Chancellor in the shape of Entertainments Duty; the producer loses his film levy, and he and the distributor together lose their share of the film hire.

It has been said that the closure of certain cinemas will allow the remaining cinemas to build up their attendances, the theory being that the patrons of the closed cinemas will move either into the centre of towns or across the street to the cinemas which remain in operation. I have been told reliably by the trade itself, that that is not so. The patrons of the closed cinemas tend to stay at home and watch television, or reserve their visits to the cinema for particularly good films, when they feel that it is worth while making a short journey to see them.

There is one further point that I should like to make about closures, since it is important to avoid jumping to the conclusion that they are all the result of the burden of Entertainments Duty. The shortage of product is a factor. If there are not sufficient good films to go round, the cinema which is missed out when the better feature films are distributed has less chance of remaining in business, because it cannot attract the patrons. At the same time, the influence of television on closures is a most important factor. Together, these factors have been too much for those cinemas which, hitherto, have been existing on a precariously small margin, and they have been forced to go out of business. They are a reminder to most of us in our constituencies of a former exhibitor who is no longer serving the public.

I hope that I have said sufficient on this point to prove that the ability to pay exists, but only if the size of one of the "eggs", the Entertainments Duty, is reduced. Many hon. Members are indebted to the All-Industry Tax Committee of the film trade which has produced a report showing convincingly the present financial position of the industry. From that report I see that 25 per cent. of the cinemas still open are operating at a loss, and that is an indication of the shape of things to come. Those exhibitors are hanging on, presumably in the hope that circumstances will change and enable them to get out of the "red" and earn a little profit.

Having dealt with the ability to pay on the part of the exhibitors, we must examine the reliance which the producer places on the receipts from the film levy. We have accepted today as a fact that the film production industry must be kept in being but so far, no figures have been quoted to demonstrate that point. We must bear in mind that the British market is only about 15 per cent. of the world market and, therefore, a British film which has a limited appeal, possibly only to the British public, has considerable difficulty in covering its cost.

Going back to the All-Industry Tax Committee's report, I will quote from a sample taken of 159 films which were completed and distributed over a period of two-and-a-quarter years ending on 30th June, 1956. Incidentally, they are all feature films. The 75 per cent. sample reveals a loss of about £4¾ million during that time. The time factor is important. There was a loss of £4¾ million in two-and-a-quarter years. The annual equivalent with which we are concerned when looking at the level of the film levy is £2,800,000. The average receipts, or estimated receipts from the levy, would be £2,200,000 and, therefore, the loss on feature films taken as a whole for one year is about £600,000.

As we have been reminded this afternoon, feature films are not the whole story. There are also short films. They receive support from the distribution of films levy, but notwithstanding this, they too show a deficiency. Adding the results of the short films to the feature films, it is seen that the annual loss is about £3,350,000. The levy, so far, contributes, or is estimated to contribute, £2,600,000, leaving an overall loss of £750,000. It is fair to say that on the basis of this report £3,350,000 would be required to enable the industry to continue without profit and to maintain the present rate of production. This, I think, squares up fairly well with the figure of £3¾ million as the level of the levy for the first year in which it is to operate.

The report goes on to refer to a return of 25 per cent. as profit to the producer and, therefore, makes an overall demand for something over £5 million. Although I have quoted liberally from the report, I cannot follow it that far; because I feel that an industry which has to rely on the exhibitor or retailer for support can hardly expect, when receiving an allowance from the retailer, to increase that allowance to a figure which would permit the producer to make a fairly substantial profit.

A good deal has been said today about the limits placed on the levy, the lower limit of £2 million and the upper limit of £5 million. There are various points to be borne in mind in this connection. As has been said frequently, the Bill is government by regulation. I hope that we shall hear today whether the general pattern, established during the years, when the voluntary levy has been in existence, for the collection of the levy and its subsequent disposal to the producers, will still be followed, or whether the President of the Board of Trade intends to introduce any innovation. Since so much is dealt with by regulation, it seems odd to me that these two limits are included in the Bill. I should have thought it a simple matter to introduce a figure, either annually or for a period, by regulation.

The higher figure of £5 million may easily be too low. If film production goes up enormously, and a large number of films are produced, the limit of £5 million might well mean that each producer would receive insufficient to enable him to cover his expenses. On the other hand, the £2 million figure may be too high. If production contracts, so that there are relatively only a few films produced, obviously, when the £2 million is shared out, each producer may receive a sum considerably in excess of the amount he needs to balance his production account.

There is a further tempting possibility in saying that the lower limit of £2 million is too high. We have discussed the Entertainments Duty during this debate. If do not want to draw any conclusions, but it is a fact that if the duty should be abolished altogether, the film hire, which at present is 4s. 7½d. in each £1 taken at the box office, would rise to 6s. 8d. in every £1. Therefore, the distributor, the renter and the producer would together receive another 2s. from each £1 paid over at the box office. Using, again, the figures quoted in the report, and an overall gross take of over £100 million at the box office, the producer and distributor would be able to reach a maximum additional income of £10 million.

I do not propose to refer to the remaining parts of the Bill, but I wish to say something about the National Film Finance Corporation, since it has been under fire today. In its early stages the film industry had a very unhappy and chequered career and found it impossible to raise finance through the normal channels. In consequence, this finance agency was set up to provide the money. The industry has progressed quite a long way since then. Reference has been made to its greater sense of accountability and to budgetary control, all designed to eliminate the loose budgeting which led to very serious losses in the years before the levy and the Film Finance Corporation came into existence.

The point of time has now been reached—this is acknowledged in the Bill—when the Film Finance Corporation should not be encouraged to lend money to those in the film industry who are unable to find finance elsewhere but to lend—and this is provided in the Bill—to those who are able to deal with films which are commercially successful; in other words, it should advance money only to those with a reasonable record, or to those who are putting up a commercially feasible proposition. In the National Film Finance Corporation we are dealing with public funds. I believe that there is a floating debt of about £6 million, so there is obviously an obligation to take care.

Hon. Gentlemen opposite have spoken of the possible not liquidation but transfer of the National Film Finance Corporation to other hands. I cannot share their alarm, because the industry, if it goes ahead, will be geared to the levy. There will be a production programme and, with assured finances which will be geared to the programme, we obviously must come to the point where the National Film Finance Corporation may no longer serve a useful purpose and finance will be available through the usual channels.

Perhaps I detected in the alarm expressed at the possible demise of the Corporation an anxiety to nationalise part of the film industry. We heard this afternoon about the difficulties of the distribution, and the suggestion was made that it might be necessary to use the Corporation not only as a finance house but as a film renter and distributor. It is possible that the reason for the alarm is that the Bill may put out of reach a tempting vehicle for nationalisation within the industry.

On the quota side, in Part III, a good deal has been said, notably on the definition of British films and, therefore, I shall not press the point any further. The Bill, by and large, enables the production side of the industry to plan ahead and, with the rest of the trade it has shown considerable ability in presenting its case by means of a thorough investigation into the finances of the industry. I hope that we shall see, once the film levy has been put on a statutory basis, that the trade will conduct a further examination to see whether it can overhaul the production side of the industry further, whether the stars and directors can operate on a profit-sharing basis more generally than is done now, and whether the industry can get together with the trade unions to see whether there are not a number of restrictive practices which add to the cost of films and which can usefully be eliminated.

One further and personal point relates to the Clause dealing with the audit of the British Film Producers' Agency. I am much obliged to my right hon. Friend anti to the Board of Trade for introducing a Clause which deals with the audit and bringing the conditions for the appointment of auditors into line with those existing in other Acts of Parliament, and, in particular, adopting the qualifications that are contained in the Companies Act. In making that statement, Mr. Speaker, I must declare an interest. As a member of the Institute of Chartered Accountants, I am, naturally, pleased to see that this practice has been creeping into many Acts of Parliament, and has been followed here.

That concludes my remarks on the Bill which I support because I think it is good in that it gives statutory effect to a very effective voluntary arrangement. I am sure that the House will give the Bill a Second Reading.

6.45 p.m.

Mr. Stephen Swingler (Newcastle-under-Lyme)

The Bill has been generally welcomed because hon. Members are thankful for small mercies. I feel bound to sound a somewhat discordant note as loudly as I can.

I believe strongly that the form of the Bill shows the validity of the demand for an independent inquiry into the industry which some of us made on 10th February, 1956. This would have been a better Bill, and some trouble that is likely to occur would have been avoided, if such an inquiry had been carried out.

We asked for a general and public inquiry into the state of the film industry and the cinema trade, but the Government chose, instead, to have a secret investigation. I know that the present President of the Board of Trade has no responsibility for that matter at all, but the Government were entirely wrong. The right hon. Gentleman's predecessor chose to make the National Film Finance Corporation a vehicle for confidential inquiries within the trade about its views on the future of legislation on the film industry.

An extremely interesting questionnaire was circulated by the N.F.F.C. last year to all sections of the industry and trade. Some sections, including the trade unions, produced a document, and published their views and recommendations. Other sections did not. The main point was that the right hon. Gentleman's predecessor refused to publish the report of the National Film Finance Corporation on the views of the trade and its recommendations to him about future legislation.

That was a grave error on the part of the Board of Trade. This debate would have been more informative, to say the least, if that report had been published. I still see no reason why it should not be published. We are now confronted with a Bill in which the quota system is reproduced unamended, the powers of the N.F.F.C. are reproduced unamended—with one exception—and the levy is made statutory. We are in very great danger of falling into the complacent acceptance of a number of expedients which have grown up haphazardly in the film industry over twenty or thirty years. It is high time that some of the assumptions on which these expedients have been based were questioned, and they cannot be adequately questioned without an independent commission of inquiry into the matter.

I believe that the basic point is this. Here we are, in 1957, after a long period of experience of many of these expedients, and still over 70 per cent. of the films shown at our cinemas are foreign films. I wonder what would be said if over 70 per cent. of the newspapers of this country were foreign newspapers, or if over 70 per cent. of our radio material was of foreign origin, or if over 70 per cent. of the creations in our theatres were of foreign origin?

I am in no way a zenophobe. I believe that the British public is entitled to all the best productions from all the countries of the world. Of course, we want to see all the best film productions of the United States in the British cinema. But here is a case where the President of the Board of Trade could adopt a little of that patriotism about which the Minister of Education was talking the other day, or, at any rate, something of the spirit of national independence to which my hon. Friend the Member for Govan (Mr. Rankin) referred.

I believe that this is still a very serious matter, because less than one-third of the films shown in our cinemas are British films, and a long experience of the quota has produced no better result. There is a second point. There is a state of what I imagine that the Economist would call oligopoly in the cinema trade. We cannot exactly call it a monopoly, but we might very nearly call it a "duopoly." It is a state of affairs which everybody knows restricts very much the markets for British pictures, and it has made the lives of some independent British producers very difficult, because of the lack of choice of distributors and exhibitors to whom they can go.

This state of what is generally called monopoly in the ownership of cinemas, combined with the load of tax imposed by the State, is responsible for the present squeeze-out of small exhibitors and small producers. Again, there is a constant and persistent tendency, and it has been so in the whole history of the cinema industry towards squeezing out the small man both in the production and exhibition sides, which means squeezing out the independents. I think that this House must make itself primarily responsible for maintaining the position of those who are independent—the men who own cinemas in the back streets, the man who runs an art cinema to provide some sections of the British public with French and other continental films, and, on the production side, the small producer who has been responsible for many of the very best products of the British film industry in its history.

Now we are asked to impose, in addition to Entertainments Duty, another flat rate and ungraduated tax for the purpose of injecting what I know is a much needed financial stimulus into film production, and I want to examine some aspects of that proposal. The President of the Board of Trade brings forward quite complacently a repetition or continuance of the quota system—this unenforceable quota with an average failure among exhibitors of between 500 and 1,000 a year. Are we really fully satisfield with the quota, or with passing it again into law in an unamended form? Certainly, very many sections of the trade, and some sections which the Minister has failed to consult, are far from satisfied with merely repeating the mistakes of the past.

I should like to echo what has been said by my hon. Friend the Member for Uxbridge (Mr. Beswick). Are we satisfied with the definition of British, which permits films to qualify both for the quota and for the levy which are produced by companies wholly financed by foreign interests, the ownership of the foreign rights of which have been wholly sold out of the United Kingdom, and the leading parts in which are played by foreigners? Was it for such films that the quota system was devised, or was the idea of this levy that it should be a subsidy towards such productions? These are some of the discontents that I would like to voice about the system, but the particular one I want to talk about is one which I have articulated before and I repeat again, and which connects very closely with my criticism of the statutory levy.

The fundamental problem is that of providing a financial incentive to show British films. The quota system, like the subsidy system or the payment of subsidies to producers out of the British Film Production Fund, are indiscriminate and generalised ways of trying to promote the success of the industry. The best way to promote the exhibition of British films and to encourage the production of such films would be the offering of a financial incentive to show British films.

It is, of course, the financial difficulty of film production in this country, compared with Hollywood, and the financial difficulties of exhibitors in this country compared with the position of exhibitors in the American market, because the Americans earn their profits in the American market before their films come over here—it is this financial insecurity that has to be remedied by our legislation, and it does not matter whether we call it a State subsidy or not.

What we are doing is quite plain. We are legislating to try to equalise conditions, which cannot otherwise be equalised, between British film producers and American film producers and between British and American exhibitors, and the best of all ways which could be adopted would be to take the Italian system. The best way of all, together with the quota for the exhibition of British films, would be the introduction of a system of tax relief for the exhibition of British films which would give a greater financial return to the exhibitor and producer and would provide a stimulus both for the production and exhibition of British films.

Of course, I shall be told at once that that would be contrary to G.A.T.T., and that a State subsidy is contrary to G.A.T.T. Let us be perfectly clear about what is being done here. We are making this formerly voluntary levy on exhibitors into a statutory one. This is, of course, a State subsidy, and we may as well be frank about it. This statutory levy is another tax on the cinema exhibitors in addition to the Entertainments Duty. We might just as well carve out a portion of the receipts from the duty and say, "Let us pay that fraction of the Entertainments Duty into a fund, and we will pay the film producers out of it." The whole thing might just as well be administered by the Board of Trade, although I appreciate the reason why it is not so. It is done because of international agreements, but it is high time that the Government said something about these international agreements. I feel very strongly that we have to face it from year to year, and it is now time that the Government raised this question with the other signatories of G.A.T.T.

Her Majesty's Government have stood out for certain exceptions to the General Agreement on Tariffs and Trade, and the British film industry has a very strong case for exceptional treatment in this respect—an overwhelming case for subsidies, because it is impossible for it to exist unless it receives some State support and encouragement. That support and encouragement should take the form of a financial subsidy from the State or the form of a discriminatory tax relief.

The question of making the voluntary levy into a statutory one, raised in this Bill, brings us straight up against that problem. I agree that when this was a matter of agreement within the film industry and the trade it was not a subsidy from the State and there was no State sanction behind it, but now there are powerful reasons why it should be altered. There is a restrictive element in this which limits the amount of encouragement being given to British film production. The snag, as I see it, is that the Eady Levy in the period up to now has been based on the quantity of cinema attendances as a whole and there is only a given amount of money that comes into the Fund each year. That, of course, will be true of the compulsory levy. That amount is distributed to British film producers on the basis of their receipts at the box office, the relative amount of commercial success they have.

It is obvious that if there is a tremendous expansion of British film production each producer will draw a smaller quantity out of the fund. After British film production has passed a certain point obviously there are diminishing returns from the fund. That is not a thing we wish to encourage. We do not wish to encourage collusion among British film producers to restrict the number of films produced in order that each may be relatively more successful at the box office and get a greater return out of the fund. I believe, therefore, that a subsidy payable out of Entertainments Duty receipts might be operated more flexibly than the proposed statutory levy and could be a more powerful stimulus to expanding production.

I also agree very strongly with my hon. Friend the Member for Uxbridge that payments of the subsidy should not merely be for commercial success. That is the principal test. It is a strictly calculable figure. Producers are paid in accordance with the way in which the cinema-going public receives their films as attested by attendances at the cinemas. But I also believe that the time has come when we should introduce some merit awards for British film culture. If the Italians can do it, and establish a general representative committee prepared to judge on the basis of artistic or social merit films produced each year, I cannot see why that is not possible in this country.

This would encourage small, independent film producers to produce films of high artistic and cultural value and they could receive a portion of the amounts from the fund. The Italians have what I regard as a very progressive system. A small percentage is paid out of taxation, but it is an important amount, set aside for the promotion of film culture. We should do well to consider the establishment of a similar system.

Many times I have raised in the House the question of the difficulties of the quota system. I support the idea that there must be some form of quota to enforce the exhibition of British films in British cinemas; but the quota system is a very blunt weapon. At any given time any quota we fix is too high for the small cinemas and too low for the circuits. That is undoubtedly true about the present quota. Naturally, the small, independent cinemas complain violently against the quota, and, naturally, a large number of exemptions have always had to be granted under the quota system because so much depends on the actual area of competition, in a big town, in the countryside, or anywhere else. I am sure that the quota system, unless combined with some financial incentive in the form of discriminatory tax relief to promote the production of British pictures, is not a system which gets us very far.

On the subject of the National Film Finance Corporation, I agree very strongly with some of my hon. Friends who oppose the Clause which will permit the selling out of some of the assets of the Corporation. For as long ahead as I can see, the N.F.F.C. will be required to promote and extend the production of British films. The trouble with the N.F.F.C. is that its powers are too limited. It cannot do the job it was established to do unless it has powers of distribution and exhibition.

Such is the vertical integration that has already taken place in the cinema industry from producer to distributor to exhibitor that unless the National Film Finance Corporation can create a guaranteed market it will not do a fully effective job. Therefore, I hope that we can amend the Bill to allow this public enterprise, which has been very important in keeping British film production going in the last few years, to be further extended, because this is an industry in which public enterprise is very urgently needed.

The potentialities for the British film industry are great. The trouble so far has been that the attitudes of Governments have reeked of complacency about the industry. We are satisfied with far too little. I thought that the speech of the President of the Board of Trade, who, obviously, has not had much opportunity to get to know the facts about this trade—he will learn a lot about cinemas as he goes along—went overboard with complacency about the industry. One would never have gathered from his speech that we were talking about an industry which can produce only one-third of the products for its customers, those who go to the cinemas.

In all respects we ought to raise our sights. If we raised our sights and gave greater promotion to the film trade instead of less, we would certainly find a great deal of talent to develop.

7.8 p.m.

Mr. William Shepherd (Cheadle)

I do not want to follow the hon. Member for Newcastle-under-Lyme (Mr. Swingler) in all his remarks, but I should remind him and other hon. Members who have spoken that the cinema industry exists to provide entertainment. Some of us who talk a lot about it should be mindful of that. From some of the speeches one would have thought that that would be considered to be the last purpose of the industry.

My right hon. Friend the President of the Board of Trade strayed into the realms of culture. Frankly, I am suspicious when I hear that kind of talk. I must reiterate that the prime objective of the cinema industry is entertainment. If it succeeds in entertaining the public it will get them into the cinemas; if not, they stay outside. The hon. Member also said that we should have a public inquiry. I reject the idea of a public inquiry into the cinema industry as I did, on Friday, a public inquiry into the motor car industry. We have already had two very good inquiries into this industry, which resulted in the Gater and the Plant Reports, and there is no justification whatsoever for any further probing into the facts surrounding this particular activity.

I welcomed the presence of the hon. Lady the Member for Flint, East (Mrs. White) at the Dispatch Box—for, I think, the first time. She gave us a most agreeable speech. Only with one point did I disagree with her rather violently, and that was when she advocated more assistance for second feature films. For myself, I think that the best thing to do with second feature films is to kill them off altogether. They do not have an attraction for a great number of patrons, and secondly, they do not—and here I cross swords with the hon. Lady—provide a useful training ground, except for technicians.

I think that they show the producer, and even the cameraman, the director and the artiste, how not to do the job. It is very much better that we should train our people in conjunction with producers, directors, cameramen and actors who know their job, and are doing it well, than with those who are succeeding only in doing the job very badly indeed. I hope to see, by pressure of economics, the elimination of second feature films.

I welcome the Bill in general, although I realise that the trade has not agreed on it in general; but then, I do not think that this particular trade would agree on much except, perhaps, the total abolition of all forms of Entertainments Duty. Apart from that, I believe that there is a good deal of discontent and dissatisfaction in the trade. On balance, I think that the Government's decision is the right one, and I support even Part III, and not, as the hon. Lady appeared to do, Parts I and II only.

I recognise, as have other hon. Members, that we are in some difficulty in making a proper assessment of the Bill's value and the equity of its proposals when we have not the advantage of hearing my right hon. Friend the Chancellor of the Exchequer's Budget in advance. Today, we have been shown a tempting glimpse—an unusual glimpse, I think—of the Budget, and I do not condemn my right hon. Friend for that as some hon. Members opposite did. It was necessary to assure the exhibitors that, in making the sacrifices inherent in this Bill, they will not be overlooked a month or so ahead when there is some reorientation of Entertainments Duty.

There is no doubt that this industry suffers from having too great an overall burden of Entertainments Duty, and it cannot go on. If he wants to maintain the duty, my right hon. Friend will have to look to other fields of entertainment which are, to some extent, superseding the cinema in the approval of the populace. What I say in support of the Bill is dependent entirely on a proper reduction of Entertainments Duty, and I assure my right hon. Friend and the Chancellor that if I do not think that in the Budget a proper reduction is made, I shall vote, despite the party Whips, against the proposals and will support any reasonable Amendments.

Many people still think that the exhibition side is a lush business. It was a lush business in the 'twenties and 'thirties, when very easy money was made, when fortunes piled up with relatively little endeavour. That situation does not obtain today and the industry is facing a much more serious position than I have gathered from the right hon. Gentleman's speech or from anyone else. When I come to the problem facing the producer I will try to give my reasons for the concern I feel about the future of the British film industry.

As I see it, the exhibitors' main difficulty is that owing to the advent of television, the film which, three or four years ago, was good enough to make reasonably profitable takes now makes an appallingly low take, and the producer and the exhibitor are thrown back on trying to get winners all the time. As anybody with knowledge of the industry knows, one cannot produce winners all the time, so that we see developing for both the exhibition and the production sides a very serious problem, which is not to be solved merely by the abolition or substantial reduction of Entertainments Duty.

I understand that the Rank Organisation is to close about 100 cinemas this year and, probably, next. It has already closed a great number. According to the Rank Organisation the losses made by those cinemas are so great that even were there to be complete abolition of Entertainments Duty they would still be in the "red." It is not even true to say that small cinemas are the only ones to suffer. The large 4,000-seaters which have been put up in some of our large provincial cities, and of which we have a number in London, lose money week after week. They scarcely ever pay. I therefore hope that hon. Gentlemen will not think that it is only the small exhibitors who suffer.

If a reduction in duty is contemplated, I hope that my right hon. Friend will look at the rebate system, which I tried, with very little support, to put over four years ago. If we want to have the small exhibitor—and I do, because he is socially very desirable in certain areas—this system, whereby the first, say, 20 per cent. of duty is rebated, is by far the best way of assisting him. Here I should like to stress that although some people talk as though the business is on its last legs, the fact remains that despite the growth of television, attendances at cinemas are still 15 to 20 per cent. above those of 1938. It is pulling in a lot of customers, and we must not be too dispirited.

There is the question whether producers will need the assistance of a levy. I say that the producers will need this assistance more in the next few years than they have needed it in the past few years. My outlook on the production side is not as rosy as that of some hon. Members who have spoken, as that of the noble Lord in another place who moved the Second Reading of this Measure there, or that of my right hon. Friend the President of the Board of Trade. I believe that our cinema production will become more and more hazardous. There is no doubt that it is becoming more hazardous, as one can see very easily by looking at the latest Report of the National Film Finance Corporation. Of the films likely to be profitable without the Eady Fund there were 12 in 1952; 10 in 1953; 5 in 1954; 7 in 1955—and I think that for 1956 they are not likely to be very much better than they were in 1954, if as good. Therefore, the financial situation of British films is not improving, and there are one or two reasons for thinking that this difficulty is a very real and a growing one.

The first reason, of course, is the effect of television. That has meant that it is no longer, or hardly ever, possible now to make a film for about £120,000 which will draw in the customers. Some hon. Gentlemen talk about reducing British film costs, but we are already trying to produce films on too low a budget, and on that too-low budget the products have not sufficient attraction to draw the customers. Let me remind the House that in 194jjss8 we were spending on first feature films an average of £250,000, and during a time when costs have risen very sharply we have brought that average down very materially; indeed, we have brought it down to the point where the product is no longer big enough and attractive enough to bring in the customers.

The producers' dilemma is that although they realise as well as anyone else that they cannot get the customers in with a film costing £120,000, they cannot afford to spend as much as £250,000 or £300,000, which is really the sort of figure one should spend to produce the film that will bring in the customers here and overseas. That is really a great dilemma for the British film producers, This tendency is made worse by what has happened in America. The Americans, since they have had a smash from television, have "gone big" and, in the true American fashion, have "gone big" in a very big way. As someone said the other day, they could produce the Ten Commandments and spend a million dollars on every Commandment—and that is roughly the order of doing it.

Mr. Beswick

Would the hon. Member refresh our memories by telling us how much such films as "Genevieve" and "Reach for the Sky" cost? They seemed to be very worth-while films, and were not big in the sense in which the hon. Member was speaking.

Mr. Shepherd

The figure for "Genevieve" was a low budget figure and a film like "The Kidnappers"—an immensely successful film—probably cost less than "Genevieve"; but one cannot strike ore quite as rich as that all the time. One must have diversion of location, spectacle and big scenes to make up for lack of genius at times.

Mrs. White indicated dissent.

Mr. Shepherd

The hon. Lady shakes her head, but the job of providing a stroke of genius such as "The Kidnappers", or comedy genius as rare as that in "Genevieve" is not really easy of attainment. No one can do it all the time. It is not that we are worse than anyone else; it is an immensely difficult task.

I say to the House that the British cinema industry is facing a very real problem, and I do not see how we are to get out of our present difficulty. I think that we had last year a rather bad run with our films. We have not struck the ore very rich in the last 12 months. It would be wrong to say that there is any sort of malaise, but the film industry is not in a very healthy condition at the present time.

I should like to suggest one or two things that might be done. First, I think that we must get more breadth to our films. We are a small country, leading a rather quiet life in many ways, with no great drama in our society, and the cinema suffers to that extent. If we were a great country like America, with vast drama, vast progress, corruptions and all the kind of things which can be dramatised—[Laughter.] Well, corruption can make a really entertaining film, and entertainment is the important thing in the cinema industry.

As I am reminded, the wide open spaces of America provide Americans with quite attractive films, so we are at a disadvantage and I think that we have to tackle it by getting into our cinema production more people from outside. As my right hon. Friend the President of the Board of Trade said, we ought to try to make this country an international centre of production. I think that we can do that.

Mr. Beswick

I thought the hon. Member said "corruption".

Mr. Shepherd

I said "production." I know that the hon. Gentleman may be more interested in the former, but we will let it go.

In what way can we help British films to get a bigger export market? That is the critical question and we must find the answer to that problem if we are to extend our markets overseas. There is one way which I will suggest to my right hon. Friend. It is this. Instead of limiting the production fund to the revenue earned annually from the home-shown, we ought to consider including the export revenue of films and let those revenues qualify for a production subsidy.

Mrs. White

Would the hon. Gentleman make it clear that that would be only if those revenues were remitted to the United Kingdom?

Mr. Shepherd

It would be only in respect of revenues remitted to the United Kingdom but, as the hon. Lady, who knows this industry well, will be aware, that would have certain advantages in certain directions.

I will turn to the question of the statutory levy. I have always accepted the idea of a levy and I have always preferred a statutory one to a voluntary one. First, if a levy is an instrument of Government policy the rather unpleasant work attaching to administering it, and squeezing it out of the exhibitors, has to be undertaken by the Government. Therefore, I welcome the change from the voluntary to the statutory levy.

The second reason is that I think the producers must be assured of continuity, which they are not in present circumstances. The statutory levy would give them that assurance of continuity. I think that it would be better for the exhibitors themselves, because once we have this levy as a statutory provision, there will be no argument but that the levy is a tax. It is a tax and exhibitors can rightly say when discussing the tax question with the Chancellor of the Exchequer, "We add on what you take in direct tax the levy because it is statutory and a tax"; they are better able to argue with the Chancellor on that basis. It is better for the Government to have this levy in statutory form. It is not really a good thing for the Government to have the exhibitors threatening them with withdrawal from time to time.

I do not think that the argument about the poor section of the trade paying for the rich really applies. In the cinema business there are various people concerned. Roughly, they are the Government, the exhibitor and the producer, and the cake is shared out between the three. It is not really a question of the richer receiving subsidies from the poorer.

There is a case being raised today about whether the levy ought to be applied to films made largely with American capital in this country. I want to say a word or two about that, because I know that it is disputed in many quarters. I believe very strongly that the levy ought to apply to what is known as the Anglo-American film. I will give the House reasons why I think so.

The first is that we need these films to fulfil our quota. The number of good British films about is not so great as we can dispense with these Anglo-American productions. The second reason is that the Anglo-American film brings about an exchange of artists, directors and producers. I should like to impress on the House the importance, in my view, of getting artists, producers and directors in from other countries to mix with our own people and show them their ways. They are to contribute a great deal to our industry by so doing, and that is another reason why I support the application of the levy to American production.

The third reason is that these films tend to open the door to British films in the United States. I know that the door is not really open at all and that there are many obstacles which we have to overcome in getting distribution there. Nevertheless, the fact that the American public is becoming gradually used to films bearing some of the hallmark of British imprint, not entirely, has eased a situation which is extremely difficult for us, and I do not think that we should neglect the advantage which it confers upon us.

The fourth reason is that the Americans have done us a service in agreeing to the Eady Levy on the films that they show in this country.

Mr. Beswick

Why?

Mr. Shepherd

The American film companies are quite entitled to dispute the right of the British Government to put a tax on their films shown, for the purpose of giving it to British producers. The hon. Gentleman will be aware that 70 per cent. of the British film time is, in fact, occupied by American films. The Americans are contributing as to 70 per cent. towards the Eady Levy.

Mr. Beswick

No.

Mr. Shepherd

The hon. Gentleman says "No." but it is perfectly true. It is true, I think, that the Americans dispute that, but they gave us a waiver, and I, for my part, believe that we should reciprocate.

Mr. Beswick

It is Entertainments Duty.

Mr. Shepherd

We are not talking about Entertainments Duty; we are talking about the Eady Levy.

In the last month or so, we have witnessed the setting up of a new organisation for the independent producers. Nobody has mentioned that today, and I should like, if I may, to "give it away." I have nothing against the British Flm Producers' Association, which is doing a very good job but I feel that there is a need for an organisation to serve the independent producers. I hope it will result in the independent producers getting a better deal and that it will do something towards setting up an organisation to deal with the sales of independently produced films overseas.

This matter of the sales of independently produced films overseas is of crucial importance to the independent producer. I cannot too strongly press upon the House the need for some action being taken.

Mrs. White

Would the hon. Gentleman develop this most interesting idea? Would he suggest that that might be one of the possible extended functions of the National Film Finance Corporation?

Mr. Shepherd

I was coming to that; the hon. Lady has anticipated. But before I do so, I should like to quote one example to illustrate the problem; I am sorry I cannot give the House the name of the film, because I have been asked not to do so.

A film was made in the last three or four years which had an exceptionally successful showing in this country. It was not a film which was limited in its market to the United Kingdom. It netted for its producers £261,000, which, hon. Members will agree, is a very handsome return. So far, in the intervening three or four years, the overseas sales of this highly successful film amount to £7,000. This is due, in the main, to the fact that there is for independent producers no effective overseas sales organisation. The Rank Organisation, very nobly and very ably, has set up a first-class overseas distribution organisation, but we must realise that films must be sold overseas and other goods have to be sold. It is no good pushing out a film with a batch of a hundred others for a salesman to sell as best he can. An effort must be made to sell British films overseas.

I hope that the National Film Finance Corporation, together with the new organisation for independent producers, will apply its thoughts to setting up an overseas sales organisation, because that is an absolute prerequisite, I believe, to the success of independently produced films. The independent producer is not merely an ornament to our production. He is a very important fellow indeed, for more than one reason. I will give the House just one reason.

The film production industry is, in many ways, a game of chance. It may well be that the reading department of one big organisation will read a hundred novels or scripts submitted and turn down the lot. Another producer reading the same novels or scripts may decide that one of them is just the thing for him. The big organisation may turn it down because, six months ago, it produced something similar, or it does not consider that the fashion for that type of film is what it was a year or so ago; there may be a number of very good reasons. But along comes another man with a different outlook who picks up that book or script and makes a successful film out of it.

Diversity is absolutely essential for the film business. Because the life of our independent producers depends so much on getting overseas revenue, I hope that something will be done very soon by the Government, by the National Film Finance Corporation, and by the new independent producers' organisation, to establish an effective selling organisation.

I will say no more about the Bill except commend it to the House. On the whole, I think that it will serve us well. I urge upon my right hon. Friend and my hon. Friend the Parliamentary Secretary that there is really no room for complacency about the British film production industry. It is in a much more difficult position than the majority of people realise. We have very good fellows in the business. We have, I think, some very good young men coming on in the job. But, nevertheless, we are facing a very difficult situation, and it will need all the resolve of the industry to face its drastic problems, it will need the backing of the Government, and it will need the good will of all concerned, if the production side is to be put on a really profitable basis.

Hon. Gentlemen opposite have talked about the demise of the National Film Finance Corporation as if it would be a matter for regret. It would not to me, because I know that if the Corporation went out of existence it would mean that production was on its own feet, which is what I want to see. I believe that it can stand on its own feet.

Mr. Beswick

It still wants finance.

Mr. Shepherd

I hope that the industry will rally its strength and make sure that in the near future it does stand on its own feet.

7.36 p.m.

Mr. Harold Lever (Manchester, Cheetham)

I have long understood that the American film industry was said to have climatic and other advantages of a physical nature over production in this country, but it is left to the hon. Member for Cheadle (Mr. Shepherd) to make it known that it is the spiritual climate of this country which is defective rather than the physical. Apparently, nothing ever happens here, and unless the English yokel's simple life is to be stirred up by some of the things we see in the world of American films, nothing notable is likely to be produced by British film producers. Apparently, we lead too quiet a life. I often feel that it is in these debates that the most revealing things are sometimes said.

It has been said that we must have a British film production industry because otherwise the British way of life and spiritual outlook will not be made known to the other countries of the world. I should like to say to those hon. Members who take that view that there are fairly solid grounds for believing that the outlook and way of life of this country will not perish even if British film production is rather less than it is today, and will not be likely to spread in any spectacular fashion even if British film production is increased by the wise administration of the Government.

I should like to add also that if, indeed, we were truly dependent for the projection of British spiritual values and outlook upon British film production, less than justice would be done to an outlook and set of values which, I believe, endured for a little while before the film industry came into being and which, it seems to me, might well survive for a little while after the film industry ceases to be here.

The hon. Gentleman the Member for Cheadle said that when he heard the word "culture" he was suspicious. I think it was Goering who said that when he heard the word "culture" he reached for his gun. I sometimes think that when the film industry uses the word "culture" it expects the House of Commons to reach for the public purse. I am not sure that that reflex action should be as automatic as it sometimes has been in the past.

I see some danger in such occasions as these. I am not complaining of the latitude with which the rules of order of the House are administered, Mr. Speaker, but these debates always range very widely. One is never quite sure why the President of the Board of Trade attends. For the most part, he pleads ignorance of the film industry and then asserts some sort of moral authority upon matters of culture and artistic taste. As far as I could judge, most of the President's speech consisted of a premature revelation of the Budget statement and some analysis of the ingredients which go to the making of a work of high art. It is true that he disavowed the Budget Leak, but, if he were here, I should like to reassure him that he did say it. He will probably prove right in the event, if he has not spoilt it by a premature announcement, and he need not worry about losing his post, because it is only the Budget leak in private which is punished so drastically. A little leak to the entire House of Commons, even if inconveniently and prematurely made, is not likely to result in dismissal. The right hon. Gentleman need not be very troubled on that account.

Amid all the talk of spiritual values and culture and the projecting of the British way of life and so on, there have been generalisations about the British character. British determination, the virtue of the British and the like, which one always hears on such occasions as this, and it seems to me that we ought now to get some basic principles clear. First of all, what we are discussing has nothing to do with the promotion of culture directly. What we are discussing is the survival of British film production on a commercial and profitable basis, and what we are discussing is how public money should be provided to that end.

I should make it perfectly plain that I would resent very strongly any attempt under the guise of this Bill to perpetuate the kind of loose ideas which have been prevalent in the past. We are providing in the Bill, among other things, the financing of people with reasonable expectations of being able to arrange for the production or distribution of cinematograph films on a commercially successful basis. We ought to dismiss all irrelevant factors such as the suggestion that we are promoting the avant garde of British culture.

I would not wish even mildly to dissent from what my hon. Friend the Member for Flint, East (Mrs. White) said when she made her so impressive first appearance on the Opposition Front Bench—which, I hope, will prove to be her début upon a permanent position.

However, I hope that the President will bear in mind that the House of Commons has not authorised and is not authorising helping adventurous film producers or the development of artistic tendencies or anything of that sort. I say that not because I am against them. If the Government were to introduce a Bill entitled to be a Bill professedly for the promotion of adventurous film producers and for subsidising them to the extent of £3 million or £5 million or £10 million or even £30 million out of public funds for that purpose, I should consider it very carefully and might support it. I am all in favour of a Bill to assist the production in Technicolour of Shakespeare's tragedies, for instance, for that might be a good thing towards the production of cultural films exhibiting the British outlook and that sort of thing.

But let us be honest about it. Let us not pretend to be doing what we are not. That is not at all what we are now about. We are not devoting public money to those cultural purposes, which would be perfectly laudable. It would be welcomed greatly if we had a Bill to bring back the Crown Film Unit, for instance, which has been so brutally and wantonly destroyed by the Government, and which was a non-commercial and cultural film production unit which ought to have been preserved.

What we are discussing today is how to intervene in an industry which is run on a commercial basis, and we are discussing the provision of finance to people who are running it on a commercial basis. We must be quite clear that the producers we are seeking to help produce films for a cash profit. They are not producing films in the hope of reclining one day in a laurelled spot in the hall of fame. They are producing films for cash, and we ought to be very careful about the provision of public funds to make profits for people unless it is justified.

The next question we have to ask is, is it justified to pay any public funds at all to the British film production industry? The answer would seem to me—apart from the film bank, with which I shall deal briefly—to be clearly, No. There is not the smallest evidence that the British film industry as a whole has not enough money in its total take to be quite self-supporting. It ought not to be a pampered industry, and we ought not to make it so. If we consider the industry as a whole, it has ample funds to support production, distribution and exhibition without coming to the public purse for any subsidy. It has plenty of funds. It may be that reallocation of those funds is needed. It may be that the operation of the large circuits or of monopolistic distribution arrangements and that sort of thing may have warped or be warping the direction in which the total take of the industry goes, so that one section is excessively rich while another section is excessively poor.

I do not know much about this industry, and I cannot exchange with other hon. Members those hints and half-statements that are delivered from time to time across the Floor of the House on such occasions as this by those more knowledgeable than I am of this industry. I do not know anything very much about this industry, but whenever I have seen or met the film tycoons they have seemed to me to be the least spectacular examples of poverty, and I often wonder why on occasions such as this, when we have film debates, we are always pressed to believe that they are about to fall into decay and starvation unless we contribute to them out of public funds, so that a Hungarian producer can bring over a Greek actress accompanied by a French ballet dancer to make a film which might be shown throughout the world, which might earn a few thousand pounds abroad, but which probably will be most successfully shown only in Lancashire. These things baffle me.

Therefore, I summarise my argument and say that the only Government intervention that is morally justifiable in what is primarily a commercial venture is not to provide public funds and to pauperise the industry or to subsidise it but to enforce the reallocation of the total take of the industry so that enough money goes to the production end to ensure that that part of the industry is preserved, if possible, not because of cultural questions so much as because we are anxious to develop as wide a range of industry as possible.

It is accepted, I suppose, that in a modern industrial society the townspeople must have their celluloid dream a week, and chauvinism now extends so widely that we want them to dream British as well as buy British, and so we may as well encourage the existence of the industry for the production of films of that character in this country.

However, we ought to ensure that the total take of the industry is reallocated, if we want to perpetuate the production end of the business and enable the industry to continue existence without pauperisation, without the use of public funds.

As my hon. Friend the Member for Flint, East pointed out, the Bill does not tell us how the scheme is to work. We must wait to see the regulations. It may be desired to consider in Committee on the Bill how to make sure that the total take of the industry is reallocated so that more goes to the producers to keep them in existence and that less goes to the—parasitic, perhaps—sections of the industry, or the sections that have taken too much in the past. If that could be ensured we would support the Bill, but we shall not be able to support it if it merely takes public money to be handed over to subsidise British film production because that, for reasons I have already given, I do not favour.

I think the hon. Member for Cheadle was quite right in saying that the whole attitude to the levy is possibly wrong. I do not know how it worked in the past, but if in the future it is merely to be used to set up a permanent structure by which more is taken from the exhibitors, in effect, and handed over to the producers by law, and in a somewhat complicated manner, we shall be liable to find that one of the reactions of the exhibitors, who seem a well protected section of the industry and a well organised section, and a nice, compact section, who know their way about, in the end may be to reduce their bids for films, and then we shall be back where we started from in the first place. I know nothing of the industry, but I see the hon. Member for Cheadle nodding his head in agreement, and so it seems that he agrees that this is not the way to introduce a reallocation.

Mr. Shepherd

If there were a substantial reduction in the taxation, it is quite clear that film hire, which has been sliding in the last couple of years, would increase.

Mr. Lever

I suppose the exhibitor depends on what he can afford and that he bids what he can afford. The Government say he has to pay £100, say, for a film through the levy. Surely the exhibitor will knock that off the price he bids. I fear that in the not too distant future we shall be back where we started, with the film producers not very much better off.

I like to see this come out in the open. I do not like involuntary voluntary levies. Everybody knows what happened with the voluntary levy in the past. At least. I am assuming that that was what happened, unless of course the film industry is more charitably and philanthropically disposed than I am and more public-spirited. The only possible reason that springs to my mind and naive imagination why some people in the industry would pay these large sums for distribution among other businesses concerned is that they were told that if they did not do it voluntarily they would have to do it involuntarily. It seems to me that this past esprit de corps and this almsgiving in the industry must have sufficiently weakened by now for the Government to make it clear that the payment is, after all, involuntary.

We ought to come out in the open on the whole thing. This business of the film industry usually occupies a quiet Friday afternoon in the House and, perhaps, would have occupied one this time had not the Chief Whip realised in time that I had recently recovered from laryngitis, Nevertheless, I do not propose to speak at great length.

This matter has an extraordinary history. I will not go into it in detail, but it started roughly with one of my right hon. Friends coming to the rescue of the production end of the industry and, very properly, bringing in the original Measure. We were told that this was no substitute for a general policy which would be laid before the House. We were told that a well-thought-out and considered scheme from the Government brain would be soon before the House to put the industry on its feet. This would be formulated and made known to the world and the Measure then proposed was only temporary. It was added that nobody would consider subsidies. The idea was unheard of. In any case, the Measure was temporary.

Then the Act was renewed three times, temporarily, and it is now being renewed temporarily for eighteen years, with some of my hon. Friends so foolish as to take seriously the thought that if some greedy capitalist comes along anxious to take over the profitable business of the National Film Finance Corporation and do the lending, the whole thing will be disbanded. I know nothing about the film industry, but I think that I can calm the fears of my hon. Friends. There is no danger of these rapacious gentlemen from the City seeking to oust the Corporation from the functions that it is discharging. My hon. Friends may be perfectly happy that Clause 12, which provides for that eventuality, will never be brought into effect.

The Government say that the Measure is temporary and that there is no subsidy, but the Measure is obviously permanent and there is obviously a subsidy. It reminds me of the young lady whose only defence to the lustful aggression of the male sex was to say "No" and do nothing further in her defence, only to find years later that her virginity was held to be in doubt because words and not deeds had been taken as operative tests. In the same way, the Government say that there is no subsidy and no permanency in the Bill.

It is a pity that we are not told what the Government's policy is. We were promised this policy years ago, but there is no hint that we shall have more on this occasion. The President of the Board of Trade will have come into office for a period and learned about the film industry, and there will be no care that he will lay down more gladly when he is promoted to a more important and exalted state in the Government than this responsibility. He will be glad that he will not have to worry any more about producing a policy for the film industry, and he will leave it to his successor to extend "temporarily" for another century or so the financial provisions of the Bill and the levy.

I spoke very strongly in criticism of the National Film Finance Corporation in 1954, but I am not in the least opposed to the Corporation's function as it is now stated to be. I am very much in favour of a film bank to facilitate and make available financial provisions of a specialist character, but on a commercial basis, to the commercial producer. I beg my hon. Friends not to think that I am opposed to making finance available for non-commercial purposes, but I cannot support such proposals in order to help commercial people who are out to make a profit. There is no reason why they should not pay the commercial rates and not depend on Government money.

The Government alone at present have sufficient incentive to provide a few millions for film finance, because private banking has many other lucrative opportunities for putting up its money in other directions. Based on the past history of the film industry and its uncertainties, the formerly over-optimisitic banks are now excessively pessimistic. The industry is extremely complex to finance. It is more than the average bank can do to cope with the technicalities and the difficulties of the industry. It requires a films bank for the purpose, and I welcome the films bank in its present form.

I am very relieved to see that, on the sordid side of the duty of the Corporation to pay its way, a completely different attitude prevails, under Clause 11, to that which it was my duty to oppose very vigorously and at length on the last occasion. The Clause states: It shall be the duty of the National Film Finance Corporation to exercise and perform their functions in such manner as appears to them best calculated to secure the avoidance of defaults being made in the discharge … of their obligations with respect to repayment of the principal of the loan and the payment of interest on any sum for the time being outstanding in respect of it. In other words, the Corporation must exercise reasonable prudence to preserve its funds and make them available for film production.

I should like to know from the Parliamentary Secretary whether the Corporation has taken shares or scrip in payment of debts due to it as provided in the previous Act. In other words, has the nefarious scheme which was intended to be operated, and which the then President of the Board of Trade as good as said would be operated, in the case of British Lion been put into effect? If not, has the Corporation taken steps to enforce its security in that case or in any other—because I gather that the receivers have taken over at British Lion? Have any other enterprises been enabled to pay their debt by the issue of scrip? Does Clause 11, for practical purposes, now replace the Section in the previous Act which allowed the National Film Finance Corporation to take paper instead of the full payment of the debt?

The Parliamentary Secretary may not know it, but the former President of the Board of Trade, now the Chancellor of the Exchequer, said that the provision allowing the Corporation to take scrip instead of demanding payment was the ordinary requirement of a prudent creditor. I am curious to know, if that would be required by a prudent creditor, why the prudent creditor has never exercised his prudence since 1954 and will no longer require the facilities in the years ahead. Perhaps the Parliamentary Secretary will explain that to us.

I have trespassed long enough on the time of the House. I will conclude by saying that I am suspicious of the levy and of the thought behind it. I doubt whether it will work on a long-term basis. What is wanted is an effective reallocation of finance within the industry and not a subsidy from public funds. I am glad to see the film bank put on a sound, businesslike basis, and, because of its basis, I welcome it and shall be glad at any time to support its continuation as a permanent support for the British film production industry.

8.0 p.m.

Mr. Farey-Jones (Watford)

This has been an extremely dismal debate. Most of the speeches have sounded like dirges or laments for a dead, or at least dying, industry. I confess that I do not find in the Bill much hope for the future.

I am very disturbed that all round the country, particularly in small seaside towns and villages, we find small cinemas which are already closing or will be closed in the near future. They are largely used by people who have no television sets, and one should bear in mind that there are far more people without television sets than there are with them. I hope the Minister will do his best to ensure that in some way hope for the small exhibitors can be preserved.

I see no long-term policy for the film industry, and I have not heard of one in any speech today. There is an essential point that I wish to put to the Minister. We hear and read about the European Common Market. From the very beginning the British film industry has lived in the shadow of the American colossus because from the start the American producers had a vast, assured market of at least 150 million people, excluding certain parts of Europe, to which they could dispose of their films.

Our film industry today has its biggest opportunity of the century. If we are going into a common market in Europe, there is no industry which can make a more immediate and greater contribution than our film industry. I should like the Minister to tell us whether the National Film Finance Corporation could be used at least to establish a British European films corporation into which the Germans and Italians might be brought from the beginning.

Leading film producers in Germany and Italy have had meetings to discuss the possibility of the realisation of that idea. If we in London approach the subject now, and if the Minister will use his good offices for that purpose, I think that we should be able, in about seven years' time, or even less—I am not familiar with the technicalities of film production—to create throughout the whole of Europe an assured market even greater than that of the American film industry; and if that market were centred in London, at least something worth while would have been achieved.

8.4 p.m.

Mr. Douglas Jay (Battersea, North)

I did my best to cheer up during that last speech, but I was not entirely successful.

The President of the Board of Trade said, at the beginning of the debate, that he was a novice, as I am, in this labyrinth, but he struck me as being rather a novice in Budget matters, also. He told us, in a sotto voce aside, that the Entertainments Duty was to be reduced in the next Budget.

Sir D. Eccles

I knew before the right hon. Gentleman rose that that was the sort of thing that he was going to say. I should like to deny that I said that I knew it was to be reduced. The right hon. Gentlemen, too, knows that that is not true, but I must say that it is in his nature to say it.

Mr. Jay

Since the right hon. Gentleman says that, I will remind the House of exactly what he said. First, he told us that the Chancellor would take account in his Budget of the consequences of the Bill. That in itself means nothing at all. Then the right hon. Gentleman, asked by one of my hon. Friends whether that meant a cut in the Entertainments Duty, used the following words, according to my record, and as the same words are on the tape I suppose that the Press reporter heard them as well, "There is no other way to do it."

Those two statements, taken together, can only mean, as far as I can understand them, that we have been informed that the Chancellor is to make a cut in the Entertainments Duty in the coming Budget. I do not know what the Chancellor will think of this extraordinary statement, but I can assure the Ministers representing the Board of Trade that the industry itself will now confidently expect a substantial cut to be made. Since the rule about anticipating the Budget has apparently been suspended by the Government, perhaps the Parliamentary Secretary will tell us just what the cut is to be. We really do not know what to expect now that all the ordinary rules have apparently been suspended.

I certainly do not advise the House to vote against the Bill, but there are still a number of questions which the Government ought to answer before we give it a Second Reading. The President of the Board of Trade asked why we had to have a Bill of this kind at all, and he gave the rather odd answer that it is because the industry is such a risky one. That argument might carry him a very long way if wherever there was an industry which took risks we had to have wholesale Government intervention. I do not believe that that is the right answer.

I think that the real answer is that ordinary unfettered private enterprise would be unable, as experience shows, to maintain a British film production industry. Indeed, on the Government's own showing by the introduction of the Bill, threefold Government intervention is necessary to make sure that even 30 per cent. of the films shown in this country are British. Not only do the Government admit this, but they continue, and, indeed, reinforce, the two main public props of the industry which were set up by the Labour Government—the Eady Levy and the National Film Finance Corporation. We are grateful for the compliment implied in that. I merely wish that the Government would imitate the Labour Government in even more important matters.

Apart from my hon. Friend the Member for Cheetham (Mr. H. Lever), who always has a very individual and entertaining point of view, I do not think there is an hon. Member in the House who seriously disputes the need for the Bill. I would say to my hon. Friend, who always takes a hard-headed, practical business point of view, that, apart from any other considerations, there is a hardheaded reason for all this action, and it is that, without some aid to the British film production industry, this country's dollar problems would be infinitely more difficult to solve than they are.

Mr. H. Lever

I did not say that I objected to help being given to the industry. I merely said that it is an ineffective way to produce the help needed, and that I doubt whether the Bill will produce the desired results.

Mr. Jay

I agree with my hon. Friend to some extent. We must look very carefully at the method adopted. I am glad to say that the right hon. Gentleman spoke of the more promising export prospect for the British industry and said that in both the United States and the Commonwealth prospects were improving.

I am tempted to add that when, last autumn. I was visiting Moscow as a tourist, full of curiosity. I was struck by the fact that the Russian public was flocking to an Italian film festival and was obviously extremely enthusiastic about seeing non-Russian films. I was equally struck by the fact that Mr. Eric Johnson, whom we all remember well and who was still representing the American film industry, was negotiating for the showing of American films in Russia on a large scale. I asked a number of Russians responsible for the showing of films whether they showed British films, and whether they would like to do so. The answer I always got was that they would be very glad to do so, that there was a demand for them, but that the British industry always asked too high a price. I cannot evaluate the truth of that answer, but it may be worth while for the Board of Trade and even the Rank Organisation to look into it.

I suggested to some of the Russians that Richard III could be a suitable film for them to see, because it might fit the current propaganda against the cult of personality and the general idea of blaming everything on the dead dictator. However, I did explain to the Russians that they must not suppose that Richard III represented the current British way of life.

Why do we have to have all this help for the British industry? The hon. Member for Watford (Mr. Farey-Jones) was right in saying that it is because the American producers have a huge American home market and can regard the British market as a supplement. But we have still to ask why we have to adopt the rather odd device, on top of the quota and the Finance Corporation, of a compulsory levy on one section of the industry to pay for another. One feels inclined to ask why, if the exhibiting section of the industry is so profitable, ordinary business bargaining does not manage to transfer part of its revenue to the production side.

I suppose that the answer is partly because of the competition of the American film. But I suspect that one other reason is the semi-monopoly position—and some say that it is getting worse—of the exhibitors who confront competing independent producers and who put producers at a severe economic disadvantage. If that is so, it makes one at least wonder whether, when the State is stepping in to redress this balance by legislation, we ought not to do something to weaken this growing monopoly ownership on the exhibition side.

Apart from my hon. Friend the Member for Cheetham no one has seriously questioned the inevitability of the Eady Levy plan. It was devised when I was at the Treasury to make sure that what the Exchequer relinquished in entertainments tax went to the producers and not to the American companies or the big British exhibitors. It is a little odd to some of us to discover—and the President himself did not discover it until this afternoon—that the so-called British films benefiting from the levy can include films produced in Jamaica by American companies with American stars.

I understand from the experts that the rights and wrongs of this question of Anglo-American films are extremely complex. It is true of this industry, as Oscar Wilde said, that truth is seldom pure and never simple. That applies to the argument about American films. We have had an argument about whether we are paying a subsidy under the Bill. In substance, what we are now to do quite bluntly by the Film Fund Agency is to continue raising revenue in both tax and levy combined on all films and to pay what is really a subsidy discriminately to British or Commonwealth films. I suppose that, technically, the levy is not public money, as it does not come from the Budget, but if we are to use compulsory Government and Parliamentary powers to collect it forcibly, in economic reality it is a subsidy.

Frankly, I do not object to that for the reasons I have given. I do not necessarily object to calling it a levy, if that serves some useful purpose. No doubt a subsidy by another name smells a good deal sweeter, but the Government ought to explain why we have to do it in this rather peculiar way. For, even if we agree to call it a levy for diplomatic reasons, I am not altogether convinced that we need the complication of this rather rarified Agency to pay the money.

Why should not the Board of Trade do the job? Either the Agency is to do a job of pure calculation, what certain noble Lords in another place rather irreverently called a job for clerks, in which case we do not really need to have this imposing statutory body, or else, as I suspect, it is not merely calculation, but involves a good deal of discretion—perhaps not including trips to foreign countries, as was mentioned by an hon. Member opposite. If there is discretion and trade advice is necessary, why should not the Board of Trade do it, advised, no doubt, by the Film Council? We have already got the Board of Trade, Customs and Excise, the Film Council and dozens of trade associations engaged in this business.

For the sake of simplicity, I wonder whether we should set up yet another body. I ask the Parliamentary Secretary, having had some experience of the Board of Trade, whether this is just a device to avoid Parliamentary Questions about the operation by those people managing the Agency. If it is not, will be tell us whether it will be in order to put down Parliamentary Questions asking what the Agency is doing?

We are made a little more suspicious about this by the inclusion in the Bill of the contrivance for doing almost everything by regulation. Collection of the levy will amount to taxation of the public. What the House is being asked to do is to pass an enabling Bill to allow the Board of Trade, within very wide limits, to tax the cinema industry and the cinema-going public. If we are doing that, we ought to be very sure when we get to Committee that this is the proper and best way of doing it.

On the other hand, on this side of the House we welcome the continuation of the National Film Finance Corporation. With the possible exception of my hon. Friend the Member for Cheetham, everyone agrees that this amount of public enterprise is necessary in the industry. There is common consent that it has been a success in sustaining British film production. At the same time, we have some doubts about the apparent attempt of the Government in Clause 11 financially to tie up the Corporation as if it were intended to be an investment trust rather than an aid to film production in this country.

Of course, we do not want the Corporation to lose public money. But if the object were simply to lend money without risk to make a profit, we should have thought that there would have been no need for this kind of Corporation, because banks and ordinary financial institutions would have done the job. Surely, the object of the organisation is to enable independent British film producers—and, thank heaven, there are such producers—to experiment and take reasonable risks in so experimenting.

As for Clause 12, in which the Government seem suddenly to have reverted to their doctrinaire passion for selling public property back to private owners—usually at a loss to the taxpayers—I am not nearly so hopeful as is my hon. Friend. He said that he was quite sure that we would not find the Corporation being sold back to anybody in the City of London. It is not the City of London so much as Los Angeles or some other part of the world which comes to my mind. Have the Government any plan to sell the Corporation to M.G.M. or, perhaps, to the Texas Oil Company?

Upon the question of the timetable, about which my hon. Friend the Member for Flint, East (Mrs. White) asked in her comprehensive speech, can we also know whether or not the Corporation goes legally out of existence on 9th March, if the House has not passed the Bill by then? If so, is the President of the Board of Trade really expecting the House to examine the Bill properly in all its stages by the end of Thursday of next week. That would be an extraordinary idea of Parliamentary procedure. I am not saying that that is what will happen but, if not, will the Parliamentary Secretary explain clearly how the Corporation will continue legally and practically to exist after 9th March?

Finally, hon Members on this side of the House could have wished that Part III, which prolongs the quota system, had been left out of the Bill altogether. Here again, the Board of Trade appears to have conducted itself in a most extraordinary fashion. This may be the fault of the previous President of the Board of Trade. Ministers move round in this Government, so that we can never blame the man who is still in office. The previous Minister wrote to all sections of the industry last February, asking them for their views upon two questions—the levy and the Corporation—and saying that the quota would be left over for discussion later. He wrote again in August last to the same effect.

The next thing that the industry knew about the matter was when the Bill appeared with the whole machinery for the quota inserted. The President of the Board of Trade now blithely says that the opportunity could not be missed. That is a rather extraordinary way to proceed. I realise that a promise was wrung from the Government, by two very pertinacious noble Lords, speaking for the Labour Party in another place, that there would be consultation before any amending legislation was introduced. This quota legislation does not expire until September, 1958.

Why not, then, introduce legislation on the quota, together with the necessary amendments and after the necessary consultation, during the 18 months which are still available—whether or not the Government remain in existence for that time—between now and September, 1958? If the Government's view is that that is not feasible because there is no Parliamentary time, or they think they will not still be here, why did they not have these necessary consultations before introducing the Bill?

The Parliamentary Secretary might also tell us for certain whether amending legislation is to be introduced and, if so, how soon, and, also, when the consultations will be started—because all sections of the industry are anxious and curious to know that. Why cannot the Government drop Part III altogether? That would both allow more time to examine Parts I and II adequately and also, later, to have a proper discussion upon the quota legislation.

As a protest against the muddled fashion in which the Measure has been presented to the House, some of my hon. Friends may feel inclined to vote against the Second Reading tonight. [HON. MEMBERS: "Hear, hear."] Apparently some do. I do not advise them to carry their protest to that length, because we must have the levy and we must have the Corporation. No doubt the Parliamentary Secretary also thinks that he must have his dinner—but that is not an argument that weighs with us. In spite of that I invite the Parliamentary Secretary to answer the questions that we have asked and, particularly, to tell us frankly what timetable the Government have in mind for the Bill.

8.25 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. F. J. Erroll)

The House will probably agree that we have had a wide-ranging and agreeable debate on the many questions affecting the film industry—from the point of view both of film production and distribution and exhibition. In the course of my reply I shall try to answer the many points which have been raised, but I may find that shortage of time prevents me from doing justice to them all.

Mr. Rankin

The hon. Gentleman has plenty of time.

Mr. Erroll

It is almost thirty years since Parliament passed the first Cinematograph Films Act—in 1927—which established the first British film quota provisions. The House may care to recollect that this Bill was regarded at the time as highly controversial, and there were no less than 300 divisions during the Committee stage alone. Today's debate has been in marked contrast to the atmosphere of thirty years ago. I think that the House is in general agreement with the need to maintain a prosperous and efficient film production industry, and that there has been a remarkable degree of support for the introduction of the statutory levy.

The purpose of the Bill is to support British film production. The support takes the form of a tripod, so to speak. There are three legs or forms of support, namely, the National Film Finance Corporation, the quota provisions and the exhibitors' levy. The stability of a tripod depends equally upon all three legs; remove one of them and the other two will collapse. The same may be said of this arrangement for supporting British film production.

The National Film Finance Corporation guarantees the end money without which few British producers could begin to make films today, and the quota provisions ensure that British films will have a reasonable share of the valuable screen time in British cinemas—again a necessary guarantee far British producers. But it is not enough to see that the films are made, or to guarantee their showing; they must be made to pay, and the levy completes the third leg of the tripod by helping to ensure this, and so enabling producers to repay their loans to the Corporation, thus making it possible for the Corporation, in turn, to guarantee fresh loans to the producers of yet more British films.

The hon. Member for Uxbridge (Mr. Beswick) referred to the fears of workers in the film industry. I am sure that now he will be able to reassure them that the support we are planning for British film production will ensure a steady output of British films; thus enabling exhibitors—especially the smaller ones—to have available a range of feature films from which they can select those most suitable for their local audiences in fulfilment of the quota provisions. My hon. and gallant Friend the Member for Barkston Ash (Sir L. Ropner) stressed the importance of bearing in mind this local need which varies from locality to locality.

I wish now to turn to the first of three legs of the tripod, the National Film Finance Corporation. My right hon. Friend referred to the excellent work being done by the Corporation. I wish to remind the House of what he said; that the Corporation has no intention of changing its policy. But we have thought it right nevertheless to insert Clauses 10 and 11 in the Bill requiring the Corporation if possible—and this is important—to balance its books and so to ensure that there is no element of hidden subsidy in its activities through it incurring in the course of its operations a number of irrecoverable losses. From what I have said the hon. Member for Flint, East (Mrs. White) will see that the Corporation will be able to go ahead and finance what she, quite rightly, described as adventurous production.

Some anxiety has been expressed over Clause 10 (1). It is suggested that the Corporation will be competing with the banks in what is their traditional line of business. I do not think there is any danger of this happening. We must remember that the Corporation borrows its money from the banks at the ruling rates of interest and then re-lends the money to the producers. By the time the Corporation has paid interest on the advances made to it from the Board of Trade and the banks there is not much scope for undercutting the banks. The National Film Finance Corporation will, of course, be free to continue to lend money in circumstances where the banks would not be willing to do this. Moreover this extra degree of freedom is surely a sensible step towards the Government's aim of putting the affairs of the industry on a truly commercial basis.

The hon. Member for Bradford, West (Mr. Tiley) and the hon. Member for Uxbridge referred to television films, or films produced for television viewing, and spoke of the relationship between television and the Corporation. Television films are technically eligible for support from the Corporation, but, of course, they are not entitled to any money under the levy unless they are shown in a British cinema just like any other film.

Mr. Beswick

I was of course aware of that. I was asking whether there was a possibility of contributing to production costs for television films in the same way as some contribution is being made to the production costs of cinema films. Television films are as important to the economy of the country as are the films shown in cinemas.

Mr. Erroll

I am aware of that point, and I am sure that the Corporation, in exercising its freedom, will take into account the commercial attraction or otherwise of television films.

The hon. Member for Ardwick referred to the holding of shares and scrip by the Corporation—

Mr. H. Lever

The hon. Member for Ardwick (Mr. L. M. Lever), who is very well known to me—in fact he is a close relation of mine—has not been present during the debate, and I think that the Minister should be informed of this.

Mr. Erroll

No one could be more apologetic than I in a matter of this sort. I meant the hon. Member for Cheetham (Mr. H. Lever). I apologise to the hon. Member for Ardwick (Mr. L. M. Lever) for having referred to him in his absence and to the hon. Member for Cheetham for having failed correctly to describe his constituency.

The position is that the Corporation hold the shares of British Lion Films Limited as the result of an arrangement made within the terms of the Cinematograph Film Production (Special Loans) Act, 1954. A statement explaining the details of this arrangement was printed and laid before the House in 1955. Clause 11 in the present Bill does not in any way render the 1954 Act unnecessary. That Act restricted the powers of the Corporation to accept shares or debentures in repayment of loans, to cases in which without such special action, harmful consequences to the production of films would ensue. There are unlikely to be many instances of this sort. I understand that the British Lion case was the only one.

I now turn to another important matter concerning the Corporation, to the point raised by the hon. Lady the Member for Flint, East and the right hon. Member for Battersea, North (Mr. Jay) in his winding-up speech, namely, what is to happen after 8th March. The National Film Finance Corporation does not cease as a legal entity on 8th March. It has many loans to collect and functions to perform, but it will cease for a short time to have the power to make loans, in fact until Parliament has passed this Bill.

Let us be frank about it. It is an embarrassment that the Corporation will not be able, for a period, to make loans, but for some time the Corporation has been aware that it might find itself in this position and it is taking whatever steps are possible to ensure that the least inconvenience is caused to film producers. No doubt film producers who have known that they will need money from the Corporation have taken pains to approach the Corporation rather earlier than they otherwise would have done so that legal arrangements can be made and money advanced before the lapse of the Corporation's loan-making powers.

This is not a happy position; it is a position of slight difficulty. Obviously, the longer the time taken in the passage of the Bill, the greater will be the difficulty which producers will face. [HON. MEMBERS: "Oh."] That is why I referred in my opening remarks to the agreeable atmosphere of this debate in the hope that we would not have 300 Divisions on the later stages. I hope, naturally, that hon. Members will assist in the passing of the remaining stages of the Bill, particularly as so much agreement has been demonstrated during the debate.

Mrs. White

I must take the hon. Gentleman up on this matter. It is not the fault of the Opposition that the Government have mismanaged their timetable. My hon. and right hon. Friends recognise no obligation whatsoever to take the remaining stages of the Bill any more rapidly than seems to us desirable in the public interest. If the hon. Gentleman hopes that no Amendment may be put down, let me assure him that we already have in draft a very large number of Amendments.

Mr. Erroll

I am neither blaming the Opposition nor trying to put them under any obligation at all. I was trying to be frank with the House and to explain the situation. I should be very surprised if hon. Gentlemen opposite had no Amendments. There should be some, and we hope to debate them in as amicable a way as we have debated the Second Reading.

Mr. Jay

Some of my hon. Friends would like to know why this explanation of the position of the Corporation could not have been given in the opening speech.

Mr. Erroll

Because my right hon. Friend, recognising the difficulties which beset Parliamentary Secretaries in making winding up speeches, very kindly left me some material. [HON. MEMBERS: "Oh."]

Hon. Members on both sides have referred to the desirability of making Amendments to the quota provisions. It would have been fortunate if Amendments could have been agreed upon in time for inclusion in the Bill, but owing to lack of time, because of the necessity of getting on with the Bill—[HON. MEMBERS: "Oh."]—from the point of view of the National Film Finance Corporation, it was thought better to renew the quota provisions as they stand by taking advantage of the passage of the Bill, rather than to leave producers without the security which they will now have, namely, that the quota provisions are to continue for a further ten years. If we had done nothing, producers would merely know that the provisions would continue for another eighteen months. It is better for them to know that the provisions will continue for a further ten years than that they will continue only for eighteen months.

Mrs. White

Why is it necessary to put in ten years for this purpose? Even allowing for the laggardly way in which the Government have dealt with this legislation, if they had allowed this to have an extra twelve months that would have been sufficient, would it not?

Mr. Erroll

It is more satisfactory for producers to know that they are likely to have the advantage of the quota provisions for a period of ten years written into a Bill, than to know it is only for a period of twelve months and to be left wondering what is to happen after that. At the same time, we do realise that some amendments are necessary, and as my hon. and gallant Friend the Member for Barkston Ash said, we have undertaken to discuss the whole question of amendments with all sections of the industry in this coming autumn. [HON. MEMBERS: "Why in the autumn?"] That is the time when it is convenient for everybody to discuss the matter, after they have had the opportunity to think out all the different aspects of this extremely complicated matter.

Reference has also been made to what constitutes a British film. This is a matter which has been exactly defined, of course, in the Cinematograph Films Acts of 1938 and 1948. The hon. Member for Uxbridge and the hon. Member for Newcastle-under-Lyme (Mr. Swingler) both referred to this matter. Let me admit at once that the definition—I will not quote it; it is already in the Act—allows films featuring foreign nationals and films made wholly by Commonwealth subjects to participate in the protective Measures provided by the quota.

I come now to the question of whether a British quota film could be made in Jamaica by an American company with American stars. The short answer to that is "No". A British film must be made by a British company. [HON. MEMBERS: "No."] Although there is provision for utilising American talent, the vast bulk of the labour must be British.

Mr. Jay

A company registered in Jamaica which was a subsidiary of an American film company would qualify?

Mr. Erroll

I think it would qualify, but I would like to check that point before I reply exactly.

Mr. Ede (South Shields)

What is the difference between talent and labour in this industry?

Mr. Erroll

My right hon. Friend and I are in a position much the same as hon. and right hon. Members on the benches opposite.

Mr. Rankin

Do not become provocative.

Mr. Erroll

It is quite against my nature to become provocative. I want to maintain the peaceful atmosphere of the debate if I can, but I am having difficulties.

Mr. Beswick

The hon. Gentleman has again given us information which we already knew. We knew of the definition in the previous Acts, and what we were complaining about was that it was an unsatisfactory definition. We are asking him what the Government are going to do to tighten up the definition and bring it more into accordance with something really British.

Mr. Erroll

What we want to do is to have the consultations and give everybody sufficient time to think out their proposals fully before bringing them to us for examination.

Films produced in collaboration with foreign subjects are mainly made with American finance, directors and stars. The American finance comes usually from the blocked sterling accumulating in this country from the earnings of American films shown here. The use of this blocked sterling for the production of films qualifying as British quota films has been an important factor in the development of the British film production industry, and one which has proved of considerable value to our producers, directors, actors and technicians.

The right hon. Member for Battersea, North, and my hon. Friend the Member for Cheadle (Mr. Shepherd) support us in our view that these Anglo-American films should get the benefits of the British quota provisions and the corresponding benefits of the statutory levy. That was my understanding of the remarks of the right hon. Member for Battersea, North, but if I have overstated his case—I see that he wishes to qualify his support. The fact is that these films are British films within the definition of a British quota film. They are made by British firms in British studios, as defined. They carry not less than the minimum proportion of British labour costs and they observe the other requirements. I see no reason therefore why such films should be excluded on the grounds that they are Anglo-American films and therefore financed out of the blocked sterling earnings of American films. They represent a useful employment of British resources with funds which otherwise would in all probability have had to be converted back into dollars.

The hon. Member for Cheetham and others have referred to the foreign personnel—which perhaps is a better word to use than labour or talent—used for these Anglo-American films. Here it must be remembered that the cost of one foreigner may be excluded from the calculations provided that 75 per cent. of the remaining labour costs are in respect of British Commonwealth subjects, or the cost of two foreigners can be excluded provided 80 per cent. of the remaining labour costs relate to British Common- wealth subjects. This is a subject which lends itself to a great deal of detailed study.

Perhaps I might turn to the agency, which has been discussed by hon. Members on both sides of the House.

Mr. H. Lever

Before the hon. Gentleman deals with the other leg of the tripod, may I point out that on every occasion when these makeshifts have been before the House we have been promised a permanent policy in future. Out of respect for the precedent established on the last four occasions, will the hon. Gentleman give us lip-service to a similar kind of promise for a permanent policy? We shall not take his promise too seriously, but, if he does not give it, by 1972 the precedent will have been lost and no policy will be promised in 1972 either.

Mr. Erroll

Obviously the hon. Member does not expect very much from me—

Mr. Lever

Only a promise.

Mr. Erroll

—so I shall not weary the House with any attempt to go further. This Bill stands on its own three feet, and its duration and the duration of each leg are as shown in the Bill. That ought to be sufficient for one evening for the hon. Member for Cheetham.

The levy will be collected by the Commissioners of Customs and Excise, who are already responsible for the collection of Entertainments Duty. It was they who formerly collected no less than 96 per cent. of the voluntary levy. The amount raised will be passed to the British Film Fund Agency, which will make payments to producers in accordance with regulations to be drawn up by the Board of Trade. The hon. Lady the Member for Flint, East and my hon. and gallant Friend the Member for Barkston Ash were concerned about the composition of the Agency. The Agency will be composed of members with no connection with films, and it has been said that they will not know enough about the trade. It has been suggested that the Agency should be advised by an advisory body drawn from the trade. Some have even suggested that members of the Agency should themselves be drawn from the different sections of the film industry.

I think that attitude possibly derives from a misconception as to the task of the Agency. The Agency is not a policy-making body; it is rather in the nature of a trust to administer the fund in accordance with the regulations which will be made under the Act. A task of this sort, involving as it does responsibility for paying out nearly £4 million a year, calls for men of high standing with legal and accounting experience rather than for a number of trade representatives who to some extent must be interested parties.

It may help to resolve some doubts which have been expressed if I now turn to the arrangements we expect to make after the Bill reaches the Statute Book. In the first place, I am glad to be able to inform the House that Sir Richard Yeabsley has consented to become the first chairman of the Agency. As hon. Members will know, he is an eminent accountant who is a member of the Council of the British Institute of Management and he is Accountant Advisor to the Board of Trade. He has told me that he has it in mind, provided suitable arrangements can be made, for the Agency to use the services of the firm of accountants which has so successfully carried out the detailed arrangements for paying producers the moneys calculated under the present arrangements for the voluntary levy.

It is because we can draw upon the services of accountants already skilled in this field that we are not proposing to do the work ourselves at the Board of Trade. The Agency will be small in number, and there is no question of building up a large staff or having a large building, such as was suggested by my hon. Friend the Member for Bradford, West. I can assure the House that the chairman designate will be most willing to receive advice from the industry, and he has asked me to let it be known that it is his intention to consult the industry freely whenever it appears desirable to do so.

The hon. Member for Uxbridge and the hon. Lady the Member for Flint, East asked about the regulations. They suggested that this was only an enabling Bill and that not enough was being told the House. For the most part, the regulations will be subject to affirmative procedure. That is to say, they will be laid before the House in draft so that hon. Members interested can study them; they can be debated if necessary, or if it is wished, and they can, in the last resort, be voted upon. Therefore, while this is, in a sense, an enabling Bill, hon. Members will have full scope and opportunity for scrutinising detailed subordinate legislation made under the Act.

As to the framing of the regulations, an Amendment was introduced in another place which requires the Board of Trade to consult with the Cinematograph Films Council before regulations are tabled, and as the hon. Lady is herself a member of that Council she will be able to keep an eye on the framing of them, and we do look forward to her co-operation and assistance in this matter.

The hon. Lady also mentioned the risk of some films obtaining an unfairly large share of the levy as a result of manipulating the rentals. This will be dealt with in the regulations to be made under Clause 3. The hon. Lady and my hon. Friend the Member for Cheadle both raised points relating to what are called second feature films. The advice which the Board of Trade has received about the share of the levy which would be appropriate to these films has been conflicting. Some think, as does the hon. Lady, that, like the short films, second feature films should have more than their proportionate share of the proceeds of the levy. Others take the opposite view.

We must remember that these films do not, perhaps, bring quite the same prestige to the United Kingdom as do first feature films or shorts. Moreover, there seems to be a slightly lessening public demand for them. Perhaps, therefore, it is better to leave this issue to the operation of the economic forces within the trade. If exhibitors think that patrons want these films, they must pay a little more for them. It is the intention of the Government to adhere as nearly as possible to the present voluntary arrangements, which have worked well and which received the assent of the industry, and not to give a specially favourable share of the levy to producers of second feature films.

Mrs. White

I presume that nothing that the Parliamentary Secretary now says precludes the Cinematograph Films Council from offering advice in a contrary sense? Regulations have not yet been formulated, and if the Council were consulted it might possibly wish to advise in a contrary sense.

Mr. Erroll

I think that we would listen to the Council's advice most carefully, and see whether or not it carried conviction.

A number of hon. Members, and, indeed, members of the public have stated their doubts about a compulsory levy. It was particularly helpful, therefore, to get the reassurances of my hon. Friends the Members for Bradford, West, for Southampton, Test (Mr. J. Howard) and for Cheadle. We have not lightly proposed a compulsory or statutory levy. The Board of Trade was, however, faced with the problem that the future of the voluntary levy was threatened by exhibitors, who indicated that they would not be prepared to pay it in future. If this threat had materialised, the consequences would have been very serious for British film production. The House is agreed that British film production should be maintained, and there is, therefore, no alternative but to make the levy statutory and thus provide the necessary assurance to producers about their future finance and, at the same time, remove the levy itself from the arena of argument and counter-claim.

Mr. Rankin

Before the hon. Gentleman leaves that point, may I raise the issue of the promise that was made to the industry that the tax and the levy would go together, that they would marry? The President of the Board of Trade indicated something about the tax. Is the Parliamentary Secretary going to deal with that aspect, because the idea is now widespread—in fact, I have had phone messages from Scotland asking if it is the case—that the President of the Board of Trade in the House of Commons tonight promised that the Entertainments Duty would be reduced?

Mr. Erroll

I only hope that the hon. Gentleman's many callers did not reverse the charges.

Mr. Rankin

They did reverse the charges.

Mr. Erroll

They doubtlessly thought that in this House we all get our phone calls free. My right hon. Friend rose during the speech of the right hon. Gentleman the Member for Battersea, North (Mr. Jay) to amplify the point which he made, and I do not think that any useful purpose would be served by my saying any more than my right hon. Friend has himself already said on this subject.

The levy will provide British film producers with some of the money they require, but if they are to achieve the prosperity of which we believe they are capable, they will have to secure a large foreign market. The domestic market alone is not large enough in itself to support an efficient and flourishing production industry. Given the assistance of this Bill, we have a right to expect producers to show particular enterprise in foreign markets. Here I should like to refer to the speech of my hon. Friend the Member for Watford (Mr. Farey-Jones), who referred particularly to the Free Trade Area implications for film production. All that I can say at present is that we are sympathetic to the concept of film production throughout the Free Trade Area and of products moving freely, but it obviously would not be possible for me to go into details at the present time.

Several hon. Members referred to the size of the levy, and I would suggest that, as I have been on my feet for some time, discussion of this could best be left to the Committee stage.

The hon. Lady the Member for Flint, East wanted to know what would happen if the required amount is not realised. I will try to cover that point briefly, because it would—let us be frank—be surprising indeed if officials were able to prescribe the rate of levy which would produce the precise sum of £3¾ million, but, after making due allowance for falling attendances and estimating whether it will be a wet or dry summer, we hope to get fairly close to our target. If we are not so fortunate and are rather on one side or the other, it will not represent a disaster because we shall be able to do something to rectify the over or under calculation, as the case may be, in the following year. We have now, of course, had experience of the estimating carried out under the voluntary levy and we think that we should be able in future to get fairly near the mark.

Mr. Beswick

Is the Parliamentary Secretary saying that the Agency would carry some float or some reserve fund? Is that what he means?

Mr. Erroll

There is obviously an overlapping from one year to another in a matter of this sort where one cannot estimate with absolute precision.

Although, as I said, this is a Bill to assist film producers, it is understandable that many speeches should have referred to the difficulties affecting distributors, both large and small. I do not propose to discuss those difficulties tonight, but I would remind the House that although the industry is having its difficulties, it is still a very large and important industry in the country. As my hon. Friend the Member for Cheadle said, we must not be too dispirited about it. In 1954, attendances amounted to 1,276 million and in 1956 to about 1,100 million, which is still a very large figure indeed.

The Bill, by providing a threefold measure of support for some years ahead, should promote a steady and possibly increasing flow of good films from British studios. Although some exhibitors are hard pressed just now, they can, I think, face the future with reasonable confidence, knowing that they will have a wide selection of films to choose from.

Mr. H. Lever

And a reduction in the Entertainments Duty.

Mr. Erroll

We all want to see a healthy cinema industry in the country providing entertainment to the public on a nation-wide scale. For this reason, I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 38 (Committal of Bills).