HC Deb 11 July 1957 vol 573 cc606-16

5.56 p.m.

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

I beg to move, That the Draft Cinematograph Films (Collection of Levy) Regulations, 1957, a copy of which was laid before this House on 26th June, be approved. It might be for the convenience of the House, Mr. Deputy-Speaker, if we discussed these and the following Regulations together.

Where appropriate, we have followed the pattern of the voluntary levy both as regards collection and distribution, and I am glad to be able to tell the House that we have been able to secure agreement on nearly all matters. Numerous methods of collecting the levy were considered, but, in the end, the scale given in the Schedule to the first of the two sets of Regulations was found to be the one most acceptable to the trade, and I hope, therefore, that it will meet with the approval of the House.

The Regulations provide also for payments for admission to cinema entertainments which are exempt from Entertainments Duty to be exempt also from levy. This follows the existing scheme and, in addition, any exhibitor taking less than £150 for admission in any one week, excluding Entertainments Duty on those takings, will be exempt from levy on that. There are arrangements for appropriate marginal relief also. These arrangements for exemption are rather more generous than those under the existing trade operated arrangements.

As to the Regulations relating to distribution, I should like to point out that claimants will now have a definite legal right to payments, which they did not have before. We are continuing the principle of distributing the levy in proportion to the box office success of all eligible films. This meets with general approval and follows the present practice which rewards merit and does not subsidise inefficiency.

There is one point to which I should like to refer, namely, that, to deal with possible abuses, whereby the earnings of films might be unfairly inflated in order to attract a larger share of the Fund—

Notice taken that 40 Members were not present;

House counted, and, 40 Members being present—

Mr. Erroll

As I was saying, we have, to avoid the possibility of abuse, given a fairly wide measure of discretionary power to the Agency rather than attempted to frame complicated and detailed Regulations which would be unlikely to stop up all possible loopholes and might be somewhat inflexible. I am glad to be able to tell the House that these discretionary powers have received an unqualified welcome from all quarters consulted.

The Agency has power to make provisional payments, but this power is permissive and not obligatory. I do not think that this need cause any anxiety, and I understand that the Agency is already taking the necessary practical steps to make provisional payments on much the same lines as at present. The Agency was set up on 1st July, and is getting ready to come into operation fully on 20th October.

I hope, therefore, that the House will see its way to approving these draft Regulations today.

5.59 p.m.

Mrs. Eirene White (Flint, East)

We are very glad to have the Parliamentary Secretary's brief explanation of these Regulations, but I think that there are one or two points which are causing some disquiet in the trade, on which it would be only proper to have a further disquisition from the hon. Gentleman.

Turning, first, to the Regulations dealing with the collection of the levy, it is true that the provisions for exemption are somewhat more generous than those under the private scheme, in so far as cinemas are now to be exempted if their net takings, instead of their gross takings as before, are £150 per week.

Of course, we all recognise that this does not really help the rather larger cinema which may, nevertheless, be in a very difficult position because, although its takings may be more than £150 and, therefore, not exempt, it may be running at a loss, or hardly breaking even. Under the private scheme there has been an arrangement with the renters whereby any cinema which was not exempt but which was in considerable difficulties over payment of the levy could approach the renter and the renter agreed to make some adjustment in the hire charge.

My understanding of the present situation is that because these Regulations provide for a statutory levy, instead of a voluntary one, the renters appear not to be willing to continue with this practice and that may mean that we shall find a certain number of cinemas which may be in considerable difficulty and which will not be helped by the renters under what I call their shorn lamb policy. We should like to know whether the Government have any idea at all in their mind as to the way in which, if need be, such cinemas may be helped.

The Cinema Exhibitors' Association has put forward a suggestion that the President of the Board of Trade might require the Cinematograph Films Council to consider such cases and make recommendations for exemption from payment of the levy. That, perhaps, may be going rather too far in this first year before we see how things go, but I think it right to say to the House that there is fairly considerable disquiet in the trade on this point, because it does not look as though the informal arrangement which has made this work under the voluntary system is likely to be continued. That is the main concern that we have about the collection of the levy.

When we turn to the Regulations dealing with the distribution of the levy, there is one point which, I think, should be mentioned to the House before we approve the Regulations. It has been decided to take 20th October as the starting day for the first distribution period. That means that the distribution period is in effect settled for the next ten years and must always begin on the 20th October. Although we realise that the levy and the entertainments tax are theoretically completely separate subjects, nevertheless it will, I think, possibly be awkward in the future if we have the levy regulations beginning on the 20th October whereas any changes that there may be in entertainments tax would presumably take place fairly soon after a Budget which was introduced in April.

There may be a very long gap—as, in fact, there is this year—between changes in tax and possible changes in the levy. I mention that because it is something which may prove awkward in the future, although I fully recognise that there were good reasons this year for going on to October instead of starting the payment period at, for example, the end of July.

The Parliamentary Secretary has assured us, I am happy to say, that under paragraph 5 provisional payments will he made as they have been made under the voluntary scheme. I am sure that the film producers will be very glad to have this assurance, because I know that there has been some anxiety about this matter of provisional payments, and I think that they will be glad to know that the Agency proposes to carry on making the usual very substantial provisional payments, even before they can come to the final computation of what any particular firm has earned. We are very glad to have that assurance.

On the other hand, when we come to paragraph 6, concerning the computation of earnings of films, once again there is considerable anxiety in the trade, and I am rather surprised that the Parliamentary Secretary has not even referred to it, because under paragraph 6 provision is made in the first subsection that a long film shall receive one unit and a short film two and a half times the rate.

Considerable representations have been made, by the film producers, the Association of Cinematograph and Television Technicians and the Association of Specialised Film Producers, that the President of the Board of Trade ought to have included a special provision for second feature films. They formally asked, I understand, that for such features the unit should be twice the basic unit. So it is rather surprising that the Parliamentary Secertary, having received formal representations from three important associations in the trade, has not even mentioned today the reasons why the President of the Board of Trade has felt himself unable to accede to this request. I do not want to go into all the details about the difficulties which the makers of second feature films are now experimenting, because I think that they are well known to anyone familiar with conditions in the trade.

I have no doubt that the Parliamentary Secretary is aware that, among other things, the National Film Finance Corporation makes very much more stringent conditions for second feature films than it does for other types of films in offering assistance with finance. In general terms, I think that it is right to say that of all the groups of British films now being made they are suffering most at the present time, so I think that we are at least entitled to some explanation why, with such strong pressure, the President of the Board of Trade has not felt himself able to accede to the request.

When we come to the later provisions concerning what one might call the tightening up of procedure, particularly in cases where two or more films are being shown in the same programme, and where there may be some little adjustment between the earnings of one and another, I assure the Parliamentary Secretary that we very much welcome the proposals in the Regulations, because it is most important that everyone should feel that there is no possibility of any dishonest juggling with the money which, after all, is collected from other people in the trade.

We are, therefore, glad to see that proper discretion has been given to the Agency. I quite agree with the Parliamentary Secretary that that is the best way to do it. So far as I can judge, the Agency is being given adequate powers to deal with the kind of difficulty which it has been suggested may have arisen in one or two cases under the voluntary scheme. That seems to us a very proper provision in the Regulations.

Most of the other provisions in the Regulations are solely of technical interest. Before we conclude this brief debate, however, I should like to draw attention to one rather important point. It is something new so far as Parliament is concerned, although the voluntary scheme had some provision for the same thing. It is the position of films made for television. The Parliamentary Secretary might be more explicit, because this is important in view of the increase in the number of television films now made. The general principle is that if a film is made primarily for television it does not seem fair that it should receive part of the money which was intended really to support the production of films shown in commercial cinemas. As this is the first time that such a distinction between one type of film and another has been made in statutory form, I think that we might have had a few words of explanation, because it is a matter of considerable public interest and of some interest in the trade.

There is one other small point which interests me personally and to which I should like to draw the attention of the House. Paragraph 13, sub-paragraph 3, provides that the maker of a film may assign his responsibility to claim on the fund to some other person and that if he does so the assignee shall … be deemed for all purposes of these Regulations to be the maker of the film to the exclusion of the actual maker thereof … While, of course, one wants completely to safeguard the financial rights of any person to whom an assignment of this sort has been made, nevertheless it seems to me that the Agency should at least be permitted—it may not necessarily be obliged—to give to the actual maker of the film information as to the amount of levy which has been earned by any film of his.

It does not seem right that when we are dealing with a quasi-public fund—this is not a matter simply of private agreement between individuals—a maker who applies to the Board of Trade should not be given that information. I should like the Parliamentary Secretary to say that whereas there may not necessarily be any statutory obligation upon the Agency to give that information, there is nothing to prevent it giving the information to the actual maker of the film even though he may have assigned his financial rights to somebody else.

After all, the person who actually made the film has a great interest in what happens to it. It might strengthen his hand in any future negotiations if he could say, "My last film made such and such an amount and received so much from the fund". I hope very much that we can have this assurance.

That may seem to be a small point, but it is one which I believe to be of considerable importance to certain individuals. The whole purpose of these Regulations is to assist the makers of British films. I hope, therefore, that on that small point we may have a satisfactory reply from the Parliamentary Secretary. Apart from these relatively minor matters, we on this side support the Regulations.

6.12 p.m.

Wing Commander Eric Bullus (Wembley, North)

I should like briefly to support the earlier remarks made by the hon. Lady the Member for Flint, East (Mrs. White). While we all welcome the general agreement on the levy, there are some cinemas which are above the £150 limit which were previously exempt from the levy, but which now will have to pay it and will be considerably affected. As there are so few cases, I wonder whether my hon. Friend the Parliamentary Secretary will look sympathetically at them.

There is one such cinema which serves part of my constituency. It has a seating capacity of 2,000 and runs the "second run" films. Previously, this cinema was exempt from the levy, but it will now have to pay the statutory levy. There are very few such cinemas. If the Minister will consider them and help them if possible, I shall be grateful, along with those others who are similarly affected.

6.13 p.m.

Mr. John Howard (Southampton, Test)

I shall detain the House for only a few moments in elaborating the point concerning the larger cinema whose takings, although they may be a little above £150 a week, are still insufficient to sustain the standing charges. Those cinemas may, by reason of wages to staff, rent and rates and the usual outgoings, require to take more than £150 before they can break even. Under the old voluntary scheme, the renters made concessions by reducing the film hire for this type of cinema, but if a reduction in film hire was inadequate and the cinema was still unable to pay its way under the voluntary scheme, no action was taken to collect the film levy.

It is quite apparent that the producers and renters together have an interest in keeping the cinema alive. If they waive a certain part of the film hire, the cinema is able to make sufficient money to keep going and a certain amount of the takings eventually flows back into the production end of the trade. If we look at the problem in the inflexible way that the Regulations treat it, there will be no ground for concession; the full levy has to be exacted from the cinema irrespective of its standing charges and, at the same time, there is not the encouragement to the renter to make a concession.

I hope that my hon. Friend the Parliamentary Secretary will reconsider this matter. He might possibly suggest that one body, either the B.F.P.A. or some other body, could examine the accounts of the cinemas and if it appears that the payment of the levy is causing a cinema to lose money every week, possibly concessions could be made by waiving the levy. At the same time, a certain responsibility rests upon the trade itself in the intervening period. The end of the trade of which I am thinking is the production end and the renters. They could continue to make some form of concession in film hire to these cinemas in the hope that my hon. Friend might come to their rescue later.

6.16 p.m.

Mr. Erroll

The hon. Lady the Member for Flint, East (Mrs. White) remarked upon the brevity of my opening remarks. She will, I am sure, appreciate that I intended no discourtesy to the House. I wished to refer particularly to the points contained in the Regulations, knowing full well that there might he matters lying to one side of the Regulations which might be raised by hon. Members and that in my opening remarks I could not exactly anticipate which points might be raised.

I should like to deal, first, with the question of exemptions for individual larger cinemas. We examined very carefully the possibilities of providing some sort of an exemption scheme for the special case of the larger cinema which is faring badly at the present time. We received conflicting views on the matter and we came to the conclusion that the disadvantages of such a scheme as was outlined, for example, by the hon. Lady would outweigh the advantages.

We feel that while in the future there may still be cases of individual difficulty, they should be substantially reduced for the reasons which I shall give. First, the exemption limit has been raised from £150 gross to approximately £190 gross. Then, there has been a reduction in the levy on the cheaper seats and also a reduction in Entertainments Duty. The new levy and duty scales are so designed to enable cinemas to retain a larger proportion of the increase in seat prices than was formerly the case in a great many instances. There are signs, if one is to judge by the trade Press, that there may well be increases in the prices of seats in the coming months which will enable those cinemas which are particularly hard hit to take advantage of a general advance, small though it may be, in seat prices.

We feel, therefore, that those cinemas which, in the past have been hard hit and those which have had some measure of relief from the special scheme operated under the voluntary scheme should think not only on the basis of past earnings and outgoings, but should make a reassessment of the likely trend of events in the coming months based on the considerations which I have just given. I would only add that we fully understand the difficulties which the cinemas have been experiencing, but after thinking the matter over carefully we feel that for the time being at least we should wait to see how the Regulations work out in practice.

The hon. Lady referred to the fact that the levy changes will in future years take place in October, whereas Budget changes arise in April, and that this might cause difficulty. We have to remember that the starting date of 20th October was chosen because the trade-operated scheme was due to come to an end in that month. By choosing any other date, we should have had to accept the consequences either of a hiatus between the end of one scheme and the beginning of another or of overlapping. So that it was surely worth while to make the new scheme start where the old scheme left off. In any case, it is surely desirable to avoid linking the levy with Entertainments Duty.

Mr. Douglas Jay (Battersea, North)

We do have October Budgets under the present Government.

Mr. Erroll

I thought that the right hon. Gentleman the Member for Battersea, North (Mr. Jay) would not be able to resist making a crack like that, but he was well answered by the Economic Secretary earlier today. The eventuality that the right hon. Gentleman describes is not likely to occur.

The next matter the hon. Lady mentioned was that of payment for second feature films. As hon. Members will know those films, like short films, are let for a fixed sum instead of on the basis of a percentage of the box office takings, as are first feature films. It was suggested in some quarters that the earnings of second feature films should be multiplied by two, and their share of the levy should be calculated in much the same way as is that of short films, whose earnings are multiplied by two and a half.

I will admit straight away that the arguments for and against are fairly finely balanced. The arguments in favour of special consideration for second feature films are that there is a great demand by cinema patrons and exhibitors for the long supporting films and that their production has become uneconomic owing to increased costs of production at a time when there is less money available for supporting programme features. This, in turn, has led to a serious drop in second feature film production so that second feature films are simply not available in sufficient quantity. A larger levy for second feature films would assist such production. That is how the arguments run.

I will now put the arguments on the other side. On the other side we feel that the solution of the problem is best left to the economic forces in the trade. If second feature films are really in great public demand we think the public will be willing to pay a little more for the longer programmes these films make possible, and this, in turn, will enable higher rents to be obtained for second feature films. Alternatively, if the public tends to stay away because of the absence or poor quality of the supporting programmes it must be in the interest of the exhibitor and supplier to ensure that the production of second feature films becomes a paying proposition and that second feature films get a proper economic rental.

It is questionable whether a multiplier of two would have the effect the hon. Lady has suggested, because it is quite likely that in present conditions of financial stringency rents for second feature films would be forced down by exhibitors on the ground that those films were now getting substantially increased contributions from the levy. That would mean that the producers of second feature films could not get so much by way of letting. Indeed, the experience of the producers of short films would seem to bear that out. So, after considering the pros and cons very carefully, we have come to the conclusion that it will be better to provide no special payment for this class of film.

As for television films, we did take very carefully into account the views put forward most strongly by the trade that the levy on cinemas should not be used to assist the production of television films. We realise, however, that this may well be a growing market, and we feel that the regulations as framed are probably right for the time being. We are keeping very closely in touch with the development of television film production and of films suitable for showing on television, and we shall make quite certain that we are not left behind in this important matter.

Another matter which was raised was that of the publication of details of levy payments. I should make it plain that the Board of Trade has no power to compel the Agency to publish details of payments, but we appreciate that the problem is a difficult one. I would only say that the Agency has been in operation for only a very short time, and that I am sure that it will be guided by the views of the House and of other interested parties in deciding in its discretion whether it should make any publication of individual figures.

Mrs. White

There are really two separate issues. One is that of the figures for all recipients should be made public. The other is that the individual maker of a film should be given information if he personally asks for it though it need not necessarily be made available to the general public.

Mr. Erroll

I am grateful to the hon. Lady. I had been thinking of the general question. I appreciate that her suggestion is a different one. It is the sort of question that I should like to leave with the Agency for the time being, saying only, in conclusion, that the Board of Trade has no power to compel the Agency to divulge such a figure even on an individual basis.

Question put and agreed to.

Resolved, That the Draft Cinematograph Films (Collection of Levy) Regulations, 1957, a copy of which was laid before this House on 26th June, be approved.

Draft Cinematograph Films (Distribution of Levy) Regulations, 1957 [copy laid before the House, 26th June], approved.—[Mr. Erroll.]