The next Amendment selected is that in page 1, line 22, in the name of the right hon. Member for Huyton (Mr. H. Wilson). It would be permissible and, I think, convenient to discuss at the same time the Amendment in the name of the hon. Member for Govan (Mr. Rankin), in page 1, line 23, at end insert:(3) Entertainments duty shall not be chargeable during any calendar year commencing with the first day of January on payments for 1066 admission to any cinematograph theatre in respect of which the Commissioners of Customs and Excise are satisfied that during the first twelve months of the preceding period of fifteen months the receipts in respect of payments for admission (excluding entertainments duty) have not exceeded the expenses of that cinematograph theatre.but to have the vote only on the first Amendment.
Mr. Glenvil Hall
I notice, Mr. Deputy-Speaker, that you have not thought fit to call the new Clause standing in the name of my right hon. and 1067 learned Friend the Member for Montgomery (Mr. C. Davies), myself and other hon. Members—"Reduction of sixty per cent. rate of purchase tax." It would be improper for me to ask you why, but as the Clause was tabled in order to elicit from the Government a statement about their intention with regard to the tax on musical instruments, I was wondering, as they have promised to look into it, whether you would give the Financial Secretary an opportunity now of letting us know the Government's position.
I cannot do that. The right hon. Gentleman said that he would be wrong to question the selection, and I should be equally wrong if I were to give a reply.
§ Mrs. Eirene White (Flint, East)
I beg to move, in page 1, line 22, to leave out "eleven pence" and to insert:the specified sum.(3) For the purpose of the last foregoing subsection, the specified sum is—In moving the Amendment in the name of my right hon. Friend the Member for Huyton (Mr. H. Wilson) and other hon. Members, I am glad, Mr. Deputy-Speaker, that you have suggested that we might discuss with it the following Amendment because, although they deal with slightly different points, they are both concerned with the state of the cinema industry and the effect of the Government's proposals.
- (a) if the amount of the payment for admission, including the amount of the duty, is less than two shillings and nine pence, the sum of eleven pence; or
- (b) if the amount of the payment for admission, including the amount of the duty, is two shillings and nine pence or more, the sum of one shilling".
When we discussed the Entertainments Duty during the Committee stage, we suggested that a much more generous remission might be made by the Government, and that they should omit the first shilling of all seat prices from the calculation of the duty. We made another suggestion, which is relevant to what we are about to discuss, that it would be a very good thing if they omitted altogether from their calculations for tax the new statutory levy. Both these suggestions were rejected. At that time, we were under some disadvantage because the House was not then in possession of the facts concerning 1068 the statutory levy; these were laid before us only some time later, and, in fact, the Regulations made under the Cinematograph Films Act were passed by the House last week.
Now that we know what the combined effect of the levy and tax proposals is, we find—as I suggested to the Chancellor would be the case—that the result of taking the two things together is that, once again, there are considerable anomalies in the incidence of tax and levy combined. Largely for that reason, we are suggesting tonight that, in order to give at least some help where we think it most necessary, to an industry which is still very hard-pressed despite some tax remission, something should be done in regard to seats costing 2s. 9d. or more.
It might be asked, "Why take the seats at rather higher prices for the purpose of relief? Surely, if you are considering that sort of thing, the more natural course would be to ask for greater relief in respect of seats at lower prices". When one looks into the figures, one finds that, with the arrangements for the levy and tax combined, the lower-priced seats, in fact, now leave rather more in the pockets of the exhibitor than do the higher-priced seats. Taking the range from 2s. 9d. up to 3s. 6d., which is the range within which by far the greater number of cinema seats is sold in this country, we find that the exhibitor is only ¾d. per seat better off under the tax remission offered by the Government. In respect of the lower-priced seats, on the other hand, he has certain advantages, and the maximum advantage he gets per seat is 2¼d.
The exhibitor gets the advantage at various odd points on the scale. That is one of the troubles, because, since the Government were unable to accept our earlier suggestions, we now find these peculiar anomalies returning. On a 1s. seat, the exhibitor will be 1d. per seat better off. On a 1s. 3d. seat, he will be l¾d. better off. On a 1s. 4d. seat he will be l½d. better off, and on a 1s. 6d. seat he will be 2d. better off. Curiously enough, if he puts up his price by 1d. he may find that the net result is to make him slightly worse off than he would be if he did not put up the price at all. In the price range from 2s. 9d. upwards, the exhibitor feels that he has been treated badly, because his net gain is only ¾d. per seat. In the 1069 range of prices somewhat higher, from 3s. 6d. upwards, he is only 1d. or 1¼d. better off.
We have had the very strongest representations from the exhibitors that, although the public believes them to be very much more prosperous owing to the remission of Entertainments Duty in the Budget, they will, in fact, be not much better off, partly because they have to pay extra levy and also because they have had to pay additional film hire. Also, like so many others, they have recently had to meet an extra wages burden, though that is incidental and we really cannot bring that into the argument.
The net effect of having what the public believes to be a remission of £6½ million is that the exhibitor will benefit, so it is reckoned, by not more than £2¼ million altogether and that those who are selling the higher priced seats will benefit least. The great bulk of the business comes in the 2s. 9d.-3s. 6d. seats. That is why the exhibitors have asked us to concentrate on this group. When we asked for a larger remission at an earlier stage, the Chancellor resisted our request because, he said, it would cost the Revenue an additional £2 million, which he felt was excessive and, therefore, he could not accept our proposal.
I have asked the Cinematograph Exhibitors' Association what it calculates the cost of this proposal would be. I am told that the closest calculation it can make is that in a full year it would amount to about £680,000. In the current year, because the levy regulations do not take effect just yet, the net cost would be about £300,000. That is not a very large sum in an industry in which the general pressure of economic forces has been particularly hard in the last few years.
We believe that it is necessary to do something if we are to avoid large-scale closures of cinemas over the next few years. We hope very much that the way we propose tonight will commend itself to the Government as being an intelligent method of meeting a difficult situation. I shall not say anything on the second Amendment, on which my hon. Friend the Member for Govan (Mr. Rankin) would like to speak. Our main point is that once again we are suffering from anomalies as a result of the Government's policy. We believe that our suggestion 1070 would do a great deal towards meeting those difficulties and we think that the amount for which we now ask is not excessive in the light of the conditions of the cinema industry, which is well known to hon. Members on both sides.
§ Mr. John Rankin (Glasgow, Govan)
I beg to second the Amendment.
As my hon. Friend the Member for Flint, East (Mrs. White) said in so ably moving the Amendment, I want briefly to deal with the second Amendment, which appears in my name. I fully endorse all that my hon. Friend has said in advancing the claim for a more just distribution of the £6½ million which the Chancellor has given. Now that we see how the levy and the tax are working out, it has become perfectly clear, as my hon. Friend said, that those cinemas in which the gross admission price is 2s. 9d. upwards are being unfairly treated in relation to those cinemas in which the price is 2s. 8d. or less. We feel that with the co-operation of the Chancellor, which, we hope, will be forthcoming later in this debate, this discrepancy could be easily ironed out.
My Amendment deals with those cinemas which are not small cinemas or which are not operating in the marginal class, for we agree that both of these cases have been fairly treated by the President of the Board of Trade. But despite the promises that were clearly made in Committee, the type of cinema to which I referred, whore the access is just above the £150 mark, sometimes making a little profit and sometimes a loss, has been left completely out of the President's reckoning.
In Committee on the Cinematograph Films Bill [Lords] on 12th March, I moved an Amendment dealing specifically with this type of cinema and also including the small cinema and the marginal cinema. The Amendment asked that these cinemas should be exempt from liability to the levy.
In reply to the case that was then put up, the Parliamentary Secretary to the Board of Trade said:I tried in my winding-up speech on the Second Reading to show that the Regulations would contain safeguards to cover excessive hardship for certain cinemas. The Amendment proposed by the hon Member for Govan would assist cinemas which are in difficulties, but we feel that it is inappropriate 1071 for it to be written into the Bill because it is properly a matter for the Regulations.That was one of the difficulties that faced us throughout the Committee stage of that Bill. We were repeatedly told by the Government Front Bench that this matter and the next matter would be dealt with in the regulations. To some extent we were working with the blinkers on. We had to wait until the regulations came along and with them would come the Kingdom of Heaven also for the cinema people.
The Parliamentary Secretary went on:I give an assurance to the hon. Gentleman that we are now considering the exact form which any Regulations should take and that we have in mind a proposal somewhat similar to this Amendment. When it has been worked out we intend to submit it to the Cinematograph Films Council for its consideration and opinion. I stress that we have undertaken to submit draft Regulations to the Council for its advice before they are finally tabled for consideration by Parliament."—[OFFICIAL REPORT, Standing Committee B, 12th March, 1957; c. 80-1.]There was an explicit promise that a regulation in keeping with the Amendment I had proposed would be tabled in due course after consultation with the Cinematograph Films Council.
It is opportune to ask the Financial Secretary to the Treasury whether or not any attempt was made to honour the promise that was given in Committee, because, when we considered the regulations, absolutely no regard whatsoever was paid to the promise that was made. The President of the Board of Trade had let us down.
It has been admitted time and time again, during the many debates that we have had on the cinema industry, that the levy and the tax are tied very closely together. That has not been denied. Now, despite the promise made to consider the exemption of this type of cinema from the operation of the levy, and the betrayal of that promise, nothing more can be done regarding the levy. However, we ask the Chancellor whether he will seek to honour the promise made by his colleague, the President of the Board of Trade, and relieve this type of cinema from the incidence of Entertainments Duty.
We are not asking for a great deal. There are not many cinemas which come into this category. I hope that the Chan- 1072 cellor will agree that it is important from the point of view of the producer to keep as many cinemas open as possible. It is important from the point of view of the producer, the renter, the public, and also of the Chancellor that he should seek to build up the cinemas so that they may give him some income in the future rather than impose such burdens on them as may cause them to close, and so penalise not only the Chancellor but all those who derive a living and get enjoyment from films.
This is a reasonable plea to make. It gives the right hon. Gentleman the chance to honour a promise that has been broken by his colleague, and to do so at a very small price. I hope, therefore, that when he replies to the debate the right hon. Gentleman will say that he will accept this Amendment.
§ Mr. Geoffrey Hirst (Shipley)
I had a great deal to say on this subject at an earlier stage of these proceedings and I hesitate, therefore, to keep the House more than one minute tonight in supporting the suggestions made. At the same time, we should not be unmindful of what has been done by the Government on two occasions to help the cinema industry. We are sometimes inclined in our criticisms to overlook that, but we are grateful for the assistance given on two separate occasion in this respect. The trouble is that the amount, although helpful, has fallen somewhat short of the need, and it seems a pity to spoil the occasion for a ha'p'orth of tar, since it is not very much more that is being asked for tonight.
My right hon. and hon. Friends should not be altogether unmindful of the reasonable way in which the Opposition has put forward this Amendment. I am a relatively new Member, but some of us here have sat on the Opposition benches and made much stronger and more unrealistic requests than have been made on this occasion. I want to be fair, because I have myself done so, and therefore I respect the restraint of the Opposition in this matter. I shall not go into details. I have a good brief here, but I will spare my hon. Friends that because they know it all.
I hope that a little resilience will be produced, because there is no doubt that, although anomalies always arise, the anomaly to which the hon. Lady the 1073 Member for Flint, East (Mrs. White) referred, though not a matter of life and death, was a substantial one. It must be wrong if we force people into a loss position which might well mean a business closing down through a type of taxation which hits them not on profits but on turnover. That point has been made many times, and it is a substantial one.
§ 9.30 p.m.
§ Mr. Powell
The hon. Lady the Member for Flint, East (Mrs. White) admitted that the Amendment would give assistance to the larger cinemas on the whole and, on the whole, to the circuit rather than the individual cinemas.
§ Mrs. White
I said no such thing. I said that we were proposing to help with the rather more expensive seats, but there are many cinemas of modest size which are not circuit cinemas which have seats at 2s. 9d.
§ Mr. Powell
This proposal deals with seats at 2s. 9d. and above, and it remains a fact that the bulk of the assistance which the proposal would give would inevitably go to the larger and, on the whole, the circuit cinemas. I do not make that a case against the Amendment, but it is worth noticing.
The second point the hon. Lady made was that we were returning to the anomalies of the old scale of Entertainments Duty from which we had got away. Certainly it was one of the intentions of the reformation of the scale of Entertainments Duty in Clause 1 to remove the very large variation in the incidence of Entertainments Duty on differently priced seats. That has been done. The progression from the point at which Entertainments Duty becomes chargeable is now an absolutely steady and even progression.
When the hon. Lady quoted anomalies, they were variations in the amount of relief per seat and according to the price of the seat which is given by the Clause, but the anomalies are due to the removal of the variations in the existing scale and its replacement by a level, steadily graduated scale. They are anomalies of which we are getting rid, not anomalies which we are creating.
It is true that the form in which the levy is to be imposed falls with slightly more weight upon seats priced at 2s. 9d. and above, but that is no reason why a 1074 further approximately £750,000 should be added to the total amount of remission of Entertainments Duty. The total amount of levy which will be obtained is that which was envisaged when my right hon. Friend came to his conclusion that £6½ million worth of Entertainments Duty was the appropriate amount of remission. There is no reason in the particular form of levy, which has been decided in consultation with the British Films Council and to which the House has agreed after debate, why we should alter the amount of the remission.
The hon. Member for Govan (Mr. Rankin) spoke of a more just distribution of the £6½ million as though it was that for which he was asking. In fact, he was asking for the £6½ million to be increased to £7¼ million and we had better get it into its right perspective. The relationship between the amount of the levy and the amount of the remission for the industry as a whole is not affected by the form of the levy. I do not believe that the form of the levy, which has been decided in consultation with the industry and by the House, will sensibly affect the benefit which the remission of duty will bring to the industry.
I must briefly mention the matters raised in the Amendment which is not directly before the House, but which the hon. Member for Govan touched upon. It would be quite out of the question to relate an indirect tax—and this is a tax upon admissions—to the state of profitability or otherwise of a particular undertaking. It would be rather like relating the levy of Purchase Tax to the question whether a particular wholesaler was or was not making a profit. If one is imposing an indirect tax, one cannot have regard to the trading position of the individual trader, and we are dealing here with an indirect and not a direct tax.
Putting that question entirely on one side, however, there is no necessary relationship between taxable capacity and the test envisaged in the hon. Member's Amendment. Many of these cinemas which individually, on his basis, do not make profits are members of groups which, taken as groups, may be making quite substantial profits and may be in quite a comfortable commercial position.
§ Mr. Rankin
Surely that is a general remark which applies to some of the cinemas whose position has already been 1075 recognised by the Government—the marginal type—and dealt with during the course of the Bill. The argument applies to them as well.
§ Mr. Powell
It is quite true that there is built into the Entertainments Duty—irrationally, if one likes to say so—the rural areas exemption, but I believe that that exemption is valued by hon. Members on both sides of the House. It is admittedly a fiscal anomaly, but it was deliberately introduced for social reasons, to avoid certain results following in the rural areas. It in no way justifies us in picking out certain cinemas, not necessarily in rural areas, which upon a certain method of calculation may be making no profit, and waiving Entertainments Duty in their case.
§ Mr. Rankin
Accepting all that, why did the Parliamentary Secretary make a promise—presumably on behalf of the Government and his right hon. Friend—to deal with that type of cinema?
§ Mr. Powell
I am sorry; I am now dealing with Entertainments Duty. The hon. Member has had his opportunity to debate the question of the levy when it
§ was before the House. On his proposal, I would only say that if the estimate made by the industry itself, as to the scope of an Amendment of this sort, is correct, the cost would be approximately £7 million in a full year. In other words, it would mean doubling the remission which has been made by the Bill. It will therefore be seen that in any case it is quite out of the question within the scope of the proposals included in the Bill. Therefore, both upon the narrower matter which the hon. Lady's Amendment raises and upon the wider matters to which the hon. Member for Govan introduced us, I must advise the House not to accept the Amendment.
§ Mr. Rankin
In his reply the Financial Secretary stated that I had had the opportunity, during the proceedings on the Bill, to deal with the position—
§ Mr. Speaker
The hon. Member cannot make a second speech upon this matter except by leave of the House.
§ Question put, That "eleven pence" stand part of the Bill:—
§ The House divided: Ayes 244, Noes 192.1079
§ 9.45 p.m.
§ Mr. Powell
I beg to move, in page 2, line 27, at the end to insert:(7) The power conferred by subsection (1) of section two of the Finance (New Duties) Act, 1916, to make regulations for carrying the provisions of that Act as to entertainments duty into effect shall include power to make regulations for carrying into effect the provisions of this or any other Act as to the duty.This is a very technical Amendment, which is designed to make it possible at a fairly early date to consolidate the law relating to Entertainments Duty. If this Amendment were not made it would be necessary in the consolidating Act to restrict the regulation-making power to the effect of the 1916 Act, but to exclude from it the effect of all subsequent Acts relating to Entertainments Duty. There is no practical effect other than to make it possible to avoid that absurdity in any future consolidating Measure.
§ Mrs. White
I do not propose to go into the technicalities of this Amendment. It is unfortunate that we should be preparing to consolidate an Entertainments Duty which has become exclusively a cinema tax and has very little basis in logic. It is because the duty is levied upon the purchaser of the ticket and not on the exhibitor in the cinema that we land ourselves in so many difficulties in one Finance Bill after another.
1080 I cannot say that we welcome this provision, because I think that the time has come when, far from consolidating it, we ought to discuss the whole logical or illogical basis of it. As we do not know precisely what the Government have in mind for the future, and as they regard this as a necessary enabling step, I think that we have to accept it; but I think we should make our protest that the Government are not prepared to look very thoroughly into the whole basis of a tax which has become very anomalous in its operation.
§ Amendment agreed to.