Clause 3.—(ENTERTAINMENTS DUTY.)

HC Deb 12 June 1958 vol 589 cc417-64

3.43 p.m.

Mrs. Eirene White (Flint, East)

I beg to move, in page 2, line 32, to leave out "one shilling and sixpence" and to insert "two shillings".

Perhaps, Sir Charles, you would be agreeable that we should discuss with this Amendment the preceding Amendment in the name of my hon. Friend the Member for Govan (Mr. Rankin), in page 2, line 30, to leave out "one-third" and to insert "one-sixth", which has not been selected.

The aim of both Amendments is to extend to some degree the proposals made by the Chancellor of the Exchequer for the reduction of Entertainments Duty, or as I prefer to call it, the "cinema tax", because this duty affects nowadays no other form of entertainment but cinemas. We are, of course, aware that the reduction this year is of great substance. It has been welcomed by the cinema industry.

On the other hand, as the Government know, the case put forward by the industry was not for the partial remission of the tax, but for its total abolition. I know that some hon. Members who take a very keen interest in this matter will wish at a later stage to adduce arguments for total abolition, but we recognise that for any Chancellor to deprive himself of such substantial revenue as would be involved in the total abolition of this tax is a little too much to expect. There is a strong case this year, whatever might be done in subsequent Budgets, for something a little more generous than has been proposed.

Then comes the question of method. One method is to vary the proportion of tax to be levied on the amount of the seat price above 1s. 6d. At present, the proposal is that we take out one-third of the price above 1s. 6d. One can vary that proportion. The other way, which has certain advantages, is to increase the minimum figure from 1s. 6d. to 2s. If we did that, and exempt all seat prices from 2s. downwards, it would have a particularly beneficial effect on the smaller cinemas which, on the whole, receive the sympathy of this Committee. The smaller cinema is not necessarily the cheapest. There are one or two in London which are not very large, but which are extremely expensive. In most towns and villages, however, the smaller cinema has much the larger proportion of inexpensive seats.

Cinematograph exhibitors who tried to work out the effects of the Amendment tell us that if we increased to 2s. the sum below which no tax will be levied, about 750 cinemas would be freed entirely from the payment of Entertainments Duty. Under the present proposal of the Chancellor that 1s. 6d. should be the limit, about 147 cinemas would pay no tax at all, in addition, of course, to the remission of the tax on the cheaper seats of all other cinemas. They tell us that if we made this further Amendment there would be another 750 cinemas freed, making almost 900 in all entirely exempt from the payment of this tax. That would clearly be a very great benefit to smaller cinema exhibitors, many of whom have had a very difficult time.

Even in the last few weeks, since the Chancellor opened his Budget, there have been fairly encouraging signs that, given very good pictures, it is still possible to draw large audiences to cinemas. It so happens that in the last few weeks there have been films which have been outstanding in their box office takings and which have brought a breath of encouragement to the industry. Nevertheless, outstanding pictures do not reach the small cinemas which we are now discussing and which cause us much concern, until they have been shown already in first-run, second-run and possibly even third-run houses. It takes a very long time for a picture like "The Bridge on the River Kwai" to reach the smaller cinemas, even if it ever reaches them at all. The smaller cinemas are not always in a position to book them. The fact that there are outstanding pictures cannot be used as an argument for refusing further relief to the cinemas which we are now discussing.

I cannot estimate the cost of this proposed Amendment, but I think I am right in saying that it would be about another £5 million. That may sound a very considerable concession. But, after all, the Chancellor has to look at this from the long-term point of view. If the tax remains sufficiently onerous, the small cinemas will be driven out of business altogether. We know that cinemas have been closing because of financial difficulties, and if a further number of them close, then, of course, the Chancellor receives less tax.

Therefore, the Chancellor should balance any proposed remission of tax against the possibility that if the remission is not granted the cinemas may have to close their doors. If they go under in the struggle against television and other forms of entertainment he will be left without this tax, which will leave him worse off in the long run than if he made some adjustment now.

Those of us who follow the fortunes of this industry, and who have spoken on this matter many limes in the House, are fully aware of some of the difficulties which still face the industry in spite of the help given by the Chancellor this year. We still feel that the tax which is now levied on cinemas only, and, as I have said, on no other form of entertainment, and which is levied without any regard at all to whether the establishment concerned is making a profit or a loss, is a tax which has really had its day.

I repeat that we understand that it may be difficult for the Chancellor to do more now than he has done in the sense of total abolition and that is why we are confining ourselves, in this Amendment, to a relatively small further concession.

We had yesterday the annual Report of the National Film Finance Corporation for the year ended 31st March, 1958. It points out that where British film production is concerned, which is of extreme importance to us, it will get roughly 10 per cent. of the remission which has been already proposed. I think that many people do not realise what a relatively small amount of the gross takings of the cinemas ultimately reaches the producer of the films on which the cinemas depend. In the speech which Mr. John Davis recently gave to the Chartered Institute of Secretaries—a speech which I commend to anyone who wishes to learn the facts about the cinema industry—he points out that of the gross takings at the box office, which, in the last few years, have been, in very round figures, about £100 million a year, only about £15 million a year reaches the producer.

The Paymaster-General (Mr. Reginald Maudling)

On the figure which the hon. Lady represents as the amount going to the producer, has she taken into account the alteration of the levy? If she does, I think she will find that the proportion is a good deal higher than 10 per cent.

Mrs. White

The right hon. Gentleman is, of course, quite right. The Report from which I was quoting was up to March of this year. We have had some adjustments in the levy which also affect the other figure which I was about to give. Even so, and notwithstanding some improvement in the levy, one must remind oneself that the film producers do not get anything like as large an amount as, I think, the general public supposes them to get out of the gross takings at the box office.

We still do not know what arrangements the cinema industry itself intends to make as to the possible division of the spoils, if I may put it that way. That is still being actively discussed by the various interests. In fact, the National Film Finance Corporation also draws attention to the fact that it hopes that the arrangements made in this respect will be such as will benefit the film producers. We have had many discussions on the general state of this industry and I know that my hon. Friends wish to put a number of points, so I will not unduly detain the Committee. I would only say that I think that we have a very strong case for suggesting that the Chancellor might go a little further this year than he has gone in the direction I have indicated. This would be of further assistance to the small cinema.

The Paymaster-General has mentioned the levy. One has to recall that, with all the changes that have taken place, there are certain small cinemas which are now liable for levy which were not previously liable to levy. We have discussed that on previous occasions when the regulations of the levy were before us and I do not wish to enter into that now. It is, however, a point which one should have in mind when considering the position of these smaller establishments.

I think that if the other Amendment were accepted it would free entirely a further 750 cinemas. That is a very substantial number. There are about 4,000 cinemas in the country, and to relieve a further 750 entirely from tax, with all the bothers of collection, and so on, would, I think, be well worth doing. It would not relieve to any great extent the larger or more prosperous cinemas, because in them the great majority of seats cost 2s. or more. They are the ones which are benefiting primarily from the big pictures shown in their cinemas. I am talking not only of pictures of outstanding quality, but also of those which require very elaborate screens and projection arrangements, which may draw the public by their novelty or by their intrinsic merit, and which do not affect the smaller cinemas at all because they are not in a position to install the equipment required. For that reason the smaller cinema, relative to the larger cinema, is being placed in a very disadvantageous position because it cannot compete with Todd-A.O., or any of the other special attractions which the major cinemas are now going in for.

We have a good case for suggesting that the Chancellor should go a little further. He may feel that the Amendment that we have suggested is not the most desirable one and he may prefer the method suggested by my hon. Friends in the previous Amendment. That Amendment would take a proportion rather than alter the proposed maximum amount. I think myself that the suggestion of 2s. is probably the better. It is an amount easy to administer, and it would have the effect of helping the smaller cinemas in a way in which the other Amendment would not. Whichever one he chooses—and we should be glad to know the one which he prefers—I think that there is a strong case for something more being done this year towards the removing of a tax which has now so little justification.

4.0 p.m.

Mr. A. E. Cooper (Ilford, South)

I have much sympathy with the case made by the hon. Lady the Member for Flint, East (Mrs. White), but I think that we are not getting down to fundamentals with this industry. The remission which my right hon. Friend has given in the Budget has in no case been passed on to the consumer. In other words, the cinemas, small and large, will continue to play to the same small audiences to which they have played for a long time. All that will happen is that in some cases the loss margin will be reduced or the profit margin will be somewhat increased.

I submit to the Committee that we have to ask: why are the cinemas playing to half-empty houses? The answer, surely, is very simple. The industry, by and large, is producing very poor films. For pictures such as "The Bridge over the River Kwai" there is no difficulty whatever in filling the cinemas over and over again. There is plenty of evidence of that from certain films which are in the West End, have been there for some time and, because of their merits, will be there for a long time yet. It has been proved over and over again that the suburban cinemas will be packed night after night for films of high quality.

It therefore seems to me that what the cinema industry must do on the production side is to get round to the production of high quality films. All hon. Members associated with industry know perfectly well that if we produce a bad product in industry we expect to suffer for it. I do not see why the cinema industry should be relieved from the effects of competition, as we are apparently expecting it to be relieved. I submit that the hon. Lady and her hon. Friends who have great interest in this matter, would do well to point out to the production side that it is at that end of the industry that the remedy for the malaise of the industry lies.

Mr. John Rankin (Glasgow, Govan)

I should like to make my points on the Amendment standing in my name and the names of some of my hon. Friends, to line 30. Before developing in a little more detail what I intend to say, I should like to say a word, not in reply to the hon. Member for Ilford, South (Mr. Cooper), but in supplementation of what he said, because he has suggested that a good deal of the trouble which resides on the exhibiting side of the industry today is due to the poverty of the films being shown.

The productive side is tied to the admission side. The amount of money which is devoted to the production of films depends almost wholly on the number of people who go to see the films, and that number is steadily dropping.

Mr. Ellis Smith (Stoke-on-Trent, South)

They see them in their own homes.

Mr. Rankin

That is a point which we might develop later, but it is not pertinent to the narrow aspect of the Amendments. Many of us hope to develop it on the Question, "That the Clause stand part of the Bill," and my hon. Friend's co-operation will then be very warmly appreciated.

Mr. Ellis Smith

I am not out of sympathy with my hon. Friend's plea. I was only trying to emphasise the point.

Mr. Rankin

I certainly agree that there is competition from television.

The hon. Member for Ilford, South has stated a dilemma, and that dilemma must be broken at some point. We feel that if it were broken at the point of taxation we should be making a contribution to greater vigour within the industry which would result in better production and better films. He must realise that taxation is very heavy on the British film industry—relatively much heavier than that on the American film industry, because no tax is paid in America on any seat under 6s. 9d. We have no situation in this country which corresponds to that in any way at all. British films, on both the exhibiting and production sides, have been under very heavy competition from the Americans, and the handicap which has been placed on the British film industry has been placed there largely by the Government through taxation which is for too heavy.

That is why we feel that the dilemma, which has been so well stated by the hon. Member, is perhaps most appropriately dealt with from the point at which we are attacking it. I believe that the Government realise that fully, because this afternoon, in reply to my Question, the President of the Board of Trade was compelled to admit that if we compared attendances for the first quarter of 1958 with those for the similar quarter in 1957, the fall was 20 per cent. That is a very serious decline. Already, the industry calculates that if that trend continues this year will see a "new low" in total attendances. If that happens, less money will go into the productive side in the making of films, and when that happens the quality may suffer along the lines which the hon. Member feared.

In fact, however, his fears are not so real as he imagined, because, despite the handicap of heavy taxation, British film production, over the last few years, has been showing a marked improvement in quality. I need only mention a film like "Richard III". The hon. Member for Ilford, South mentioned "The Bridge over the River Kwai". Those will compare with productions in any part of the world. Within the last month we have had, "Witness for the Prosecution", with Charles Laughton in the leading rôle giving a dramatic performance which has probably never been excelled in the theatre at its best. This is the effort of the British film industry despite the handicap placed on it by taxation. We who want to see British films doing well ought to aid them by whatever means are most appropriate These two Amendments are methods of helping it, and I do not think we shall be choosey if the Government adopt either of them.

Perhaps I might now say a word or two in support of the Amendment in my name, the effect of which would be to ease still further, by halving it, the burden of Entertainments Duty on the cinema, which is the only form of entertainment now left to bear that tax. That is a stain that we want to wipe out. There is no such thing now as Entertainments Duty—it is a cinema tax, and in that connection I should like to draw attention to what the Chancellor said on 15th April last: 'I must say frankly that it cannot possibly be an object of Government policy to keep open the doors of every cinema in the country, regardless of the tastes and habits of the public. If people prefer to occupy more of their leisure time in other forms of entertainment and less in film-going, some reduction in the number of cinemas seems inevitable. However, I am satisfied that the present level of the duty is, in the changed circumstances, now too high and should be substantially reduced."—[OFFICIAL REPORT, 15th April, 1958; Vol. 586, c. 68–9.] The part of that passage that I think worth noting is that in which he says: … some reduction in the number of cinemas seems inevitable. I do not know exactly what could be done for them, because I imagine that on both sides of the Committee it is accepted that there will be a reduction in the number of cinemas. It might even be said that the number of people now attending cinemas is levelling out at the pre-war figure. The likely attendance of between 17 million and 18 million is practically that of 1938. It would, therefore, seem as though some form of rationalisation was taking place—a steadying up in the numbers.

Coming from the Chancellor, however, the words … some reduction in the number of cinemas seems inevitable assume a different significance. Why must the Chancellor take it upon himself to hasten this inevitable reduction by continuing the imposition of cinema tax? The right hon. Gentleman said that the duty was too high and should now be substantially reduced. In other words, he says that the effect of the duty is to reduce the number of cinemas, and he therefore continues the duty in order to continue increasing the number of cinemas that close down—

Mr. Maudling

My right hon. Friend said that the duty should be substantially reduced, and he did substantially reduce it.

Mr. Rankin

Yes, but since he reduced it 20 cinemas have closed.

It is, therefore, fair to say that even though the duty has been substantially reduced its very existence explains why cinemas are still closing. The duty ought to be abolished but, as I have already said, that is a wider aspect that we must leave until we debate the Question "That the Clause stand part of the Bill." However, I hope that we shall have an assurance that it is not Government policy to rationalise the exhibiting side by fiscal means.

It would seem fair to assume that the Chancellor cannot be keeping on this tax for the revenue that he hopes to get from it. He said in his Budget speech that the reduction would cost £14½ million in a full year, and that he was giving away more than half of the then yield, but the tax yield for April of this year—the Budget month—was £2,190,000; or an annual rate of £26,280,000—not £29 million. It was falling in the very month when the Chancellor was cutting the tax. Since then, attendances have continued to fall because, as I have just said, a further 20 cinemas have closed since the Budget was announced.

4.15 p.m.

The Chancellor's relief, therefore, could not save them, because it was too late and it was too little. That, indeed, is one of the criticisms that we might fairly make of the Government: that what they have done, even though it has been welcome in itself, has, in almost every case, been done a year too late. They did not act nearly so quickly as did the United States Government. When the American film industry over two years ago was in the state that ours is now, the American Government acted immediately, and acted in a more comprehensive way. The result has been that there has been some revival in the United States. That is a point that we can make, and it is one about which I hope the Chancellor will think when he is considering these Amendments.

When we look at the April figures, after allowing for the Budget reduction, I do not think that the right hon. Gentleman can expect to get more than £13 million of revenue in the financial year, even if attendances remain static, but I think that it will be agreed from what has been said this afternoon that these attendances are expected to fall by a further 15 per cent. on the 1957 figures. Today's figure indicated 20 per cent., so that in a full financial year the Chancellor will be lucky if, on present tendencies, he nets £11 million—and if cinemas were to continue to close at a still more rapid rate even that figure might be substantially less.

If the Chancellor cannot see his way to abolish the tax this year—although I think that he has still the opportunity—I press him to accept the first Amendment. I imagine that, at the very most, it would not cost him more than £5 million, but it would at least ensure that fewer, if any more, cinemas closed, and if attendance figures improve it could well cost him even less than £5 million.

There is an alternative, of course, and it is one which I am sure he wants to avoid. If he does not do this, he may find that next year he is finally forced to abolish the tax—I am not making a prophecy about that—because I agree that the right hon. Gentleman realises now that that is the logical outcome of what is being done at present. It is better to abolish it altogether than to wait until so few cinemas may be open that there is no alternative left. He may well by then have destroyed an industry which has been a very good dollar earner indeed, earning much foreign currency abroad.

I am sure that the right hon. Gentleman will agree with me that if the industry is to continue earning that money abroad it can do so only if there is a good domestic market. We can only get that good domestic market, sound and stable, if the tax is halved, as I suggest, and finally, I hope, when we come to next year, completely abolished.

Mr. Geoffrey Hirst (Shipley)

I am not unmindful of the extent to which my right hon. Friend the Chancellor of the Exchequer has helped in the substantial—which is the correct word to use—reduction in the Entertainments Duty this year, and I cannot be unmindful of the fact that Conservative Governments in earlier years have made some other reduction in the tax, all of which I applaud. I am not going to be ungracious about it, but I am going to be consistent, because I have often addressed the Committee on the subject, and hon. Members have been kind enough to listen to me.

I accept the fact that the policy which we have carried out over the years, in the context of the speech of my hon. Friend the Member for Ilford, South (Mr. Cooper), but not as he developed it, has to some extent been tinkering with the problem, and I agree that the lesson was learned much better in the United States than here, to which fact I myself drew attention last year. Sometimes, this moving backwards by stages can, in the long run, cost more than recognising the problem for what it is, facing it and deciding on what type of surgery is required to complete the cure, in so far as the Entertainments Duty itself is in any way a cure.

We have, perhaps, been in a little difficulty about that. I think that the discussion of this Amendment, which leans towards a further reduction, is helpful and wise. The hon. Member for Govan (Mr. Rankin) made a great point about the 20 cinemas that have been closed recently, and I feel that we have got to get the priorities right. I do not believe that Entertainments Duty is by any means the be-all and end-all of cinema closures. To a great extent, it is not. What it does affect is the overall health of the industry. Attendances have been falling and this is part of a vicious circle. It is also largely because of the competition from other forms of entertainment, and because of the fact that the public will now only go to see films of a character quite different from the entertainment which they can get at home.

This vicious circle also affects the extent to which Entertainments Duty, or cinema tax, as the hon. Lady the Member for Flint, East (Mrs. White) called it. which I think is a more correct name for it, if it is reduced, will enable the industry to help itself by making exhibitions more ready to supply cash for production funds, and, in turn, to increase the number of good films produced, and also to encourage cinemas through all that process to spend money on improving their efficiency and introduce new techniques when big enough to take them—and many are big enough to take them now.

It is all a sort of vicious circle, and to the extent to which the right atmosphere can be created the Government can play a large part in this business. It is rather like sailing a rocky boat and the Government trying, by life-belts or launching a lifeboat, to rescue people. The better way would be to launch a new boat which does not need to have a lifeboat for this purpose, though I feel that my right hon. Friend has himself taken the biggest step of all Conservative Chancellors in recent years to achieve this purpose and to help this industry.

I do not propose to use one of the bisques which I sometimes afford myself, though they do not come from the Whips Office, and I do not wish to range myself against the Government on this occasion. But I do want to point the story that comes out of this Amendment, because I think that the Opposition are right to bring it forward. I hope that the lesson will be learned, though I do not want to press it today, and I shall not do so, except possibly for some nominal taxation to square it up with the new forms of entertainment, such as television. I think that as soon as the Entertainments Duty is removed the more likely it is that the industry will adapt itself to modern considerations and techniques and do more to help itself, without Government support. That is what it wants and can do, if it knows that such a policy will be followed.

Mr. Stephen Swingler (Newcastle-under-Lyme)

I agree fully with the hon. Member for Ilford, South (Mr. Cooper) when he says that the cinema industry has suffered so much from Government half-measures, under all Governments, since the industry itself began, but, having said that, I part company from the hon. Gentleman, because I disagree so fully with everything else he said.

The hon. Gentleman introduced two typical fallacies about the industry. One was that the decline in attendances at the cinemas has something to do with quality. I just do not believe it. I should like to believe that there was some connection between the two, and, obviously, in particular cases, such as those of some of the films which have been quoted here today, including "The Bridge Over the River Kwai", one can point to certain evidence. I do not believe that there is either much more or much less rubbish being shown, though there is plenty of it, in the cinemas in 1958 than there was in 1948.

Today, there is an annual rate of only 900 million attendances, and in 1948 it was 1,500 million. We cannot account for that difference by pointing to quality. I do not think that it has anything at all to do with it. But we can account for that difference by pointing to the fact that there are 8 million television licences today, which have very much more to do with it. One might also point to the fact that today there is less money jingling in people's pockets. There is a whole series of factors, and the quality of films is only one of very many factors which have influenced it.

The other thing which the hon. Gentleman said, or inferred, was that quality pays, and therefore, if only the film industry would put its house in order and produce good quality films, everything would be all right. He said, quite naturally, and I agree with him, that those who produce bad products, as in other fields, ought to suffer for it, but I believe, after a modest study of the history and problems of the film industry, that that is not so. The whole problem facing the British film industry in all its history has been that good quality just does not automatically pay. In fact, the producers of films, both good and bad, in the United Kingdom, nearly always lose. It is quite rare for them to be able to get their money back. Because of that situation, the House of Commons has long been troubled with various kinds of legislation, as well as with problems connected with fiscal interference with the industry.

4.30 p.m.

Mr. Hirst

Is the hon. Gentleman speaking about good quality films, or good entertainment quality?

Mr. Swingler

In all respects, good entertainment quality or any other quality. There may be others with greater knowledge who will challenge me on this, but there are films which have been very good box office and excellent entertainment and highly popular, but on which the producers have not got their money back.

The reason has been that there are certain specific characteristics about the film producing industry. One is the very high capital cost of producing films and another is the limitation of the British market as such. A third characteristic is the fact that American producers have a tremendous advantage in the enormous American market which they can use before sending their films into the British market. That gives them an additional profit, so they can afford to sell their films here more cheaply—and there is also the fact that Hollywood is very highly capitalised and advertised. There are special factors in the history and economics of the film producing industry which mean that one cannot draw simple analogies with other industries.

In considering taxation on the cinema industry, we must recognise that the imposition of that taxation is completely arbitrary. We recognise that with other aspects of indirect taxation. The level of that taxation is charged according to the state of the industry and its alleged capacity to bear a certain amount of taxation, to provide a certain amount of revenue to the Exchequer. The second consideration is the desirability of fostering the industry and trade.

I know that in the past some hon. Members have supported maintaining a certain level of taxation on cinemas in order to streamline the trade. They regard it as a good thing that a number of cinemas have closed partly because of the weight of taxation because, as some of them have said and written, they thought that the country was "overcinemaed". They held the view that it was not a good argument to say that tax relief should be given to save some small cinemas from being closed down, since they believed that with developing television such cinemas ought to be closed down.

A good case can certainly be made in that direction, but it is clear, on the basis of the state of the trade and taking into account what has been done for theatres and football matches, and so on, that there is an overwhelming case for a bigger reduction in taxation than the Chancellor has granted this time. One has to judge the Chancellor's actions in relation to the prosperity of the cinemas and of the production industry.

There was in 1947 a decline of 18 per cent. in cinema attendances and by Christmas, 1957, we had reached the end of a period in which 400 cinemas had closed because of declining attendances and because of the margins which cinema proprietors had to pay taxation. Cinema proprietors, therefore, had an overwhelming case for the abolition of the tax, or at least its drastic reduction for their economic salvation.

Moreover, those who say that the country has been or is now "overcinemaed" and that it is, therefore, not a bad thing that some cinemas should close must appreciate that the effect of the tax and the effect of this state of the cinema industry is to play into the hands of a few oligarchs. That is what is happening. The steady closure of the small cinemas, in spite of this concession, will eventually land us in a state where cinemas are divided between the Rank empire and the A.B.C. empire. We shall be faced with monopolistic concerns.

I should have thought that that was a very bad thing. That process can be arrested only by reduction in taxation and by giving sufficient relief to small and medium-sized cinemas to enable them to stay open in this period of severe competition from television. That is a strong case in favour of giving a greater amount of relief, because the present relief is not sufficient to keep many of the small cinemas open for very much longer.

The second part of the case which we must consider is the desirability of fostering and attempting to promote the industry. I have already said that it is always difficult for film producers to make any money and to stay solvent, because of the difficulties of the preponderance of Hollywood productions and the economic advantages which the American industry has, and because of the limitations of the British market and the crazy economics of the cinema trade itself.

If we think that British film production is important, it must have a favourable attitude from the State if it is to continue. To the extent that the producer benefits from tax relief, we ought to consider giving more tax relief. The amount which has so far been given is not sufficient to promote very much more film production. Only a small part of the relief will go back to production and it is production which is in a critical condition and whose continuance will affect the prospects of continuing the promotion of British films abroad, which, in recent years, has been so important.

I know that a number of hon. Members were recently much influenced by the speech of Mr. Kenneth More about the effects and influence of British films in Commonwealth countries like India and Pakistan. British films are now making an impact in the South American market and considerable progress has been made in the United States. The continuance of this development and the maintenance of even the present level of production undoubtedly depends on seeing that more money goes back to the producer, both from the box office and from the British Film Production Fund.

I am very glad that the statutory levy has been raised and that that money will flow to those producers whose films are commercial successes at the box office. Because this is important in relation to possible dollar savings, as well as to the economic and social value of promoting British film exports, I ask the Chancellor to pay attention to the need of British film producers to get a fair share of the tax reliefs that are given.

Although some say that we should be gracious and congratulate the Chancellor on the step that he has taken in giving this tax relief, I believe that he was compelled this year, by the economic facts of the cinema trade and the film industry, to give substantial relief. I am sorry that he has not taken the opportunity to abolish the tax altogether but has left the cinema as the only form of entertainment which is taxed in this country, in spite of the enormous number of cinemas forced to close because of their economic situation.

I ask the Chancellor to remember, lest we face a worse position next year, that he is contributing, by retaining this level of tax, to further monopolistic tendencies in the industry which can kill a great deal of its initiative as well as be extremely dangerous for the variety of entertainment offered to the people. The right hon. Gentleman should make the further concession for which my hon. Friends are asking.

Mr. William Shepherd (Cheadle)

I hope that hon. Members, particularly hon. Members opposite, will forgive me if I say that I have been very disappointed by the tone of this debate. It gives an extraordinarily bad lead to the industry. The tone set is not one of the industry now facing its problems and defeating them but of again throwing itself back on the thought that, if only the Government gave a little more relief, all its problems would disappear. If I may say so, this debate has, so far, done a serious disservice to the cinema industry.

We must face the fact that had right hon. Gentlemen opposite been on this side of the Committee the relief to the industry this year would have been about the same. There is no doubt about that.

Mr. Swingler

indicated dissent.

Mr. Shepherd

I cannot bet on this, but if I did I should be very sure of winning money. Right hon. Gentlemen opposite would not have attempted a greater level of relief than has been attempted by the Government. I am quite certain that they, had they been on these benches, would have been resisting these Amendments as I hope that my right hon. Friend will resist them.

We have heard a great deal about the closing of cinemas, but we should try to put the matter in perspective. In the 1930s, there was a great spate of cinema building, to new and luxurious standards. The fact that hon. Gentlemen so often forget is that, had there not been a war, whether Entertainments Duty had been raised or not, a great number of those cinemas would have gone out of existence long before now. What happened? We finished the war with about 200 more cinemas than when we started.

In other words, instead of the ordinary economic trends being followed and older cinemas going out of business because of the great inrush of new cinemas, the war stimulated the demand for attendances, and we had more cinemas at the end of the war than at the beginning. Small halls, drill halls and other such places were converted for cinema projection.

Mr. John Cronin (Loughborough)

I think that the hon. Member is not paying sufficient attention to the importance of the big increase in the standard of living of the people since the war, largely as a result of the policies of the Governments immediately following the war. There has been a substantial increase in the population, also. Therefore, one would expect a large increase in the number of cinemas.

Mr. Shepherd

No. The increase in the standard of living is one of the reasons that the smaller, older, less luxurious cinemas find it difficult to continue. A man who was out of work and wanted a 9d. seat had to put up with anything. Today, that man has a job and he wants a good seat. That is an additional reason that the smaller and older cinemas find it hard to continue.

Had it not been for the intervention of the war, by the normal process of attrition, some cinemas would have closed many years ago. Yet, as I say, we ended the war with 200 more than when we began.

Mr. Donald Chapman (Birmingham, Northfield)

How can that be so? We have heard of cinemas which, in fact, were all still making a profit apart from Entertainments Duty. The hon. Gentleman's argument presupposes that Entertainments Duty always went on at this very high level.

4.45 p.m.

Mr. Shepherd

They were not all making a profit irrespective of Entertainments Duty. A number of cinemas, even those run by the chains, were certainly not making a profit even if one took into account the abolition of Entertainments Duty. They have closed many. I hope that hon. Gentlemen will be realistic about this, because we undoubtedly have too many cinemas. But for the intervention of the war, which created an artificial situation, many of the cinemas which now exist—even some of those now making a profit—would have gone out of business.

I listened to the hon. Member for Govan (Mr. Rankin) with absolute amazement. I thought he had been on a space trip, for he had really neglected to find out what had been happening in the past few months. It is no good talking about the doom of the cinema. There has been far too much of such talk by those in the industry. We are doing no service to the industry if we adopt that sort of approach. Why talk about cinema attendances declining when the fact is that cinema attendances are rising?

The first quarter of this year gives a most encouraging indication. I am told that the second quarter, despite the bus strike which affects attendances in London, will show a very encouraging trend, also. If that is the case, we must not talk about the decline of the cinema. The industry itself is doing damage to its own prospects by talking about its business as a dying one.

I believe that the cinema today is on the upgrade, and I disagree violently with the hon. Member for Newcastle-under-Lyme (Mr. Swingler), who talked about quality as being unimportant. If we produce the right product, we can do the business. Of that I am convinced. Certainly, the cinema has little to fear in the long run from television.

Mr. Swingler

Really.

Mr. Shepherd

The hon. Gentleman says "Really", but let him address his mind to the facts. If a television company tries to produce an hour's entertainment, it can spend on it, at the very most, about £10,000. A film will have as much as £2 million spent on it. "Ben Hur" is being made in Rome at the moment, at a cost of £5 million. A television company cannot compete in real entertainment value with the cinema. I hope, therefore, that we shall not have this pessimistic attitude about television. I believe that the cinema can beat television every time in terms of entertainment, and I hope that we shall all look to the increasing attendances of the last few months as a sign that the cinema need have no craven fear of television.

The hon. Member said that quality did not matter. I could not disagree with that more. I am quite certain that if, for instance, it were made easier in the cinema business to make a profit, it would not necessarily guarantee that the product would be better. I believe that the stimulus in the industry now is a very real one. If it produces films of good enough entertainment value, which may be a different thing from quality, it can get the business. It is doing that today. The films of the last four or five months have been of exceptionally good quality and they are drawing in the customers.

It is becoming increasingly clear that the independent is to play a much bigger part in production than ever before. Large schedules by big companies are proving to be impracticable, for reasons into which I will not go. I rejoice that the independent producer is, apparently, once again, to come into his own and to be a vital force in the business.

I hope that all of us here will do all we can to make London and the surrounding area a centre of international production, and I hope that the Government will do all they can to that end. Some members of the trade have been trying recently to restrict the definition of a British film with a view to limiting the advantages which partially foreign-made films have here from quota facilities. I hope that the Government will not take any notice of those people. We want to encourage as many people as we can to come here to make films, and I hope that the trade unions concerned, particularly the A.C.T.A.T., will do all possible to ensure that these people are not driven away by restrictive practices.

Mr. John Diamond (Gloucester)

I am obliged to the hon. Gentleman for giving way. I am carefully following everything that he is saying, and I particularly agree that we should do everything possible to encourage people to come here to make films. But will he say, sooner or later, whether he is supporting these Amendments and whether he thinks that one way of encouraging people to go to the cinema is to reduce cinema tax?

Mr. Shepherd

Of course I am in favour of reducing the tax and abolishing it altogether; but in the light of the existing economic circumstances I am satisfied that what my right hon. Friend has done is fair to the industry, and I stand by that. I repeat what I have already said, that I do not think that if the right hon. Friends of the hon. Member for Gloucester (Mr. Diamond) had been sitting on this side they would have done anything different. What my right hon. Friend has done is just and adequate in the circumstances.

I am pleased that British film producers have stimulated their export sales. This is vitally important to us, because we cannot hope to recover the costs of production—which are increasing because films are better produced and better finished than in the past—from the home market. It is encouraging to find that we are getting more and more receipts from overseas.

I hope that my right hon. Friend will continue to watch carefully and sympathetically the progress of this industry. My own feeling is that the industry can now bear this weight of taxation and can progress on the present basis. If it is shown that this feeling is wrong, then I look to my right hon. Friend to take action next year. However, I hope that the industry, meanwhile, will seize its opportunities and will cease to talk as though it is a finished industry. It attracts 900 million people or more each year. It has a turnover of over £100 million each year, and is the major entertainment industry in the country. It has a better prospect of winning adherents than any other form of entertainment. If it seizes its opportunities, it can regain its former prosperity.

Mr. Cronin

I am always interested to hear a speech by the hon. Member for Cheadle (Mr. Shepherd). His contributions to our debates are usually very helpful and intelligent, but I think on this occasion some of us must have considerable difficulty in accepting some of his statements. For example, I am sure that cinema attendances have been rising in the last few months, but that is a very short-term way of looking at the matter. He must be aware that there has been a drop in the last 10 years of about 40 per cent., which is a gigantic fall.

Most of us in the Committee have received the submission to the Chancellor of the Exchequer by the All Industry Tax Committee of the film industry. According to the figures, admissions were 1,514 million in 1948, but that had dropped to 905 million in 1957. Therefore, I think it is going a little too far to congratulate the industry on a rise based on the last few months.

Mr. Shepherd

That document also says that there is likely to be almost a similar fall this year as compared with last year, whereas, in fact, the attendances are rising.

Mr. Cronin

I do not think that affects the main argument. What we are suggesting to the Chancellor and the Paymaster-General is that in view of the enormous fall in attendances there should be further relief in Entertainments Duty.

My hon. Friend the Member for Newcastle-under-Lyme (Mr. Swingler) pointed out that the cinema industry is falling more and more under the control of the oligarchy. On general principles, that is obviously undesirable. Perhaps "oligopoly" is the proper word. I do not think we can escape from the fact that that is the tendency which is affecting so many forms of industry.

We heard from the hon. Member for Ilford, South (Mr. Cooper) that the film industry would be able to look after itself much better if it produced films of higher quality. But there are certain problems here. One is that the industry has to produce enough films to fill the screens. That obviously means that the resources available have to be stretched further than would be helpful. Secondly, from where is the capital expenditure coming for these films of higher quality? A high quality film usually needs a large and heavy financial outlay, and there simply are not the profits available to plough back to produce the necessary capital resources.

Of course, these difficulties are made even worse because the film industry shares the difficulties of all industries generally in suffering from the very restrictive monetary policy of the Government over the last two years. In improving the quality of films, the important thing is to ensure that there will be a return for the necessary capital expenditure. Unfortunately, that money cannot be raised from private resources in the present rather low state of the film industry.

We have had a discussion on two Amendments, one so ably moved by my hon. Friend the Member for Flint, East (Mrs. White) and the other moved by the hon. Member for Glasgow, Govan (Mr. Rankin). The second Amendment has certain advantages in that it perhaps produces more benefit for the smaller cinema. All of us are in favour of smaller cinemas as a general matter of principle.

Mrs. White

Except the hon. Member for Cheadle (Mr. Shepherd).

Mr. Cronin

Except the hon. Member for Cheadle. He takes such a lugubrious view of the fact that there are 200 extra cinemas that one cannot be expected to be too sympathetic on that matter.

I do not think the Committee should be completely mesmerised by the misfortunes of the small cinemas. Where small cinemas are providing entertainment for a small community which cannot be entertained elsewhere or are providing an important public service, obviously we must do everything possible to retain them. But when they are merely alternatives to other more efficient cinemas, one must expect in the course of things that they will tend to decline in numbers. Therefore, I do not think that the Committee should be completely carried away by this idea of supporting small cinemas, although when they are efficient and are providing a useful service we must obviously bear that in mind.

It has been made clear in the debate that there is a strong case in equity for reducing the Entertainments Duty. I think we ought to congratulate the Government on having reduced the duty as substantially as they have.

Mr. Diamond

Not at all.

Mr. Cronin

I cannot agree with my hon. Friend there. I think that we ought to congratulate the Government. The case for reducing the duty is overwhelmingly obvious. So often one comes across occasions where the Government cannot see something that is obvious. When they do, we must give them some measure of credit.

Mr. Diamond

What it is so obvious that the Government have not seen is this. Is it not the case that there should be no cinema tax whatsoever?

Mr. Cronin

Perhaps one might more usefully argue that point on the Question, "That the Clause stand part of the Bill." However, the Government have moved in the right direction, and that is something. We are so accustomed to the Government moving sideways or backwards, but not forwards in the right direction. Therefore, it would not be inappropriate to accord some measure of credit for the relief that they have given in this case.

5.0 p.m.

One of the important aspects of this matter, which has been pointed out by my hon. Friend the Member for Flint, East and also by my hon. Friend the Member for Newcastle-under-Lyme, is that the cinema industry is very important to us in the export market. It is a most helpful factor in the balance of payments, and it would be a much more helpful factor if it had not been penalised to such an excessive extent by the Entertainments Duty.

Many of these points would be more helpfully raised on the debate on the Motion, "That the Clause stand part of the Bill." I should, however, like to emphasise that if one of these Amendments is accepted it will certainly be helpful to the public interest generally. We have producers, directors and a cinema industry of very high quality—it may well be the very finest in the world. At the moment, the industry is carrying a heavy handicap. If that were removed or, at least, more substantially alleviated, it would be more satisfactory for the general economic future of the country.

Mr. Maudling

We are dealing with two Amendments, the first of which is designed to give a general further reduction of duty to the cinema industry. That Amendment was not selected, but it appears on the Order Paper in the name of the hon. Member for Govan (Mr. Rankin). The cost of that would be about £5¼ million in a full year. The other Amendment, moved by the hon. Lady the Member for Flint, East (Mrs. White), is particularly designed to help the small cinema, which was what the hon. Lady rather emphasised in her speech. The cost of that Amendment would be rather less than the hon. Lady estimated; it would be about £4 million in a full year. Both Amendments, however, involve substantial sums. I must say straight away that they are not sums which my right hon. Friend the Chancellor feels he could recommend the Committee to concede at this stage of our affairs.

In this year's Budget, my right hon. Friend has done quite a lot to help the cinema industry. From some of the speeches which have been made, and, indeed, from some of the interjections from various sides of the Committee, this point did not seem to be sufficiently realised. In his Budget speech, my right hon. Friend said: In reaching this decision, I have had fully in mind the difficulty which the fall in box office takings has caused to the industry as a whole—producers as well as exhibitors. I believe that we need to sustain a vigorous British film production industry."—[OFFICIAL REPORT, 15th April, 1958; Vol. 586, c. 69.] The measures taken by my right hon. Friend in the light of that attitude involve reducing the total weight of duty upon the cinema industry by £14½ million in a full year, which is more than half the total present yield of the duty. That is a very large reduction indeed. In fact, in the course of some of our earlier debates on Purchase Tax, I have heard it commented that the Chancellor can find a lot of money for the cinema industry but cannot find £2 million for the bicycle industry and £3 million for this, that and the other. Fourteen-and-a-half million pounds is a very large sum in a Budget which, although it makes substantial concessions, does not scatter largesse everywhere. It is rather less than gracious of people not to recognise what a substantial move my right hon. Friend the Chancellor has made in the context of this particular Budget.

I was grateful that the hon. Member for Loughborough (Mr. Cronin) acknowledged that, but he somewhat tempered his acknowledgment by his usual "dig" at the ability of the Government to observe only the obvious. I sometimes wish that when the hon. Member makes his speeches on economics, he had a similar ability to observe the obvious, but I cannot always say that he has.

The effect of this reduction of duty is to reduce by more than half the total yield of duty at present paid by the industry. That will mean that the net box office receipts, after deduction of tax, will increase by more than 25 per cent. That, surely, is a substantial increase and should be a big assistance to the cinema industry, as, I think, has been recognised by the industry since the Budget speech.

Of course, the industry is not wholly satisfied; it wanted the tax entirely abolished. I think it has, however, been recognised by the industry that the move made by my right hon. Friend was a very helpful one. Indeed, at an earlier stage, the hon. Lady the Member for Flint, East—and nothing that she said this afternoon was in any way inconsistent with her earlier speech—said in the Budget debate: I am inclined to think that the Chancellor has perhaps gone as far as could reasonably be expected this year, but he will understand that the industry will naturally expect some further relief in the future."—[OFFICIAL REPORT, 16th April, 1958; Vol. 586, c. 265.] With neither half of that statement would I quarrel. It is natural for industries always to expect further relief in the future and I trust that under the present Government those expectations will, in due course, be fulfilled in the case of every industry which has expectations. How long that would take is, however, another matter. So far as this year is concerned, the hon. Lady conceded that my right hon. Friend might be said to have gone as far as he could reasonably be expected to go.

The greater part of the £14½ million relief resulting from this reduction in tax will accrue to the exhibitors. As for the producers, to whom reference has been made by the hon. Lady, by the hon. Member for Newcastle-under-Lyme (Mr. Swingler), the hon. Member for Govan and other hon. Members this afternoon, the funds accruing to them, when we take into account the adjustment of the levy, will be rather larger than the hon. Lady suggested. She suggested that a figure of 10 per cent. would go back to the British producers. That is perfectly true—

Mrs. White

From the Entertainments Duty.

Mr. Maudling

Yes. The hon. Lady will, however, find that, taking into account the levy, the total additional amount that the producers receive will be very nearly double the 10 per cent. which she has in mind.

Mrs. White

I was talking about the percentage of the Entertainments Duty relief. The right hon. Gentleman is talking about a gross amount, but we are not discussing receipts from the levy. The 10 per cent. is, I believe, an accurate figure for the Entertainments Duty relief.

Mr. Maudling

I am not quarrelling with the hon. Lady's figures. It is not altogether irrelevant to take into account the adjustment in the levy which is now going on. The two things are happening simultaneously, and the total additional amount of funds coming into the production end of the industry will be about twice the figure of 10 per cent. for the Entertainments Duty relief to which the hon. Lady referred, although she was quite right in saying that only about 10 per cent. will accrue to the producers from the relief of duty.

Mr. Swingler

The producers were expecting £3¾ million from the levy in any case, because that is provided for in the Act. When the right hon. Gentleman refers to a doubling of the 10 per cent. mentioned by my hon. Friend, does he mean that there is to be an increased amount from the levy and that this accounts for the difference, or is he taking into account some other figure for the levy?

Mr. Maudling

The figures I am given show that the additional amount coming in through the levy and through the reduction of Entertainments Duty will be somewhere above £2½ million. The hon. Member will find that that is the position, although I agree that the actual details are not complete.

Mr. Douglas Jay (Battersea, North)

Does that not mean, presumably, the raising of the levy back to what it was originally intended to be from the low level to which it has fallen in recent months?

Mr. Maudling

I think so. This matter has, of course, been considered in the recent discussions on the levy. I agree that what I am saying about the levy is not strictly relevant to the discussion on Entertainments Duty, but I am trying to give a picture which will compare the position of producers over the next year with what it has been. I quite accept that that is not strictly relevant to what we are saying about the Entertainments Duty.

The first Amendment was designed to give a further relief of £5¼ million to the industry as a whole. In the circumstances of the current Budget, my right hon. Friend could not possibly accept this suggestion. He said also in his Budget speech: I must say frankly that it cannot possibly be an object of Government policy to keep open the doors of every cinema in the country, regardless of the tastes and habits of the public.".—[OFFICIAL REPORT, 15th April, 1958; Vol. 586, c. 68–9.] The hon. Member for Govan quoted that passage in the course of his speech earlier this afternoon.

There could be a great deal of argument how much various influences have contributed to producing this sudden surprising break in cinema attendances. As I understand it, experience in this country has been different from America, in that in America there has been a rather steep decline, whereas attendances here held up fairly well for a time and then there was a sudden break. Television may have played a big part. Entertainments Duty, of course, has its influence. The cost of the films, certainly, has an influence as well. From my acquaintance with people in the film industry, my opinion is that no one knows for certain what is the cause of this sudden change in the fortunes of the industry.

I think that my right hon. Friend has recognised the position of the industry, and also the competitive position compared with television, in producing a reduction in the pre-Budget level of Entertainments Duty of, on the average, 58 per cent. Therefore, I am afraid that I cannot recommend the Committee to accept any suggestion that my right hon. Friend should go further in the way of concessions to the industry as a whole.

I will deal now with the second point specifically raised by the hon. Lady the Member for Flint, East about the small cinema. Here, again, I am afraid that I cannot recommend the Committee to accept the proposal, and I am not sure that the hon. Lady will be entirely surprised at that. She moved the Amendment with moderation. She always moves her Amendments, as we appreciate, with moderation, and on this occasion her arguments were also moderate, as was her style of address.

Frankly, the case here for special treatment for the small cinema is not a very strong one. We could argue whether a small cinema is entitled to special treatment just because it is small. I agree with what the hon. Member for Loughborough said, that the question is whether as it is small and because it is serving some purpose in the community it therefore needs special treatment, but to say that just because it is small it needs special treatment seems to be a dangerous point of view. I know that if I push that argument too far I shall get into trouble with the hon. Member for Newcastle-under-Lyme for being an oligarchist or oligopolist.

In the changes which my right hon. Friend has introduced, the weighting is in favour of the small cinema. The general average reduction of duty is 58 per cent. whereas in the case of the smallest category of cinema, seating about 500, the reduction will be something over 70 per cent. in the weekly rate of duty. Therefore, there is a weighting in favour of the smaller cinemas. Once again, to quote from the speech of the hon. Lady the Member for Flint, East in an earlier stage on the Bill, she said that the smaller cinemas were likely to benefit. Therefore, I think that one of the social concerns we have about these cinemas may have been met to some degree. I think the hon. Lady will recognise that we have gone some way in the direction she has in mind.

There are special provisions applying to rural cinemas and cinemas in areas where the population is sparse. These have recently been extended, and since this extension we have had very few complaints. Our impression is that the point on cinemas in rural areas is pretty satisfactorily met. In these circumstances, I do not feel that on this Amendment either the case is made out for a further reduction of duty, particularly when, as I said earlier, the amount of money involved is as much as £4 million.

To sum up, my right hon. Friend feels that this year he has, by reducing the duty by more than half, really done a great deal to help the industry which is admittedly facing considerable difficulty and that in all the circumstances he cannot possibly accept Amendments which propose further reductions in the duty this year.

Mr. Jay

We have had a very interesting debate with very little passion on either side, in which, as the right hon. Gentleman said, we have put forward moderate proposals with moderate arguments advanced for them. We have not proposed the total abolition of the duty. I only want to say now that the right hon. Gentleman has not convinced me that he has yet gone far enough to prevent a further rapid decline in the industry.

I do not claim to be a great expert on the film industry, but it seems to me very likely that the Entertainments Duty is not the whole, perhaps not even the most important, reason for the sharp decline in attendances over the last two years, and particularly in the last year. But there is no question at all that the decline is a fact. It is no doubt probable that the main single reason has been the competition of television, and also, of course, the fact that cinema attendances greatly expanded during the war and just afterwards when there were no alternative forms of entertainment. Of course, when that situation had passed away we should naturally expect cinema attendances to decline.

5.15 p.m.

I hope the right hon. Gentleman would agree that, when an industry is in that sense in a weak position and in a falling market, if we impose or, indeed, even maintain tax on it, we accelerate the decline. Therefore, in that sense, the existence of the tax is a cause of the decline, and I do not think the right hon. Gentleman would deny as a matter of ordinary economics that, of course, existence of the tax accelerates the decline in that situation. Incidentally, the right hon. Gentleman said that the sharpness of the decline during last winter was rather unexplained. I should have thought that the Government's general credit squeeze and deflation policies had something to do with it. After all, the cost of living has been going up and there has been an attempt to freeze money wages. Therefore, it is only natural that the wage-earning population has economised on some of the slightly less essential things.

Mr. Maudling

Is it not a fact that personal consumption has been rising?

Mr. Jay

Nevertheless, unemployment and under-employment have been increasing faster in the last six months than at any time since the war.

However, leaving aside the general situation, I want to ask the right hon. Gentleman this. The Government might have taken the line, "We are really not interested in the cinema or film industry one way or another. It is a business. Let it expand or contract according to the demand of the public. It has nothing to do with the Chancellor of the Exchequer one way or another." In fact, I believe that none of us takes that attitude for two reasons. First of all, we all agree that we want to see a British film production industry and also that we cannot have a reasonably flourishing film production industry unless there is a film exhibiting industry, a cinema industry, of reasonable size in the country. For that reason, we have adopted the levy and the National Film Finance Corporation and so on.

Incidentally, I thought the right hon. Gentleman was a bit complacent when adding in the levy as the extra income which the producers were supposed to get. I think I am right in saying that all that has happened is that Parliament passed an Act in which the figure of £3¾ million was inserted as the sum which the producers could expect to get. In point of fact, due to this depression, the figure fell a large way below what they had been statutorily promised and the Government are now putting it back to where it was. I think that throws a slightly different light on the matter.

The other reason why the Government cannot disinterest themselves altogether is that the cinema industry, after all, is still a source of revenue to the Government. Surely, it is unwise to press it so hard when it is in difficulties that the very revenue itself may be lost in the longer term. The Minister said that a very generous concession of £141 million had

been made by the Chancellor this year. Of course, that figure depends on all sorts or hypothetical estimates. That figure was for a full year, which presumably means April, 1959, to April, 1960. Therefore, the figure rests on an estimate of what cinema attendances would have been had there been no concession and what they will be with this concession in force. Both estimates, I should have thought—no doubt the Exchequer makes the best estimate that any human agency could make—must be extremely hypothetical.

Nevertheless, the Treasury's real interest in these things, leaving aside the wider considerations, is whether the decline of the industry is not being forced at such a rate that in a very few years' time the Exchequer itself will lose even in terms of revenue.

Even allowing for the other causes, is the right hon. Gentleman quite sure that it is wise even to maintain the duty at the rate still now in force when we recognise all the other admitted difficulties which the industry is likely to face? The right hon. Gentleman did not fully answer one other question which was put to him. Is it not the case with this decline, due to all causes, including tax, that the preponderance of these chains on the exhibiting side of the industry is steadily increasing as the decline of the industry goes on?

Are we not all agreed, even if opinion as to remedy differs, that it is undesirable that the domination of the exhibiting side of the industry by two combines should be allowed to go too far? Is the right hon. Gentleman not satisfied that by accepting the Amendment he could have done something also to maintain the more independent cinemas and to provide more alternative outlets for those who are still producing British films?

Question put, That "one shilling and sixpence" stand part of the Clause:—

The Committee divided: Ayes 226, Noes 189.

Division No. 150.]	AYES	[5.24 p.m.
Agnew, Sir Peter	Ashton, H.	Barber, Anthony
Aitken, W. T.	Astor, Hon. J. J.	Barlow, Sir John
Allan, R. A. (Paddington, S.)	Atkins, H. E.	Barter, John
Amory, Rt. Hn. Heathcoat (Tiverton)	Baldock, Lt.-Cmdr. J. M.	Bell, Philip (Bolton, E.)
Arbuthnot, John	Baldwin, A. E.	Bell, Ronald (Bucks, S.)
Armstrong, C. W.	Balniel, Lord	Bennett, F. M. (Torquay)
Bennett, Dr. Reginald	Harrison, A. B. C. (Maldon)	Nairn, D. L. S.
Bevins, J. R. (Toxteth)	Harrison, Col. J. H. (Eye)	Neave, Airey
Biggs-Davison, J. A.	Harvey, John (Walthamstow, E.)	Noble, Comdr. Rt. Hon. Allan
Bingham, R. M.	Head, Rt. Hon. A. H.	Nugent, G. R. H.
Birch, Rt. Hon. Nigel	Heald, Rt. Hon. Sir Lionel	Oakshott, H. D.
Bishop, F. P.	Heath, Rt. Hon. E. R. G.	Orr, Capt. L. P. S.
Black, C. W.	Henderson-Stewart, Sir James	Osborne, C.
Body, R. F.	Hill, Mrs. E. (Wythenshawe)	Page, R. G.
Bossom, Sir Alfred	Hinchingbrooke, Viscount	Pannell, N. A. (Kirkdale)
Boyd-Carpenter, Rt. Hon. J. A.	Hirst, Geoffrey	Partridge, E.
Boyle, Sir Edward	Hornby, R. P.	Peel, W. J.
Braine B. R.	Hornsby-Smith, Miss M. P.	Pickthorn, K. W. M.
Braithwaite, Sir Albert (Harrow, W.)	Horobin, Sir Ian	Pike, Miss Mervyn
Brooke, Rt. Hon. Henry	Horsbrugh, Rt. Hon. Dame Florence	Pilkington, Capt. R. A.
Bryan, P.	Howard, Gerald (Cambridgeshire)	Pitman, I. J.
Burden, F. F. A.	Howard, John (Test)	Pitt, Miss E. M.
Butcher, Sir Herbert	Hughes Hallett, Vice-Admiral J.	Price, David (Eastleigh)
Butler, Rt. Hn. R. A. (Saffron Walden)	Hulbert, Sir Norman	Price, Henry (Lewisham, W.)
Campbell, Sir David	Hurd, A. R.	Prior-Palmer, Brig. O. L.
Carr, Robert	Hutchison, Michael Clark (E'b'gh, S.)	Redmayne, M.
Chichester-Clark, R.	Hutchison, Sir James (Scotstoun)	Remnant, Hon. P.
Clarke, Brig. Terence (Portsmth, W.)	Hyde, Montgomery	Renton, D. L. M.
Cooper, A. E.	Hylton-Foster, Rt. Hon. Sir Harry	Ridsdale, J. E.
Cooper-Key, E. M.	Iremonger, T. L.	Roberts, Sir Peter (Heeley)
Cordeaux, Lt.-Col. J. K.	Irvine, Bryant Godman (Rye)	Robertson, Sir David
Corfield, Capt. F. V.	Johnson, Dr. Donald (Carlisle)	Robinson, Sir Roland (Blackpool, S.)
Craddook, Beresford (Spelthorne)	Johnson, Eric (Blackley)	Rodgers, John (Sevenoaks)
Crosthwaite-Eyre, Col. O. E.	Joseph, Sir Keith	Roper, Sir Harold
Crowder, Sir John (Finchley)	Joynson-Hicks, Hon. Sir Lancelot	Russell, R. S.
Cunningham, Knox	Keegan, D.	Sharples, R. C.
Currie, G. B. H.	Kerby, Capt. H. B.	Shepherd, William
Dance, J. C. G.	Kerr, Sir Hamilton	Simon, J. E. S. (Middlesbrough, W.)
Davidson, Viscountess	Kershaw, J. A.	Smithers, Peter (Winchester)
Deedes, W. F.	Lambton, Viscount	Smyth, Brig. Sir John (Norwood)
Dodds-Parker, A. D.	Langford-Holt, J. A.	Speir, R. M.
Donaldson, Cmdr. C. E. McA.	Leather, E. H. C.	Stanley, Capt. Hon. Richard
Doughty, C. J. A.	Leavey, J. A.	Stevens, Geoffrey
Drayson, G. B.	Leburn, W. G.	Steward, Harold (Stockport, S.)
du Cann, E. D. L.	Legge-Bourke, Maj. E. A. H.	Steward, Sir William (Woolwich, W.)
Dugdale, Rt. Hn. Sir T. (Richmond)	Legh, Hon. Peter (Petersfield)	Storey, S.
Duncan, Sir James	Lindsay, Hon. James (Devon, N.)	Stuart, Rt. Hon. James (Moray)
Duthie, W. S.	Lindsay, Martin (Solihull)	Studholme, Sir Henry
Eden, J. B. (Bournemouth, West)	Linstead, Sir H. N.	Summers, Sir Spencer
Elliott, R. W. (Ne'castle upon Tyne, N.)	Lloyd, Maj. Sir Guy (Renfrew, E.)	Taylor, Sir Charles (Eastbourne)
Errington, Sir Eric	Lloyd, Rt. Hon. Selwyn (Wirral)
Farey-Jones, F. W.	Low, Rt. Hon. Sir Toby	Teeling, W.
Fell, A.	Lucas, Sir Jocelyn (Portsmouth, S.)	Temple, John M.
Finlay, Graeme	Lucas, P. B. (Brentford & Chiswick)	Thomas, Leslie (Canterbury)
Fisher, Nigel	Lucas-Tooth, Sir Hugh	Thomas, P. J. M. (Conway)
Fletcher-Cooke, C.	McAdden, S. J.	Thompson, Kenneth (Walton)
Foster, John	Macdonald, Sir Peter	Thorneycroft, Rt. Hon. P.
Fraser, Sir Ian (M'cmbe & Lonsdale)	Mackeson, Brig. Sir Harry	Thornton-Kemsley, Sir Colin
Freeth, Denzil	McKibbin, Alan	Tilney, John (Wavertree)
Gammans, Lady	Mackie, J. H. (Galloway)	Turton, Rt. Hon. R. H.
Garner-Evans, E. H.	McLaughlin, Mrs. P.	Vane, W. M. F.
Glyn, Col. Richard H.	McLean, Neil (Inverness)	Vaughan-Morgan, J. K.
Godber, J. B.	Macleod, Rt. Hn. Iain (Enfield, W.)	Vickers, Miss Joan
Gough, C. F. H.	Macmillan, Maurice (Halifax)	Vosper, Rt. Hon. D. F.
Gower, H. R.	Maddan, Martin	Wakefield Edward (Derbyshire, W.)
Graham, Sir Fergus	Maitland, Cdr. J. F. W. (Horncastle)	Wakefield, Sir Wavell (St. M'lebone)
Grant, W. (Woodside)	Maitland, Hon. Patrick (Lanark)	Wall, Patrick
Grant-Ferris, Wg Cdr. R. (Nantwich)	Manningham-Buller, Rt. Hn. Sir R.	Ward, Dame Irene (Tynemouth)
Green, A.	Markham, Major Sir Frank	Ward, Dame Irene (Tynemouth)
Gresham Cooke, R.	Marlowe, A. A. H.	Whitelaw, W. S. I.
Grimston, Hon. John (St. Albans)	Marshall, Douglas	Wilson, Geoffrey (Truro)
Grimston, Sir Robert (Westbury)	Mathew, H.	Wood, Hon. R.
Gurden, Harold	Maudling, Rt. Hon. R.	Woollam, John Victor
Hall, John (Wycombe)	Mawby, R. L.
Hare, Rt. Hon. J. H.	Maydon, Lt.-Comdr. S. L. C.	TELLERS FOR THE AYES:
Harris, Frederic (Croydon, N. W.)	Milligan, Rt. Hon. W. R.	Sir G. Wills and Mr. Hughes-Young.
Harris, Reader (Heston)	Nabarro, G. D. N.
NOES
Ainsley, J. W.	Benson, Sir George	Brockway, A. F.
Albu, A. H.	Beswick, Frank	Broughton, Dr. A. D. D.
Allaun, Frank (Salford, E.)	Blenkinsop, A.	Brown, Thomas (Ince)
Allen, Arthur (Bosworth)	Blyton, W. R.	Burton, Miss F. E.
Allen, Scholefield (Crewe)	Boardman, H.	Butler, Herbert (Hackney, C.)
Bacon, Miss Alice	Bonham Carter, Mark	Butler, Mrs. Joyce (Wood Green)
Baird, J.	Bottomley, Rt. Hon. A. G.	Callaghan, L. J.
Balfour, A.	Bowden, H. W. (Leicester, S. W.)	Carmichael, J.
Bellenger, Rt. Hon. F. J.	Bowen, E. R. (Cardigan)	Champion, A. J.
Bench, C. R. (Dunbartonshire, E.)	Bowles, F. G.	Chapman, W. D.

Clunie, J.	Jenkins, Roy (Stechford)	Price, J. T. (Wetthoughton)
Coldrick, W.	Johnson, James (Rugby)	Proctor, W. T.
Collins, V. J. (Shoreditch & Finsbury)	Jones, David (The Hartlepools)	Pursey, Cmdr. H.
Corbet, Mrs. Freda	Jones, Jack (Rotherham)	Rankin, John
Cove, W. G.	Jones, J. Idwal (Wrexham)	Redhead, E. C.
Craddock, George (Bradford, S.)	Jones, T. W. (Merioneth)	Reid, William
Cronin, J. D.	Kenyon, C.	Robens, Rt. Hon. A.
Cullen, Mrs. A.	Key, Rt. Hon. C. W.	Robinson, Kenneth (St. Pancras, N.)
Davies, Rt. Hon. Clement (Montgomery)	King, Dr. H. M.	Ross, William
Davies, Ernest (Enfield, E.)	Lawson, G. M.	Royle, C.
Davies, Stephen (Merthyr)	Lee, Frederick (Newton)	Shinwell, Rt. Hon. E.
de Freitas, Geoffrey	Lee, Miss Jennie (Cannock)	Short, E. W.
Diamond, John	Lewis, Arthur	Silverman, Julius (Aston)
Dodds, N. N.	Lindgren, G. S.	Silverman, Sydney (Nelson)
Dugdale, Rt. Hn. John (W. Brmwch)	Lipton, Marcus	Simmons, C. J. (Brierley Hill)
Dye, S.	Mabon, Dr. J. Dickson	Skeffington, A. M.
Ede, Rt. Hon. J. C.	McAlister, Mrs. Mary	Slater, Mrs. H. (Stoke, N.)
Edelman, M.	McCann, J.	Slater, J. (Sedgefield)
Edwards, Robert (Bilston)	MacColl, J. E.	Smith, Ellis (Stoke, S.)
Evans, Albert (Islington, S. W.)	McGhee, H. G.	Soskice, Rt. Hon. Sir Frank
Fernyhough, E.	McInnes, J.	Sparks, J. A.
Foot, D. M.	McLeavy, Frank	Stewart, Michael (Fulham)
Forman, J. C.	MacPherson, Malcolm (Stirling)	Stonehouse, John
George, Lady Megan Lloyd (Car'then)	Mahon, Simon	Stones, W. (Consett)
Gordon Walker, Rt. Hon. P. C.	Mallalieu, E. L. (Brigg)	Strauss, Rt. Hon. George (Vauxhall)
Grey, C. F.	Marquand, Rt. Hon. H. A.	Stross, Dr. Banett (Stoke-on-Trent, C.)
Griffiths, David (Rother Valley)	Mayhew, C. P.	Summerskill, Rt. Hon. E.
Griffiths, Rt. Hon. James (Llanelly)	Mellish, R. J.	Swingler, S. T.
Grimond, J.	Messer, Sir F.
Hale, Leslie	Mikardo, Ian	Sylvester, G. O.
Hall, Rt. Hn. Glenvil (Colne Valley)	Mitchison, G. R.	Taylor, Bernard (Mansfield)
Hamilton, W. W.	Monslow, W.	Thomson, George (Dundee, E.)
Hannan, W.	Moody, A. S.	Thornton, E.
Harrison, J. (Nottingham, N.)	Morrison, Rt. Hn. Herbert (Lewis'm, S.)	Tomney, F.
Hastings, S.	Moss, R.	Ungoed-Thomas, Sir Lynn
Hayman, F. H.	Moyle, A.	Wade, D. W.
Henderson, Rt. Hn. A. (Rwly Regis)	Neal, Harold (Bolsover)	Warbey, W. N.
Herbison, Miss M.	Noel-Baker, Francis (Swindon)	Watkins, T. E.
Hewitson, Capt. M.	O'Brien, Sir Thomas	Weitzman, D.
Hobson, C. R. (Keighley)	Oliver, G. H.	Wheeldon, W. E.
Holman, P.	Oram, A. E.	White, Mrs. Eirene (E. Flint)
Holmes, Horace	Oswald, T.	Wigg, George
Houghton, Douglas	Owen, W. J.	Wilkins W. A.
Howell, Charles (Perry Barr)	Padley, W. E.	Willey, Frederick
Hoy, J. H.	Paget, R. T.	Williams, Rev. Llywelyn (Ab'tillery)
Hughes, Emrys (S. Ayrshire)	Paling, Rt. Hon. W. (Dearne Valley)	Williams, Rt. Hon. T. (Don Valley)
Hunter, A. E.	Palmer, A. M. F.	Williams, W. T. (Barons Court)
Hynd, H. (Accrington)	Pannell, Charles (Leeds, W.)	Willis, Eustace (Edinburgh, E.)
Hynd, J. B. (Attercliffe)	Parker, J.	Wilson, Rt. Hon. Harold (Huyton)
Irvine, A. J. (Edge Hill)	Pearson, A.	Winterbottom, Richard
Irving, Sydney (Dartford)	Peart, T. F.	Yates, V. (Ladywood)
Isaacs, Rt. Hon. G. A.	Pentland, N.	Zilliacus, K.
Jay, Rt. Hon. D. P. T.	Popplewell, E.
Jeger, George (Goole)	Prentice, R. E.	TELLERS FOR THE NOES:
		Mr. J. Taylor and Mr. Deer.

Motion made and Question proposed, That the Clause stand part of the Bill.

The Temporary Chairman (Sir G. Nicholson)

I should remind hon. Members that most of the points in the Clause have been traversed during the debate on the Amendments, and I hope hon. Members will not cover them again. Mr. Hunter.

Mr. A. E. Hunter (Feltham)

On this question, Sir Godfrey, I want to put the case for the complete repeal of Entertainments Duty. The cinema industry is an important one when it is remembered that there are 80,000 people employed in renting, film production, exhibiting and distribution. Therefore, when we debate the effect of Entertainments Duty upon cinemas we must take into account the livelihood and the welfare of approximately 80,000 people, a number of whom are unfortunately in the lower earnings groups.

Whilst I realise that the Chancellor has taken a big step forward in reducing Entertainment Duty on cinemas, I feel that the case for its complete repeal is overwhelming. Entertainments Duty was first imposed during the First World War, in 1915 or 1916. I was a young boy at that time, and I remember that "The Bing Boys on Broadway" was then showing in one of the London theatres. So Entertainments Duty was introduced well over forty years ago, and although at that time it was stressed strongly that the tax was only a war-time measure, it is still with us. Of course, cinemas were in their early stages then. Today, with the cinema industry showing signs of a decline, there is a very strong case for relieving it of this tax. It is true that although it has been removed from the theatres, they still have their difficulties, especially in the provincial towns.

Mr. Ellis Smith

The logic of that is against the Clause.

Mr. Hunter

My hon. Friend says that the logic of that is against the Clause. The Clause makes Entertainments Duty payable and if we vote against the Clause in a majority it will mean that the tax will be abolished. I do not know whether my hon. Friends will divide the Committee on this Question.

There were not many cinemas in the early days of Entertainments Duty, so it fell mainly on the theatre. After the advent of the talkies in the latter part of the twenties, there was a rapid growth in cinemas. I can speak with some little knowledge of the cinema building which went on at that time, In fact, there was mushroom growth. Personally, I think there was over-expansion. However, conditions were easy for financing projects of that type. Building costs were fairly cheap in 1928 and 1929, and in the early 1930's raw materials were cheap also. So the advent of the talkies was a great attraction to the public and we saw cinemas going up all over the country. It is true that a large amount of American capital helped to finance their building in order to exhibit American films in this country.

There is no excuse why Entertainments Duty should be retained today, because the experience of the last ten years has shown that there has been a rapid decline in attendances and in box office receipts. Entertainments Duty is not a tax on profits but a tax on receipts. Before any money is drawn for the cost of production of films and for the upkeep and maintenance of the cinemas the tax is levied on box office receipts. It cannot be argued today that an industry which is showing a steep decline and which is faced with the competition of television is able to bear this tax. My hon. Friend referred to the 8 million television sets in this country, and television is only in its early days yet. With the introduction of colour television in the near future the cinemas will face even greater competition, and though hon. Members say the remedy is better films, let us remember there can also be better television programmes. I do not believe it will be possible to keep open the same number of cinemas in the future, even with the production of better films, because the industry needs this relief in order to modernise and redecorate the buildings and to repair the seats and carpets and improve the wages of its employees. So I feel that the Government are not justified in retaining this tax and that the Chancellor should abolish it altogether.

Another point is the value to this country of exporting our films. Good British films of a high entertainment value can help to show the British way of life. Not only have they a cultural value, but they also help our export trade, not only in Western and Eastern Europe and the Commonwealth, but throughout the world. Yet our films cannot compete in the export trade without a home market, so we need a certain number of cinemas open in this country to maintain cinema finance for British films for home and abroad.

I do not think there will be again a rapid expansion of cinemas in view of the high cost of building and of equipment and the falling attendances. One has only to walk round London to see that famous cinemas are disappearing and are being replaced by blocks of offices and stores. The financial people know what they are doing, and they see the decline in the cinema industry. When one considers the experience of the past ten years and remembers that in 1957 there was a drop in attendances of 18 per cent., it will be realised that there is an overwhelming case for the cinema no longer paying Entertainments Duty, just as there was for the living theatre, which most hon. Members supported. The Government, therefore, should make this further gesture of repealing entirely the Entertainments Duty on the cinema.

Sir Thomas O'Brien (Nottingham, West)

In response to the appeal made by the Temporary Chairman, there is no point in traversing again the arguments which we used in the debates on the Amendments. I wish just to make a very brief statement.

It is very gratifying to the film industry, and to me in particular, that so much interest has been shown during the last two or three years by hon. Members in all parts of the House in the plight of the film industry in relation to Entertainments Duty. Many years ago, I was practically a lone voice in the House in dealing with not only the problems of Entertainments Duty but the other problems which from time to time beset the film industry. I appreciate very much the speeches which have been made in this debate and in other debates about the film industry by hon. Members opposite and my colleagues.

Frankly, I voice the opinion of the entire industry—the employers and the trade unions—in expressing my very great appreciation of the manner and capacity with which my hon. Friend the Member for Flint, East (Mrs. White) has conducted her task in the House in matters concerning the film industry. It is noteworthy that in the House of Commons the industry has many friends on both sides. Consequently, this ought not to be regarded as a party matter at all.

I appeal to the Paymaster-General to represent to the Chancellor that he should not repeat the mistake which was made on the theatre side. We fought very hard to abolish the tax on the living theatre, and eventually sheer, stark pressure of events compelled the Government to abolish it, but it came too late to be of any vital use in preventing many theatres from closing. Once a cinema or theatre closes it is almost impossible for it to reopen. For the sake of another year, I beg the Chancellor completely to wipe out the duty on the cinema. It is the only remnant of the 1917–18 Entertainments Duty. It is no good thinking of saving cinemas a year from now. If a number of cinemas close in the meantime as a result of the impossible tax burdens which they are carrying, they will be unable to open again.

I appeal to hon. Members to keep in mind what was said by my hon. Friend the Member for Feltham (Mr. Hunter). There are 80,000 employees in the film industry represented by my organisation and others—film studio employees, film distribution employees and cinema employees. A little while ago I was at a meeting with the cinema employers trying with my colleagues to negotiate a reasonable share of the relief in taxation for cinema wages, which I am also doing in respect of film studio wages.

It is not a matter of trying to invade the inflationary spiral; it is a matter of obtaining justice. The cinema wages of this country are notoriously below standard, and we feel—rightly, I am sure, and I am certain that we shall have the good will of the House of Commons; I appreciate that this cannot be made a condition—that when we come to an agreement on wages and conditions for film industry workers the employers will be generous enough to allow some part of the concession given by the Government to go into the wage packets of those who have served the industry so well.

5.45 p.m.

Mr. Diamond

When I had the good fortune to address the House in the course of the Budget debate, I made it clear that my view at that time was that the Chancellor's gesture, made the previous day, by offering a reduction of half of the Entertainments Duty did not meet the needs of the situation. I have listened to all the speeches made since and have heard nothing whatever to cause me to alter my mind in the slightest degree. Indeed, nearly all the arguments used during the discussion we have just had were in support not of the Amendments but of the complete abolition of the tax.

I rest my case first on the fact that, however much the Government may be criticised for having in previous years made their concessions both too little and too late, they have no justification for continuing the tax at any level this year because they know that the most likely result in the current fiscal year is that with no Entertainments Duty at all being levied there will be a loss to the cinema exhibitors of some £3 million. Although in previous years there has been some taxable capacity and, therefore, some justification for a level of tax, the present situation is that there is no taxable capacity left. The Government are no longer taxing cinema profits; they are taxing cinema losses.

That is the first point, and it is based on figures which have been supplied by the all-industry committee. They have been submitted each year to the Government and have been shown in previous years to err on the side of caution. They may very well be shown in twelve months' time to have erred on the side of caution this year also.

The argument can be advanced that, although there is no justification for continuing any rate of tax at all for the current year, this is due to the fact that the industry itself has not done everything it could to put its own house in order, and that if it had adopted some of the many suggestions made by hon. Members in various parts of the House it would be likely to make not a loss but a profit and once more justified the levying of a rate of tax.

The suggestion which is most frequently made is that we should produce good films—as if the production industry sets out to spend millions of pounds and devote a great deal of time and labour to the production of bad films. Everybody in this country and America tries to produce good films, the best possible films having regard to the different criteria of what is good and what is good "box office". How could it possibly be thought that over the years from 1948 there has been a steady decline in the production of good films, which is the only cause to which one can look to account for the steady decline in the numbers of people going to the cinemas, which has been accentuated from time to time and particularly in the last three years.

It cannot be the case that it is a question of lack of quality of films. Nor, if one thinks about it—though it must be admitted that a better film produces a better return—could it be held for long to be that it is just as simple a matter as trying to get a good film. Those who have some experience of this matter know that what is a good film in one area is not a good film in another. What goes down in Baker Street does not go down in Tooting, as I know from my own knowledge. Therefore, we should not use these terms about good films too readily and—as the hon. Member for Ilford, South (Mr. Cooper) did—offer suggestions from great experience of some other industry to those who do their best to try to make this a successful industry.

The trend has been obvious in this country since 1948. It has also been seen in America. What can one conclude from that? It would be very helpful if every film were a winner, but it is just beyond the capacity of man to produce winners every time. Of course, it would be nice if every one of us, when addressing meetings at by-elections, had audiences running into hundreds or thousands, as we used to do, and if we had the same sort of "admissions" comparatively as some of us used to have. But few of us have audiences of that size nowadays. Certainly I do not. No doubt, my hon. Friend the Member for Ebbw Vale (Mr. Bevan) gets his audiences of 2,000, because he is a winner. The hon. Member for Gloucester (Mr. Diamond) is not a winner. He has to be satisfied with the normal attendance of 10, 15 or 20 as the case may be.

Mr. Maudling

Is the hon. Gentleman suggesting that that is due to any form of Entertainments Duty?

Mr. Diamond

I am suggesting that the argument that to solve the problem one should produce the best possible films is sound in theory but impracticable. It is beyond the capacity of man to produce the best possible every time. Therefore, we cannot look to the production of films as being the source of the problem. We cannot say to the cinema industry, "Put your house in order by means of the production of better films and then you will be able to bear the burden of taxation." Nor can we say to the cinema industry, "Provide even plushier carpets or seats that you can sink into almost out of sight, and the greater the comfort and the greater the sense of luxury the sooner will you be able to put your house in order."

I wish I could draw some conclusion from the number of occasions when I have spent thousands of pounds upon a particular cinema in redecoration and making it more comfortable, and seen the admissions go down, and the number of occasions on which I have spent 6d. and seen admissions go up.

Mr. Shepherd

Will the hon. Gentleman say why he thinks attendances are rising this year compared with last year?

Mr. Diamond

No, I certainly will not, because it is far too short a period and far too small an example from which to draw any conclusions. The hon. Member would be extremely unwise—more unwise than he normally is—if he ignored the trend of ten years. I know what is behind his question. He is anxious that we should have a flourishing cinema industry. So am I, and I am going to try to indicate how to achieve that.

We are dealing with the question whether the cinema industry can put its house in order and therefore bear the burden of this continuing rate of cinema tax which the Chancellor seeks to impose on it. Another obvious way of putting its house in order is to increase what I would call its ancillary activities. I hope the Committee understands that the cinema exhibition industry is politely called by that name but in fact consists of the provision of ice cream and other things to eat and drink, with a film thrown in. I hope it is realised that the time has long since gone—it had gone years and years ago—when the cinema could support itself out of its own proper trading. One has to resort to every possible means of increasing the receipts from all sorts of outside activities, such as the provision of cafés, restaurants, dancing and a whole host of things which have nothing whatever to do with the exhibition of films.

Therefore, I deny that there is any obvious method whereby the cinemas can put their house in order by some simple expedient of this kind. It would be wrong to suppose that they have been ignoring the trends and that they have been taking no account of the competition of television and other things.

The next question to be asked is the very fair one—will the abolition of Entertainments Duty solve all these problems? Will it result in every cinema which is at present in existence keeping its doors open? Of course not. This is not the solution of the whole problem. All I would say is that so long as we have this tax, the whole of the activities of the cinema industry will be devoted to campaigning to get rid of the tax instead of to the more constructional rationalisation problems which are needed.

So long as a country is not free it will devote all its energies to achieving its freedom, and only after that will it start solving its own internal domestic problems. My view is that exactly the same thing applies to the cinema industry. It has many things to do, and it is not our function or within our power in this Committee to discuss or suggest what all of them are. What we are entitled to consider here is the extent to which the continuance of Entertainments Duty prevents the cinemas from solving their own problems. It is a very heavy barrier to their doing that very thing.

The Committee should realise that the function of a managing director of a company owning cinemas has been and still is to forecast the future and decide what action to take—not to decide whether to put a cinema here or there, or whether to close a cinema, or whether to install a bigger screen or a different shaped screen, or more seats or fewer seats. His function is to try to anticipate what the Chancellor of the Exchequer is going to do in next year's Budget. That one act of the Chancellor of the Exchequer is more important than any other series of acts that he could possibly take.

Of course, the present reduction in Entertainments Duty amounts to millions of pounds in terms of box office—more than any other single thing that the Chancellor could do. That is why it is such a dominant argument, that all other arguments fall into fifth or tenth place. That is not a healthy state of affairs for an industry. I have been fortunate enough to have guessed what respective Chancellors of the Exchequer would do within half a million three years running. I could not expect my luck to continue. But that is surely a criticism of the way in which the cinema industry has to be run, that it has to be concerned almost exclusively with that one problem instead of the various other problems with which it should rightly deal.

There is no question in anybody's mind that the cinema industry cannot afford to be taxed. It cannot afford a proper standard of wages. It cannot afford any of the things which would justify it continuing to call itself a healthy industry. By a curious coincidence I find that I have made my few notes on the back of a cutting from The Times which states: Cinema staff turnover impedes union'. It goes on to say: Women who 'no sooner start work in a cinema than they leave,' were described as a 'great impediment' to union organisation by … general president of the National Association of Theatrical and Kine Employees, in London yesterday. "Women who no sooner start work in a cinema than they leave"—whoever has had that experience is a lucky man. My experience is that many women leave before they start. One engages them and expects them to come along. One has to comply with licensing conditions, to see that certain numbers are engaged, but when the time arrives for them to attend they do not turn up—not even on the first occasion—because the standard of wages is too low. With that low standard of wages the industry is facing a loss of £3 million, without bearing any tax. Every additional penny that is paid away in tax increases the losses of the industry.

I say to my own Front Bench, who have put forward arguments with moderation and skill, that they should have courage. They should not be inhibited in any sense by their own responsibilities in view of the fact that they would occupy the Front Bench opposite when the next Budget is to be considered in twelve months' time. The facts are so obvious that any Chancellor will have to extinguish the tax next year at the latest. My right hon. Friends might just as well have taken their courage in their hands and said quite clearly—as the arguments which they used should have led them to say—"When we come back to office in twelve months' time or less we shall, without hesitation, extinguish the remainder of this tax."

I am grateful to the Chancellor for being good enough to listen to my remarks, and I would ask him to consider whether he wants to collect these dwindling bits of revenue or have a healthy industry. If he wants to help the industry—and I should have thought that all sections of the Committee wanted to do that—he will without hesitation extinguish the remainder of this cinema tax.

6.0 p.m.

Mr. Maudling

At the beginning of the debate. Sir Gordon, your predecessor pointed out that, inevitably, much of the argument which would arise on the Question, "That the Clause stand part of the Bill," would have been traversed in the course of discussions on the Amendments. I am, therefore, in a somewhat difficult position, because there is little left for me to say. That being so, I am sure that the Committee will not want me to say it.

The fact is that on the earlier Amendment an argument was put forward for a reduction in the duty on the cinema. I have put the reason why my right hon. Friend cannot agree to a further reduction in duty, and that being so a fortiori, he could not agree to a complete abolition. Were I to go over the whole ground again I should only adduce the same arguments; therefore, for the benefit of hon. Members on both sides, I shall not repeat them. I will only say that my right hon. Friend cannot go any further this year in reducing the duty on the cinema.

Although I speak with some temerity in the matter, in view of the great knowledge of hon. Members who have spoken in the last few minutes, I do not entirely share all the pessimism of the hon. Member for Gloucester (Mr. Diamond). My hon. Friend the Member for Cheadle (Mr. Shepherd) has been accused of rashness—a very unusual charge to be levelled against him—but I might accuse hon. Members opposite quite fairly of a certain amount of pessimism. It would be wrong to assume that the cinema industry, with its great talents and enterprise, assisted by the substantial reduction in duty, cannot cope with the difficulties facing it.

That is certainly both the belief and the very sincere hope of my right hon. Friend and his colleagues in the Government. We hope that the relief that we have made will enable the cinema industry to establish itself and to achieve a future which we all want to see it achieve, both in production and exhibition. For the present, however, my right hon. Friend could not possibly accept an abolition of the duty and, therefore, cannot accept the Amendment.

Mrs. White

I ought to say that although I do not expect the Government to make any further concession in this matter, those of my hon. Friends who have spoken happen to be those with the greatest first-hand experience in the industry, both on the exhibiting side and in the organisation of workers. I therefore feel that some attention should be paid by those whose knowledge of the industry is purely theoretical to the arguments of those who have had to wrestle with the day-to-day problems of the industry.

My hon. Friend the Member for Gloucester (Mr. Diamond) has had an extensive and very successful experience in the industry, but he was so daunted by the obduracy of various Chancellors of the Exchequer that he has found it wise to turn his great talents to other spheres. Had he felt that there was a hope of the early relief for which he has been pleading today there is little doubt that he would have declared a present interest, instead of the past interest in the exhibiting side of the industry.

Mr. Shepherd

Perhaps the hon. Member sold out at a capital profit.

Mrs. White

It does not lie in the mouth of the hon. Member to complain on that score. He might have done that in good time. Be that as it may, we should pay some attention to the experiences of those who have had direct responsibilities in this industry, and we shall have to give great weight to the arguments put forward. What differences exist between us relate to the matter of timing. We have great sympathy with the direction in which their arguments are taking us.

The Paymaster-General has expressed the hope, which we all share, that the industry will overcome its present difficulties successfully. One of the great difficulties on the exhibiting side is that besides the three major circuits, there are half a dozen circuits of moderate size—Essoldo, Granada and the rest—most of which have other interests besides exhibiting films, and they therefore have the capital with which to manœuvre. But there are many cinemas which are giving a good service to the public—and not merely of the kind referred to by the hon. Member for Cheadle (Mr. Shepherd)—which will probably have to go out of business because they just have not the necessary resources to sustain them. I am thinking of those which are not too badly placed and which follow an intelligent policy by which, nevertheless, have not got the resources needed for reconstruction and readjustment.

I wish that I could see greater signs of rationalisation on the exhibiting side, although I recognise that outside the circuits it is difficult to obtain the room for manœuvre to adjust to a changing position. A man may have half a dozen or a dozen cinemas. He is not a circuit proprietor, and with the present burden of tax he has not a sufficient margin to reorganise his cinemas as he should. It is quite possible that some cinemas in a group of that kind are not viable and should be closed, but to complete that operation and readjust himself the proprietor needs a little margin.

The real case for the abolition of the tax is that that margin, for most of these people whose sole interest is cinema exhibiting and who do not have all these other interests of the Rank Organisation and others with a foot in the television world, is insufficient to enable them to do what we should like them to do in the way of reorganising themselves. We do not propose to take the matter to a Division, but I hope that the Government will take note of the very powerful arguments which have been adduced by those with great experience in the industry.

Question put and agreed to.

Clause ordered to stand part of the Bill.