§ 10.37 p.m.
§ The Parliamentary Secretary to the Board of Trade (Mr. F. J. Erroll)
I beg to move,That the Draft Cinematograph Films (Collection of Levy) (Amendment) Regulations, 1958, a copy of which was laid before this House on 23rd April, be approved.These Regulations are made under Section 2 of the Cinematograph Films Act, 1957, which requires the Board of Trade to impose a levy on exhibitors for the benefit of makers of British films. The levy is to yield, in the Board's estimation, approximately £3¾ million in the first year, ending on 18th October, 1958. The rates of levy were fixed last year before the full severity of the decline in cinema attendances had shown itself, and it is now evident that if these rates remain unaltered the levy will not bring in the sum laid down in the Statute for the first year. Therefore, an obligation rests on the Government to amend the rates to attain the prescribed target, and the Regulations before the House are intended to achieve this.
At the same time we are taking the opportunity to make some small changes in the method of imposing the levy. At present the levy is paid on the net seat price after deduction of Entertainments Duty. Provided, therefore, that seat prices remain unaltered, this means that a reduction of duty automatically increases the yield of the levy. The recent change in duty has not, however, increased the levy yield sufficiently to make unnecessary a change in the rates at which the levy is charged in order to secure the necessary £3¾ million. The amended Regulations, therefore, provide that the levy shall in future be charged on the gross seat price, including Entertainments Duty, so that the yield will not be affected by any subsequent changes there might be in duty, provided, of course, that there are no changes in seat prices.
Secondly, instead of providing for the levy to rise by steps of ¼d. for specified price ranges, as in the past, we have decided to change over to a straight 10 per cent. of the amount by which the gross seat price exceeds 11d. Apart from being 752 more equitable, the new system is much easier to operate. Its effect is to reduce the levy on seats of 1s. 1d. and under, and to increase the levy progressively on higher-priced seats. I think I can say that these changes in the method of imposing the levy have been favourably received by the trade.
The Act provides that the Board of Trade shall consult the Cinematograph Films Council before making Regulations, and this has been done. I hope, therefore, that the House will be able to approve these Regulations.
§ 10.41 p.m.
§ Mrs. Eirene White (Flint, East)
As the House knows, we have always given support to the idea of a statutory levy, and we on this side, therefore, agree in principle with the amendments proposed in these Regulations. It is not only within the statutory obligation of Her Majesty's Government to do something to increase the amount of the levy, in view of the fall in cinema attendances, since that is an obligation to the producers contained in the Cinematograph Films Act of last year, but it is a desirable object in any case.
We feel, however, that we might have been given a little more information as to the estimated future effect of the levy. At the moment, we are in the middle of a levy year, which runs from October to October. The statutory obligation for the first year is, of course, to produce £3¾ million, but thereafter there is a certain elasticity, and the amount laid down by the Statute is anything between £2 million and £5 million.
We ought to be told what are the calculations of the Board of Trade as to the probable future yield after October next, when one has this rather wider range within which the yield can be fixed. I think I am right in saying that the figure in mind is something more than £4 million in a full year for the year running from October next. We should have that confirmed. If it is, perhaps we might also be given the calculation of the probable attendance figure on which that yield will be based. The House is entitled to know that. The Regulations will continue until changed by some further order of the House; they will not end with the present levy year.
753 While we would not expect to have any fixed date given tonight as to when some review might be made, I think it would be for the advantage of the trade and the public if they were to be told what the Government have in mind about this. The whole situation in the cinema industry at the moment is a little uncertain, to say the least. The trend in cinema admissions has been catastrophically downwards in the last year or so. That may be evening out a little, and we all hope that that will prove to be so. But, because of the fluctuating situation, it would be very desirable to have an assurance that there will be a reasonably early review in case some further change in the rate of levy seems desirable.
I have one comment on the method of collection. I entirely agree that the proposed arrangement for 10 per cent. is a much more satisfactory one than the previous arrangement. It allows for changes in Entertainments Duty. I could not discuss that on these Regulations, of course, but it is, at least, a possibility that in a subsequent Budget the duty may be abolished altogether. There is nothing in the present Regulations which would impede that in any way.
In fact, 10 per cent. is both more practical in itself and also—as the hon. Member pointed out—it means that the higher-priced seats bear a considerably greater proportion of the levy, which should have the indirect effect of helping the smaller cinemas. Therefore, although there have been some criticism in the trade that this procedure seems to be a tax on a tax, that is not justified in practice, and we have no objection to the method of procedure adopted. We think that it will be generally helpful.
In mentioning smaller cinemas I ought to refer to the representations which we have received from certain of the smaller exhibitors, who suggest that because of the levy they are likely to lose some of the advantage they may appear to be gaining through the reduction in Entertainments Duty. The reason is that the levy is collected from cinemas whose net takings amount to £150 a week or more, and the fact that they now have a somewhat smaller amount to pay in Entertainments Duty means that some cinemas which paid no levy previously are now brought within the range of it.
754 They feel that this is a certain hardship, and suggest that the limit of £150 should be increased. This limit of £150 net, which was itself an advantage over the £150 gross which previously prevailed, came into effect only last October, and it has not run for long enough for us to see quite how it is working out. I do not think that my hon. and right hon. Friends, at this point of time, would be justified in supporting a change in this minimum.
On the other hand, we have had a number of cases of individual hardship, not all of them coming below the £150 limit. Some of the rather larger exhibitors are, unfortunately, in difficulties, and say that the burden of the levy is fairly considerable. Under the previous voluntary scheme in the trade there was an arrangement whereby individual exhibitors who claimed hardship could state their cases and produce their accounts before a committee of the trade, with exhibitors and renters represented on it. When the levy became statutory this procedure came to an end, and I know that representations have been made to the Board of Trade that, by some method or other, cases of individual hardship arising out of the payment of the levy should be considered.
There are means whereby it might be done. We have committees in the Cinematograph Films Council which consider cases for exemption from quota regulations, and in theory, at least, I see no reason why some machinery of that sort might not be established to deal with individual hardship among exhibitors who say that they have a sufficiently strong case to preclude their being asked to contribute to the levy.
I hope, therefore, that before we finally assent to the Regulations we shall be given a little more information on the points that I have mentioned.
§ 10.49 p.m.
§ Mr. Robert Mathew (Honiton)
My hon. Friend the Parliamentary Secretary has said that this change will mean the introduction of a more equitable system. In the main that is so, and the Regulations have been welcomed generally. But, as the hon. Member for Flint, East (Mrs. White) suggested, there is a category of smaller exhibitors who feel that 755 the impact on their business will be less favourable, and I should like to add my plea that the Minister should seriously consider whether the £150 limit should be raised.
As the hon. Lady indicated, these Regulations have a very direct relevance to the generous concessions in Entertainments Duty announced by my right hon. Friend the Chancellor in his Budget statement. Of course, these concessions have been welcomed in the cinema business.
There is a category of smaller exhibitors especially in the country areas, to whom this present change presents a considerable threat. I am told that the tax reduction proposed will result, overall, in an average increase of about 25 per cent. in the takings. For the smaller cinemas—I speak of those with a seating capacity of 400 or perhaps a little more—in country towns with a population of 5,000 to 15,000 and a "catchment area" of not more than 20,000, the benefit from the tax concession will be very much less. The reasons are that the film company's share in the taking may be up to 50 per cent. in a number of cases, and in addition the exhibitors are faced with the increase in the levy. A number of these businesses were below the £150 limit before; and, now that they are getting on to a paying basis at last, they will get above the limit and become liable for the levy.
I have been in touch with cinemas in my constituency in the West Country which come into this category and I am informed that, so far as it can be worked out, the actual benefit from the tax concession is likely to be nearer 8 per cent. than 25 per cent. I understand that the Performing Rights Society is likely to increase the percentage it takes. The conclusion, therefore, is that although the cinemas in the larger areas will benefit from the tax concession and will be glad to welcome this change, in the rural areas and in the smaller country towns it may prove a real threat. For those reasons, I ask my hon. Friend to look again at the £150 limit.
§ 10.53 p.m.
§ Mr. Glenvil Hall (Colne Valley)
I represent a scattered rural area in which almost all the cinemas are small ones and 756 what is proposed tonight is of the greatest moment to many of them. I have been asked to support what has been said by my hon. Friend the Member for Flint, East (Mrs. White) and the hon. Member for Honiton (Mr. Mathew). The smaller exhibitors fear that what is being given with one hand may be taken away with the other, because of the Eady levy. It is hoped to raise about £3¾ million this year, and we have not been given the real basis on which that figure has been calculated. It may be that cinema audiences will continue to decline. They have gone down by about one-third during the last five or seven years, and the £3¾ million may not be realised. That will mean an increase in the levy.
If that happens, and if in October the change has to be made by Statutory Instrument, what will happen? I ask for an assurance from the Minister that if any increase has to be made, it will not be imposed on the smaller cinemas. If it is, they will be put into a serious plight, and none of us wants that to happen.
§ 10.55 p.m.
§ Mr. Geoffrey Hirst (Shipley)
As one who has taken interest in this matter, I thank the Minister and the Government for introducing these Regulations in this form. They are a very great improvement. Few people have thought more about the needs of the small cinemas than I, and I am well aware that the reduction of Entertainments Duty affects the small cinemas by more than the average that has been referred to—in fact about 70 per cent.
One has to bear in mind that on the percentage basis the advantage which they might get out of the reduction of the duty is offset by the fact that they do not get full value in the matter of the levy. We should not be viewing this thing in its full perspective if we did not realise that the Entertainments Duty reduction for cinemas has been a vital matter of first aid. I do not think that any of us seriously believes that the restoration of prosperity will lead to a reasonable living in the industry. It has to attract people, and the best way it can do it is by better standards. Small cinemas have a vital interest in that requirement. That is exactly what the Regulations seek to do.
It is not awfully easy to sell the advantages of the levy to the small cinema, but there is a growing perception that a way should be thought out to get the 757 cinema industry out of its difficulties. There has been an unfortunate reduction in attendances. It may be argued that the Government have rather delayed their first aid. [HON. MEMBERS: "Hear, hear."] I think I said that last year and the year before. None the less, the Government have done what they could. They have done a lot to reduce the burden of the Entertainments Duty. There have been three reductions in a year, thereby making it easier for the cinemas to function. By reducing so much more, the small cinemas will be helped to take a rather better view of life.
These Regulations will operate very much better than before. We need a certain amount of pressure on the small cinemas. I am convinced that some of them do not look at the economics of the thing as a whole and do not realise the extent to which the Government are trying to help to produce the sort of material that will give the cinema industry a chance to hang together.
§ 10.59 p.m.
§ Mr. John Rankin (Glasgow, Govan)
I am sure that the Parliamentary Secretary will agree that the White Paper changing and improving the method of collection might well be coloured red. It is a warning from the Government who, in many ways, are much better informed as to the state of the cinema industry than we are. It is for that reason that I say that the paper should be red, because it shows that the real reason—the only reason—for the increase in the levy is that admissions are falling dangerously.
My hon. Friend has asked for the estimate of admissions on which the levy is calculated for the present levy year ending in October next. I have put down a Question seeking not only that but further information, as the hon. Gentleman knows. It is important that we should know not only the estimated admissions for the year ending next October, but also on what estimate of admissions the Board of Trade is to base the levy for 1959. We have to look to the full year that follows.
Once again we have to emphasise a point about which the Government will be hearing a good deal in the next few days. Whilst there has been generous treatment of the industry, I am quite 758 certain that the Parliamentary Secretary will agree that, if the duty remains, in another year we shall have another Statutory Instrument revising the collection of the levy. It is as clear as daylight that merely reducing the duty will not cure the problem that faces the industry. The only solution that will, within the next few years, prevent a succession of these Instruments in order to keep up the yield of the levy is the total abolition of Entertainments Duty. I hope that the Parliamentary Secretary will keep that in mind.
§ 11.3 p.m.
§ Mr. Douglas Glover (Ormskirk)
I agree with what the hon. Member for Govan (Mr. Rankin) has said. This is not a party matter. I am quite certain that the Entertainments Duty will very soon have to be totally removed, not, perhaps, just as a matter of justice to the industry, but because of the operation of the law of diminishing returns. In welcoming these Regulations—which, I think, are well drawn and will work in a better way—I should like to say a word to the cinema industry.
I am quite certain that, even without the duty, the cinema industry is a contracting one. There are now alternative forms of entertainment, whereas, at one time, the cinema was the ordinary weekly entertainment of every family in the land. The family now has to be persuaded to leave the fireside and go to the cinema. It thus becomes doubly important that all exhibitors should use all the force they can, including the payment of the levy, to ensure that the quality of the films is such as to persuade families to leave slightly inferior entertainment at home and find superior entertainment outside.
As a non-expert, I want to say a few words to the cinema industry about prices. Every industry, when faced with a falling turnover, says that it is necessary to cut prices. The cinema industry faces an entirely different problem. It is a night out when a person goes to a cinema, and he has to be attracted to go there. The cost of the seat is not nearly as important as it was when cinemas provided the major form of entertainment. The industry would be wiser to try, if possible, to keep its prices at their present level, in some cases even slightly to 759 increase them, but to provide better facilities and to give a better welcome to the cinema-going public.
It is because I believe that the Regulations will help the industry to produce the films which will drag people out of their homes and back to the cinema that I warmly welcome them.
§ 11.6 p.m.
§ Mr. Stephen Swingler (Newcastle-under-Lyme)
Hon. Members are extraordinarily generous to the Government. In the last two years, 300 or 400 small cinemas have had to close under the crushing weight of Entertainments Duty and we were unable to be generous to the proprietors. I am one of those who believe that the case for abolishing the cinema tax has been well made out, but I do not want to get out of order and so I will defer my remarks on that topic until next week.
I hope that the Parliamentary Secretary will respond to the invitation of my hon. Friend the Member for Flint, East (Mrs. White) and give us some information on the subject. One of the factors which has had a harmful effect on the film industry in the last six or twelve months has been the uncertainty of the whole situation, the uncertainty of the market due to the decline in attendances and, primarily, the uncertainty about what the Government would do.
As has been said, the Government have left it very late indeed to tell the film industry, in the light of declining attendances, what they intended to do about this subsidy to maintain film production. The result has been that many productions have been abandoned in the last few months, many have been postponed and, for the size of the industry, there has been much unemployment among technicians, producers and others, who have drifted out of the industry. That is a loss of talent and a loss of confidence. Some of the workers have been lost to television and other competing trades and they will not be won back to the industry.
The Government must take some responsibility for that situation. Those concerned with the production side of the industry want to know exactly what the Government view is about the yield of the levy. They want to know what is 760 likely to be the pool, because calculations about future productions depend on that.
One of the objections about the Cinematograph Films Act, 1957, is that the amounts mentioned are so vague—a minimum of £2 million per annum and a maximum of £5 million per annum for the size of the pool resulting from the statutory levy. It would be a great help to the production side, because of the long-term planning necessary for film production, if the Government could give a clear indication about the financial pool which they expect annually from the levy.
I regard this as a crazy system. It is ridiculous that we should deal with a subsidy in this way—and this is a subsidy to British film production.
§ Mr. Speaker
Order. The main principle of the levy cannot be discussed on the Regulations because it is enshrined in the Act.
§ Mr. Swingler
I understand that, Mr. Speaker, but I am commenting on the fact that this Statutory Instrument has to be introduced in this way because of the fluctuations which have taken place on the exhibiting side of the film industry, which have knocked sideways the Government's calculations, and also because of changes in the Government's fiscal policy in the Entertainments Duty. I regard it as crazy that the Government are compelled to bring forward Regulations of this kind to make changes in the rates of levy. We are passing a measure of subsidy for the film industry, based on a rate of statutory levy which has now to be changed because the economic circumstances of the exhibiting side of the industry have changed and because the taxation system has been changed.
The amount which we are asked to vote should not be dependent on the fluctuating circumstances of cinema attendances. We ought to make up our minds what we think is the amount of subsidy which should be given to uphold or expand British film production, because we regard that production as a national asset and because we want to promote the export of British films for reasons of prestige, culture and education. We ought not continually to have to consider Regulations of this kind, which may arise frequently because nobody can estimate what will happen to the size of cinema 761 attendances. The Government may constantly have to change the rate of the levy because their calculations of the yield have been undermined.
I understand that I am not allowed to go further into the principles of the system, but I hope that I have made the point clearly. I hope that, for the benefit of those who are vitally concerned in planning future film production, the Parliamentary Secretary will give a firm indication of the amount which is to be raised by the levy and of the Government's future policy.
§ 11.13 p.m.
§ Mr. Ray Mawby (Totnes)
I welcome these amended Regulations. The hon. Member for Newcastle-under-Lyme (Mr. Swingler) suggested that cinema production units should be kept on a particular rate of levy regardless of cinema attendances and of whether the films are those which people want to see. This raises a fundamental principle. The Government cannot decide who will go to the cinema, and people do not want to go only to be educated. They go to the cinema to see a film which is attractive to them. If we get away from the basis of a levy supplied by the exhibitors, depending very much on the number attending the cinema, and handed over to the producers, the production units will no longer keep their eyes open to find out what people attending cinemas want to see.
It would be wrong of us to decide that cinemas should be a national institution, with the State deciding that a certain amount should be devoted to producing films and with people being expected to attend to be educated. We should be wrong to take that view of the cinema industry. This measure is very fair. It is taking from exhibitors a certain amount, according to the attendance at cinemas. Upon that amount production units can produce better films.
The Government cannot say how many people shall attend cinemas, though I think they can make a rough estimate how many in future will attend. However, the Government do not have the last word in the matter. It is for the industry to produce pictures which people wish to see and which will attract them from their firesides and television sets. At the moment we are turning out some first-class films because there is 762 that nice balance and connection between the exhibitors and producers, and everyone knows the type of film which is required. As films get better so attendances grow. As we have seen, for at a number of these first-class films the attendance has been phenomenal. As a result more money comes in for producers, to help them produce better films.
§ Mr. Swingler
I am sure the hon. Member does not want to give a wrong impression of what I said. It is a fact that film producers draw out of the production fund in accordance with the commercial success of their films. The question we have to face tonight is whether, if attendance at cinemas falls, the rate of levy must be raised to produce a certain yield. That has nothing to do with the commercial success of the films and the amount of the production fund. What we are faced with is the question whether, if attendance at cinemas falls, the rate of levy should be raised to produce the same yield.
§ Mr. Mawby
If we follow that line, and assume attendances will continue to fall for ever, there will be a problem. As I see it, the reduction in Entertainments Duty and the new methods in the cinema industry should level off the fall in attendances. I am not too pessimistic about the possibility of a continuation of the fall of attendances—unless the cinema industry does not produce the films which can compete with the other forms of entertainment. It is that which I am worried about. I am worried that we may create a condition in which we shall have falling attendances because the industry does not suit the potential customers. I feel that the measures which are being taken, particularly these Regulations, will be the best way of making certain we get the best films.
§ 11.18 p.m.
§ Mr. John Diamond (Gloucester)
These Regulations alter the rates of levy paid by exhibitors, and the purpose of the alteration is to provide the film producers with sufficient income to enable them to continue to produce films. The amount which they may require depends on other sources of income, and in particular that from renting films to cinemas. The amount which they receive from the renting of films to cinemas depends to a 763 large extent upon the Entertainments Duty levied on the exhibitors. It is, therefore, impossible to discuss these Regulations without some reference to the Entertainments Duty, because the purpose of these Regulations is affected by the Duty itself.
No doubt it was for that very good reason that hon. Members on both sides of the House were permitted to mention that the Government had been generous in their treatment of the cinema industry in their Budget proposals. If I have succeeded, Mr. Speaker, in making my point to you that it was apparently in order for these statements to be made, may I have your indulgence while I attempt to controvert these statements and say how totally I disagree with the absurd use of English in suggesting that the Government have been generous in charging only half the amount of the Entertainments Duty on an industry which cannot afford to pay any duty and should not pay any at all.
§ Mr. Speaker
I cannot allow the debate to develop into an argument about Entertainments Duty. The hon. Gentleman was right to say that it may be an element in the situation which influences the charge that we are now discussing, but we cannot debate the Entertainments Duty now.
§ Mr. Diamond
I was not seeking to debate it, Mr. Speaker; I was merely seeking to controvert the statements previously made. I would not wish to pursue that, because I have made my position in that respect clear.
I do not regard this as a simple request for an alteration in Regulations. I regard it as an apology by the Government which has been ill-made from the Front Bench. The Parliamentary Secretary ought to have said, "We have been wrong in our estimates, as usual; we have given too little and too late. We are now compelled to produce these Regulations, which are an admission of that fact"—an admission of the fact that had a correct estimate been made of the needs and likely results of the cinema industry there would have been no need to produce varying alterations. Indeed, the Parliamentary Secretary indicated as much.
I am saying these things because I am not one of those who share the view that 764 the Government understand the needs of the industry. I am highly critical of the Government's lack of foresight on the needs of the industry. It is the Government's action which has prevented the industry from flourishing as it used to do. I am conscious of the fact that six years ago I had plenty of black hair; now I am practically bald and grey, and all in the service of this industry, trying to run during those six years some 25 small cinemas. Therefore, of course, I am only too glad to endorse the plea which has been put forward, by my hon. Friend the Member for Flint, East (Mrs. White), in particular, for support for the small cinemas to the extent that they can be supported out of these Regulations, which is very little indeed.
I hope I have made my point sufficiently clear. I am sure that the Parliamentary Secretary understands the feeling that some of us on this side of the House have, a feeling which no doubt will be further explained at a later stage of our proceedings on the Finance Bill.
§ 11.23 p.m.
§ Mr. Erroll
I think it fair to say that the Regulations which we have submitted to the House command the general approval of hon. Members who have spoken, with the possible exception of the hon. Member for Gloucester (Mr. Diamond), and also the hon. Member for Newcastle-under-Lyme (Mr. Swingler), who was, I thought, very ably answered by my hon. Friend the Member for Totnes (Mr. Mawby).
Several hon. Members have asked about the attendance figures and estimates on which our calculations are based. We have assumed that there will be a further decline in attendances, but not such a severe one as the catastrophic decline which took place in the late summer and autumn of last year. I would remind the House, however, that we consult the Cinematograph Films Council in these matters and get the benefit of its expert estimates—which can only be estimates in a highly changeable and fluctuating market.
We have, of course, considered both aspects of the matter, namely the question of producing the necessary £3¾ million this year which we are by statute bound to try to raise, and the question of what the collection should yield in the 765 next levy year. We have, we believe, arrived at figures which will produce the amount required for the remainder of this year, and we hope that a figure of the same order, or perhaps a little more, will be produced during the course of the next levy year. However, in the light of the experience of the last six or eight years, it would be a very rash Parliamentary Secretary who attempted to give reliable forecasts in this extremely changeable industry.
Several hon. Members have referred to the particular problems of the small cinema. I would just like to say that, taking Entertainments Duty and the levy changes together, every cinema is better off than it was before. Although the overall yield of the levy is going up, the levy on 9 per cent. of the seats has actually been reduced. These, too, are the cheaper seats in which the smaller cinemas usually specialise. The incidence of the levy starts at 1 per cent. on the shilling seats, rising to 6½ per cent. on the 2s. 6d. seats, finally going to 9 per cent. and over on the very high-priced seats. The combined effect of the levy and duty changes gives the maximum percentage relief to the lower priced seats, from 18 per cent. at 1s. 6d. down to only 8½ per cent. at 15s.
It is true that there may be some of the smaller cinemas previously exempt from the levy which, because of the reduction in the Entertainments Duty, will now be in a position to pay the levy and which, although they will be considerably better off than they were before, cannot be said to have been particularly helped compared with other exhibitors. It is true, nevertheless, that the great majority of the smaller exhibitors will have been well and truly helped. For these reasons, I confidently submit the Regulations to the House for approval.
§ Mrs. White
Will the hon. Gentleman just say a word about provision for a further review, if necessary? He has himself said that he is unable to give any firm calculation as to the probable yield next year or of the attendances on which that calculation will be based. Will he, therefore, give an assurance that there will be an early review, if need be, so that the producers will know where they stand?
§ Question put and agreed to.
That the Draft Cinematograph Films (Collection of Levy) (Amendment) Regulations, 1958, a copy of which was laid before this House on 23rd April, be approved.