HC Deb 11 June 1959 vol 606 cc1192-261

  1. (1) Entertainments duty shall not be chargeable in respect of payments (whenever made) for admission to entertainments given after the thirty-first day of July, nineteen hundred and fifty-nine.
  2. (2) Where entertainments duty has been charged on any payment made before the first day of August, nineteen hundred and fifty-nine, and by virtue of this section no duty should have beeen charged, the person by whom the duty was paid shall be entitled to repayment of the overcharge.
  3. (3) On and after the first day of August, nineteen hundred and fifty-nine, the Entertainments Duty Act, 1958, shall no longer have effect.—[Mrs. White.]

Brought up, and read the First time.

Question again proposed, That the Clause be read a Second time.

3.54 p.m.

The Chairman

Mr. Harold Wilson.

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

Sir Charles, I wish to raise several points of order relating to procedure. To enable me clearly to explain these points, it will be necessary to make a few observations but, having studied what is in order and what is out of order, they will be within very narrow limits.

As you know, Sir Charles, Parliament as a whole derives its authority and power from the control of finance. Hence we must be on our guard when any suggestion is made that the Standing Orders or the practice of the House as laid down in Erskine May have not been fully observed. A large number of my hon. Friends, for whom we all have great respect, are now away from this Committee. Last night they were here until after eleven o'clock. Having other engagements to fulfil, they had to rush off to catch their trains, but as a result of what took place last night they are deprived of their right, as Members of the House, to vote against one of the proposed new Clauses.

Mr. Cyril Osborne (Louth)

They should be here.

Mr. Ellis Smith

They are in various parts of the country. How can they get back? [HON. MEMBERS: "They should be here."] My hon. Friend the Member for Enfield, East (Mr. Ernest Davies) says that they should be here. I agree that we should all be here, but let us not press that too far. If it comes to comparing records, we can safely leave it to the Committee to come to the correct conclusion. Let me make it quite clear that, unlike many others, I associate myself 100 per cent. with my hon. Friends who cannot be here. I am not running away from the issue. They would like to be here, but owing to previous engagements they had to catch their trains to Scotland and other parts of the country last night.

Mr. Osborne

They ought to be here.

Mr. Ellis Smith

I agree that it is the duty of us all to be here. We should be here 100 per cent. To those who keep making interruptions, to which I do not object, I would say that if we were to consider one another's records those who are members of the Institute of Directors would not come out of it very well.

My hon. Friends feel very strongly on this issue. I intend to quote from the practice of the House later, but for your guidance, Sir Charles, you will see, in HANSARD for yesterday, column 1103, that the following took place. At five minutes past nine we were considering a proposed new Clause dealing with the repeal of Entertainments Duty, the Second Reading of which was moved by my hon. Friend the Member for Flint, East (Mrs. White). Later, we dealt with a proposal by Government supporters.

My first point to you, Sir Charles, is that my hon. Friend the Member for Flint, East, when moving the new Clause, said: It has been discussed at length fairly recently and I do not wish to weary the Committee by going in very great detail into arguments …"—[OFFICIAL REPORT, 10th June, 1959 Vol. 606, c. 1104.] I admit that the usage and practices of Parliament are very often matters of interpretation, and that what the practice should be is not laid down very definitely. But I remember the practice only too well over many years. One would have thought that the Chair—I wish to make it quite clear that I make no reflection on the Chair—might have taken a different course, and what I shall do is to ask the Chair later for an explanation of why this was allowed to take place.

4.0 p.m.

I should have thought that if we are to keep control of finance a Division should have been taken at 11 o'clock last night, seeing that it is admitted, on behalf of those who moved and supported the first new Clause dealing with Entertainments Duty, that the matter had been thrashed out year after year, for many years. Last night we were limited in time. One would have thought that the Chair, interpreting the usage and practice which I shall refer to, should have allowed a Division to my hon. Friends and all those who were here, who would have been in order in using their elementary rights to do their Parliamentary duty in the House, whether some other hon. Members want to do it or not.

The second new Clause dealing with Entertainments Duty dealt with a different issue, and the Chancellor made a statement upon that. Therefore, it was a different debate. I admit that this may raise questions of interpretation and, because of that, I have armed myself with Erskine May's Parliamentary Practice. I wish to refer you, Sir Charles, to page 552, which deals with the safeguarding of Amendments, and says: Sometimes the chairman selects the amendments to be moved and announces the selection before calling the member in whose name the first amendment which he has decided to select stands. That is the practice. You were good enough to make an announcement, stating that you had posted a notice in the No Lobby to save time, and make things clear to everybody. There is no one who appreciates that more than I do. That is a step in the right direction, but, at the same time, we want to safeguard ourselves against the difficulties and dangers which can arise from doing that sort of thing. One would have thought that last night the Chair would have called for the second new Clause. Instead of that, the debate took place on the two new Clauses which are referred to in HANSARD.

The debate took place on those two new Clauses and, considering that the first one was disposed of by the Chancellor when he made his statement about a concession, it was surely logical to interpret the Standing Orders and the practice of Parliament in such a way that a Division could have been allowed to the Opposition particularly as we were proposing something different from the Chancellor's concession.

Later, we came to the second new Clause which was not moved. There is a reference to page 553 of Erskine May to the need to safeguard Amendments. Upon that, Sir Charles, I want to suggest that we should learn the lesson for the future. We cannot undo what we did last night. My hon. Friends are away. We are here, and we cannot undo that, but I suggest that, for the future, to safeguard our position, this kind of thing should be avoided.

The Chairman

The hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) has asked, I think, several questions. The first one related to the fact that, last night, at 10.57, I think, there was a Motion, "That the Chairman do report Progress and ask leave to sit again." Of course, the debate on the new Clause No. 3—"Repeal of Entertainments Duty"— is still going on, and we shall go on with it for a fortnight if we like.

Mr. Ellis Smith

May I interpose, Sir Charles? I agree, and I hope that you will bear in mind this point, also. You have been good enough to stress that many of us could have carried the debate on, because we are fundamentally opposed to the Chancellor in what he did.

Mr. Osborne

Why did not the hon. Gentleman and his hon. Friends do so?

Mr. Ellis Smith

I will tell the hon. Gentleman why we did not. We believe in playing the game with some members of the Committee. Some members of the Committee were committed in the way we know. [Interruption.] This is going to distress me. Some of us do not belong to the "Whitehall dinner panic runners", who have constant arrangements made when dinners are taking place all over London. Let us not hear too much about that. It is our duty to be here. We are here, and we were here last night.

The Chairman

Of course, as the hon. Member knows, the debate on this new Clause is exempted business and it could go on for a fortnight, if we liked. Last night, I was not myself in the Chair when it was moved, "That the Chairman do report Progress and ask leave to sit again," but I gather that it was accepted by the Committee. I think, therefore, that that disposes of that point.

As to tedious repetition, nobody wants less of that than I, but one has to give a warning two or three times before one can do much about it. I hope that tedious repetition does not occur. I am all on the hon. Member's side on that.

My next note was, "Provisional". What was that point? I am sorry, but I have forgotten the exact nature of it.

The hon. Member referred to the disposing of one Amendment or new Clause. Of course, when we discuss two together, the first one on the Notice Paper is called and we discuss that, and, if there is a second one, a vote on it cannot be taken at that point, if there is something in between. That is why I have put up a notice in the No Lobby to make matters clear. The new Clause No. 68 will be taken when the time comes, so that the Opposition will be able to speak against it and, if they like, there will be an opportunity for a vote.

Mr. Ellis Smith

Yes, the Standing Orders provide for that. But the Standing Orders provide also that whoever is in the Chair can decide that a new Clause or an Amendment is out of order.

The Chairman

Of course, if a new Clause or an Amendment is out of order, it is never called, anyway. The selection is in the hands of the Chair. Amendments out of order are not called. Obviously, one cannot call an Amendment which is out of order.

As to the saving of Amendments, I think that the hon. Member was thinking of something else. There is no question of saving in this. It is a different matter altogether, when there are two which overlap.

The hon. Gentleman made a point about speaking, I think. Of course, we are in Committee, and Members can speak as often as they like, provided that they are called.

Mr. Harold Wilson (Huyton)

In continuing, this debate, Sir Charles, it is neither my intention nor my hope that we shall debate this new Clause for a fortnight, which was the period you mentioned a few moments ago.

To my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith), I will say that I was responsible last night for suggesting to the Chancellor that he should move to report Progress, and I did that for a deliberate reason, having regard to the rights of hon. Members of the Committee and, if I may say so, so far as I ever am biased in these matters, having regard particularly to the rights of my right hon. and hon. Friends.

It was very clear, once the Chancellor had made his statement, just before 11 o'clock, that he proposed to accept in principle the idea of the new Clause standing in the name of the right hon. Member for Blackpool, North (Sir T. Low) and other hon. Members, that many hon. Members—this certainly applied to me—would want to debate that new principle which had just been injected into our debate.

None of my hon. Friends, with the exception of my hon. Friend the Member for Glasgow, Govan (Mr. Rankin), had really taken time to debate the new Clause spoken to by the hon. Member for Shipley (Mr. Hirst), because none of us thought for a moment that the Chancellor would be likely to accept what we regarded as an unworkable proposal. When he told us that he was accepting it, obviously many of us would have liked to get up and say why we considered it to be unworkable.

In any case, even if the Chancellor had not made his statement, there was a considerable number of hon. Members on both sides of the Committee wishing to speak and make, I am sure, what would have been highly relevant comments about what is proposed in the new Clause.

For that reason, I felt that it would be very inconvenient to hon. Members to be kept here until 12 o'clock or after, missing their trains, so that they could vote. Therefore, I suggested—and the suggestion was accepted by the Committee as a whole—that we should defer further consideration of the new Clause until today. I do not apologise for that.

I do not think that hon. Members have been denied any rights which belong, to them. On the contrary, I think that it has underlined the rights which hon. Members possess, particularly since this was a new proposal which we should be considering in conjunction with the new Clause moved from this Front Bench.

I want to make it plain, also, that, although many of the arguments on this question have been put in past years, this is the first time that a proposal for the total abolition of the Entertainments Duty on cinemas has been moved from the Opposition Front Bench. To that extent it underlines the new and additional importance which many of us attach to this proposal. Furthermore, although it is true that arguments have been put forward by a number of hon. Members in the past, I think that the position has become far more serious in the past year, and it was for that reason that it was necessary to move our new Clause.

Since I played a leading part in the matter, I hope that my hon. Friend will not feel that the Committee's historic control over finance has been weakened in any way.

The Chairman

I have now remembered what the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) said. I think that the hon. Gentleman took exception to the new method of putting up the list.

Mr. Ellis Smith

Just the opposite. I am always advocating the introduction of efficiency, and I made it clear—if I did not I should have done so—that I very much appreciate that.

The Chairman

I thought that the hon. Gentleman was making a complaint. I have written down the word "provisional" on it, so I am not absolutely bound by it.

Mr. Wilson

Coming now to the Opposition's new Clause, we very much regret that the Chancellor last night failed to accept it. We believe that the concession he made in indicating acceptance in principle of the Clause which will in due course be moved, and which was referred to last night by the hon. Member for Shipley, is inadequate to deal with the problems of the industry.

I do not intend to repeat all the arguments which were cogently put from both sides of the Committee last night, but the Chancellor should have scrapped this tax entirely in his Budget.

In the Budget debate I used these words: He ought to have taken the opportunity this year, with the surplus he disposed of yesterday"— that was Budget day— to abolish once and for all the Entertainments Duty on cinemas. It yields a sharply falling revenue, and it is now quite clear that the profit is not in the cinemas; the profit is gained now by the operators of commercial television".—[OFFICIAL REPORT, 8th April, 1959; Vol. 603, c. 220.] That was the general attitude which we put forward in the Budget debate. I think that it is an answer to the claim which the Chancellor made last night that he did not have enough money to enable him to accept the Amendment.

Entertainments Duty was a war-time measure, introduced in 1916 on a temporary basis, like every other tax on the Statute Book. The principle of it was that a great deal of money is spent on the cinemas and it was at that time, and for many years afterwards, quite profitable. But sport, such as Association football, Rugby football and cricket, and the living theatre have been rightly taken out of the Entertainments Duty field by decisions of this Parliament. As we all know, the crowds have now deserted the cinema screens for the television screens.

In suggesting that the tax should follow the public, I do not mean that the public should pay the tax. What I feel, and what I am sure hon. Members in many parts of the Committee feel, is that the television operators are now obtaining a large and uncovenanted monopoly profit which enables them far more easily than cinema proprietors to meet any claim that the Government might reasonably put upon them. They are certainly better off than the cinema proprietors and film producers.

4.15 p.m.

The Chancellor last night ignored the real depression in this industry and he ignored it in his Budget. In his Budget he concentrated his generosity on the brewers. The case here is very much stronger. The brewers are very much more prosperous than the cinema proprietors. Since the Committee passed the Clause relating to beer duty, we have seen how profitable breweries can be and how much untapped, if that is the right word to use, financial reserve there is in the brewing industry which needs the genius of a Clore to bring into the light of day. Yet the Chancellor felt that the brewers needed help and that the cinema industry did not need help.

I am sure that if it were a question of the Chancellor wanting to increase the consumption of beer and to increase the revenue, he could have done so by asking the brewers to reduce the price of beer. If the breweries are so profitable that the shares should rise so much following this take-over bid, clearly the Chancellor could have persuaded the brewers to reduce the price of beer without reducing the tax, and the revenue would have been fortified all the more. However, it would be out of order to pursue further this question of the beer duty. I am trying to demolish, without too much difficulty, the argument of the Chancellor that he has not the money to accept this eminently sensible and reasonable new Clause.

I do not intend to repeat all the very eloquent and moving figures given from both sides of the Committee about the position of different cinemas. I have received many letters from all parts of the country since the Budget—I received a number before the Budget—which tell broadly a similar story to that told by hon. Members last night. Although I could detain the Committee for some considerable time by reading extracts from those letters, I do not propose to do so.

When there is a fall of nearly 20 per cent. in cinema admissions in 1958 compared with 1957, when there is a further 20 per cent. reduction in cinema admissions in the first quarter of this year compared with the already depressed first quarter of 1958, when there is a fall of £10 million in the box office takings in a single year, when we hear the calculations of my hon. Friend the Member for Flint, East (Mrs. White)—and, incidentally, I do not think that any Treasury Minister has attempted to question her calculation that 800 cinemas have been closed in the last five years—I think that the case for our new Clause is fully made out.

So far, most reference has been made to the cinema proprietors. I am sure that if my hon. Friend the Member for Nottingham, West (Sir T. O'Brien) were here he would have underlined the position of the workers both on the exhibition side and in the industry as a whole. My hon. Friend the Member for Flint, East specifically referred last night to the film producers and to exports. It was encouraging to hear the tributes from both sides to what the film industry is now doing in the export field. I take some satisfaction from that, because many of the films that have made such a remarkable showing in export markets were financed with Government money as a result of the decision which we took in 1948 to establish the National Film Finance Corporation.

Little was said last night about the position of the film producers. The Minister will know the figures. In 1957–58, I think that 134 feature films were produced, in 1958–59, 121, and in the present year the programme is for 107, which is a very serious fall. Unemployment in the studios is certainly increasing.

The question of embarking on new film production is very much a question of confidence. There is a two years' gestation period for the making of a film. It is comparable to that of the elephant. When the Chancellor destroys confidence, or fails to restore confidence, as he could have done last night—[Interruption.] I am sorry if I have got the two Treasury Ministers excited by my reference to the period of gestation.

The Economic Secretary to the Treasury (Mr. F. J. Erroll)

I merely wondered whether the right hon. Gentleman was accurate in his relative periods.

Mr. Wilson

I thought I was right. If not, I shall be happy to withdraw. I have not checked it. In any case, I should be out of order if I went into that much further.

At least, there is no doubt that the period from the inception of a new film to its production generally averages about two years. Therefore, the Chancellor's failure to give a much-needed confidence to the industry last night will have a serious effect on film production two years from now.

For one thing, we know that film production is very much a question of finance. Finance will be tighter in view of the fact that the Entertainments Duty is not being abolished. It is not only a question of private finance, end money and all the other delightful phrases which are often used in the film industry. The National Film Finance Corporation is at present being very tight on the question of financing film production. One understands the Corporation's position in view of its statutory responsibilities. It would feel more confident in financing more film production had the Chancellor agreed to the removal of this duty last night.

I also remind the Government Front Bench that last year, when the Chancellor removed £14 million of Entertainments Duty, the genuine producers of British films—I define British films in a narrower than quota sense; I exclude American producers producing in this country with blocked sterling under the 1948 Agreement—got only £1.1 million out of the £14 million tax concession made by the Chancellor. If the same proportions rule now, it will be clear that their share of the £2½ million concession announced by the Chancellor last night will be even more infinitesimal.

I do not intend to refer to the scheme which the Chancellor accepted in principle last night. It was well and truly debunked in all its anomalies by my hon. Friend the Member for Govan, in the course of his knowledgeable speech. If my hon. Friend the Member for Walthamstow, West (Mr. Redhead) is successful in catching your eye, Sir Charles, as, I hope, he will be, he will develop some of the arguments that we would want to deploy against the scheme proposed by the hon. Member for Shipley. My hon. Friend will be deploying the argument with expert knowledge to which most of us cannot make claim. The real issue is that £2 million or so will not solve the problem, but will, in fact, create more anomalies. Every time that we have attempted to have a shielding of this kind, more anomalies have been created. The Chancellor should have made a clean sweep of the Entertainments Duty.

I conclude by referring to the fact that the Chancellor gave only two reasons for not doing so. The first was based on his claim of cancellarian poverty, that he had given so much away on other things that he did not have the money to do anything more. I have dealt with that and said that he should have put the cinema claim higher than that of the brewers. Last night, however, the Chancellor gave a second reason, which some of us thought was rather sinister and new. Certainly, it was very ominous. If there were no other justification for continuing this debate today, the fact that the Chancellor has thrown a new idea into the pool concerning Entertainments Duty is a thorough justification for going on with this debate and examining it.

The Chancellor has decided—as I have said, this is new—that some sort of tax on the cinemas should be permanent, a kind of offshoot of the Purchase Tax or, perhaps, a concession to the sales tax idea which has been put forward on various occasions. Let me remind the Committee of the words used by the Chancellor last night. Referring to the proposal that our new Clause should be accepted, he said: Were it done, it would relieve entirely from indirect taxation about £80 million worth of consumer expenditure of a kind which is neither on basic essentials nor deserving of special encouragement on social grounds and which, in the long run, I should think would be able to support a moderate rate of duty along with other analogous expenditure. Therefore, I do not feel that on the present evidence it would be justifiable to relieve this form of entertainment entirely from taxation. The rate of taxation that it will bear will be a good deal lower, far lower, than is the case with many other forms of consumer expenditure on entertainment in other forms."—[OFFICIAL REPORT, 10th June, 1959; Vol. 606; c. 1132.] I think that I am right in claiming that that is a new argument which so far has not been put forward by the Treasury Bench in any debate on Entertainments Duty. We have always considered that Entertainments Duty was a regrettable necessity at a time when the entertainments industry was more profitable. I have given my reasons for suggesting that the duty should have been switched as public attention has been switched from the cinema screens to the television screen. I would not have been at all surprised if the Chancellor had said, "I am sorry, I cannot afford it this year, because I have done so much, but we will look at it again". I have given my reasons why that would have been a poor argument, but it would not have been a surprising one.

What is surprising is that the Chancellor has now, for the first time, said, in effect, that the taxation of cinemas must be a permanent feature in our tax structure. Obviously, he regards Purchase Tax as a permanent feature in our tax structure and he appears to regard this as analogous to Purchase Tax. It looks, therefore, as though the Government are still flirting with the idea of a general sales tax and one now, apparently, which is to be extended to services and entertainments as well as to physical commodities. On that basis, the Government will be proposing to extend it to laundries, dry cleaning and a hundred other services if they have this general sales tax.

The Chancellor last night was using carefully considered words, which either he had drafted in the cool of his yacht, or wherever he drafts his speeches, or which had been drafted for him and which he had considered and approved. It is, therefore, ominous that he should use those arguments in rejecting the new Clause. The Chancellor has shown that he cannot abide the thought of any substantial slice of expenditure going on which does not bear tax. The fact that £80 million is spent on cinema entertainment suggests to him that here is a good place for the Treasury to maintain its claws.

We feel, therefore, that no satisfactory arguments have been put forward for the rejection of our new Clause. By accepting in principle another Clause, which we believe to be on the wrong lines, the Chancellor has entirely failed to meet the needs of the industry. More particularly, he has injected a new note into our debates on Entertainments Duty in suggesting that the Government at least believe that in some form or other, and at some rate or other, the taxation of cinema admissions should be a permanent feature of our tax system.

4.30 p.m.

Mr. Eric Johnson (Manchester, Blackley)

I would like to refer to what the right hon. Member for Huyton (Mr. H. Wilson) has said about the speech made last night by my right hon. Friend the Chancellor of the Exchequer. I confess that I, too, was disappointed at what my right hon. Friend said in that speech. He seemed to be making the point that there was every justification for keeping up a tax on the cinema industry and that the industry had failed to prove any need for a remission. It seems to me that we have got the idea of taxation in this case somewhat the wrong way round. My right hon. Friend should come and explain to the Committee for what reasons he proposes to keep a tax on the cinema, alone of all entertainments, at a time when the industry is losing money.

It was most regrettable that in the Budget which brought so many very welcome remissions in taxation, including one which helped the television industry, by abolishing Purchase Tax on television tubes, my right hon. Friend has not seen his way to remove the tax on the cinema industry which brings in a relatively small amount of revenue which is rapidly decreasing as cinemas close. No one would challenge the value of the contribution which the cinema industry makes as a source of entertainment at home or in earning foreign exchange by sending films abroad. I agree, also, that perhaps as much as, if not more than, any other, this industry depends on a strong home market if it is to be able to send its products abroad.

It is well known that admissions and takings have been falling for some years and I understand that this year film production has also shown a sign of falling off. I do not want to worry the Committee by repeating statistics and arguments which have been put forward already on many occasions, but I should like to draw attention to the position in my own constituency of Blackley, which is situated about four miles from the centre of Manchester and cannot be said to be over-endowed with cinemas.

We had five cinemas, but one has been forced to close. The remaining four have a seating capacity ranging between 900 and 1,300 seats. All of them have shown a drop in the number of admissions by about 25 per cent. in the year ending last March compared with the previous year. One of them, of which I have the greatest details, shows a drop in admissions of no less than 55½ per cent. between 1954 and 1958 and I expect that the others would show much the same if I had the full figures. Takings tell the same story. The smallest of the four surviving cinemas is making a loss, but it still had to pay £292 last year in taxation, which is a most unjust state of affairs.

Mr. Gerald Nabarro (Kidderminster)

Is my hon. Friend advancing the argument that the profitability of an industry should be the arbiter as to whether it is taxed at a particular rate or given unilateral relief? On that thesis the Government should inject ten times the sum of money suggested into the cotton industry to keep unprofitable businesses in being, if my hon. Friend carries his argument to its logical conclusion.

Mr. Johnson

I am not advocating giving any help to the cinema industry, but advocating the end of unfair discrimination against an industry which in some cases is losing money. I do not know what my hon. Friend does, but if I had an income of minus something I would not expect to be taxed on it. That seems to be the position in the case of this cinema. The other four are making a small profit, not by showing films but on the refreshments they sell and the advertisements they show.

Cinemas of this type are also finding it increasingly difficult to keep up the proper standard of decoration, furnishing, comfort and equipment which they would like to keep up. The result is that as they deteriorate there will be a continuing and increasing falling off in the number of people who go there.

Mr. Douglas Glover (Ormskirk)

I agree with my hon. Friend in his comment on what my hon. Friend the Member for Kidderminster (Mr. Nabarro) said, but he is a little unfair to the Chancellor of the Exchequer, because the concessions to which he agreed last night will remove nearly all the tax that this sort of cinema pays. Cinemas will have to have been paying at least £1,000 a year now before they are taxed at all.

Mr. Johnson

I wish that my hon. Friend had been able to possess his soul in patience for about two seconds more, because then he would have heard me say that I welcome very much the concession which the Chancellor made in respect of the new Clause in the name of my right hon. Friend the Member for Blackpool, North (Sir T. Low), which we discused last night. That Clause will be of immense help to the cinemas in my constituency and will mean that in future none of them will have to pay any taxation. I believe that the concession will keep those cinemas going until there is a revival in cinema-going. I disagree with what my hon. Friend said about that last night. I think that when the novelty of television wears off there will be a revival in cinema-going, because the cinema is an infinitely better form of entertainment than television.

Mr. Nabarro

I do not think so.

Mr. Johnson

The concession will at least keep the cinemas going until that happens, as I believe it will. I am grateful for a concession which will help all the cinemas in my constituency. But I do not believe that it goes far enough, for the reasons which I put forward earlier. Although I am grateful to my right hon. Friend, I think that it is a pity that he allowed himself to become a party to what seemed to me a typical piece of Treasury meanness, by refusing, as I understood him to say, to make this relief retrospective to the date of the Budget. It is a greater pity that my right hon. Friend did not see his way to abolish altogether a tax which is unfair and discriminatory against one alone of the entertainment industries. I would find it very hard to oppose the new Clause in the name of the right hon. Member for Huyton, which was expounded last night by the hon. Member for Flint, East (Mrs. White).

Mr. John Diamond (Gloucester)

As can be well imagined, it is a very great pleasure for me, as the former Member for Blackley, to follow in the debate and congratulate the hon. Member for Manchester, Blackley (Mr. E. Johnson) on what he has said. I endorse every word. I feel a good deal better now about the defeat that I suffered at his hands in 1951. It was well-deserved for the pleasure of hearing him say things with which I entirely agree about the cinema industry.

During the six years I was out of the House of Commons, as a result of the hon. Member's efforts, I devoted myself in a very direct capacity to the cinema industry. One cannot help being somewhat aware of the circumstances of an industry one has worked at day and night—as people do who are engaged in that industry—for a period of six years. I must make clear, however, that my interest in the industry ceased before I returned to the House.

I entirely agree that the cinema industry should not have to come here and ask for this tax to be withdrawn. The Chancellor ought to stand at the Dispatch Box to justify this tax at all. There is no justification any longer for a tax which is levied on one industry alone and which it has been shown now, for the third year, as a total industry will make a loss even after the reductions which the Chancellor now proposes. I said this last year, and it is encouraging to hear other people say precisely the same thing this year. But what is most discouraging is to hear the Chancellor going backwards.

The most serious thing is that the right hon. Gentleman has really taken a marked step backwards, because the industry cannot afford any tax. There is no justification for a tax which is not only discriminatory, but which falls on losses. Although there was implicit in everything the Chancellor said up to this year a recognition of the difficulties of the industry and of the fact that when circumstances permitted he would withdraw the tax completely, this year he has changed round completely. He made perfectly clear in our earlier debates that he is turning in favour of a kind of general Purchase Tax or modest sales tax which will cover all forms of small expenditure and he regards going to the cinema, quite properly, as a form of consumer expenditure.

I endorse heartily everything said by my right hon. Friend. It is vital that this matter should be cleared up. The difficulty of the industry up to now has been that it has not been able to make headway against television or against the changing pattern of entertainment. But, at all events, it has had the hope that if it kept pressing this claim it would at least have a chance to see daylight it would have a chance of standing on its own feet and not being penalised. It would have a chance of making its way in the world as, under a private enterprise, competitive system, it is entitled to feel it can do under a Conservative Government.

Now, however, in view of what the Chancellor said, it has a cloud hanging over its head and is in a difficult position, both as a result of what the right non. Gentleman said in the Budget speech, which the whole trade has taken up, and in particular because of what he said last night. I hope, therefore, that nobody less than the Chancellor will make it absolutely clear either that he meant what he said—because, with the greatest possible deference, the right hon. Gentleman was not quite clear after he had said it whether he had said it or not, and there was an interruption between the two Front Benches—or that we have misunderstood him and that the industry can have some hope that even under a Conservative Government it will be allowed to row its own boat, to make its own way, and not be so penalised.

The arguments have been repeated so often that one does not want to cover them again, but it happens that I have received one letter from a lady, not a constituent, which applies so pointedly to this matter that, if I may trouble the Committee, I will read it. I intervened in the Budget debate to put forward all these arguments and to suggest that there was no longer any justification for the Chancellor saying that he could not afford this concession, because if only he raised his horizons he would see much better and wider and more plentifully full coffers into which he could put his hand right up to the elbow as far as I am concerned, and recoup the modest £9 million of revenue he would lose from this source.

My intervention was picked up in the Daily Express, which was good enough to publish something of what I said under a section called "Opinion". In fact, it went so far—I do not regard this as entirely libellous—as to say that these remarks were commonsensical. The letter I received stated: I read in 'Opinion', Daily Express yesterday, your remarks.… I am an old age pensioner, aged 75, and the cinemas are the only form of entertainment who give us any concession. We are allowed in before 3 p.m. for 7d. or 9d. and can sit anywhere we like. We have to pay the same as the rich for our wireless licence, and T.V. is quite beyond our means. If cinemas have to close it means bus fares to get to one further away"— This letter comes from a Londoner— and pennies have to be counted when you have only £2 10s. Please go on fighting for the removal of the tax so that we may not be deprived of our one weekly pleasure. That is a very relevant letter. Anybody in the industry knows that it is common practice almost throughout it to give a special concession to old-age pensioners. Perhaps what everybody here has not looked at is that it is cheaper for the old-age pensioner to go to the cinema in the afternoon and pay that amount to keep warm than to try to do so at home. That facility can only be given if the cinemas are able to make ends meet and they cannot make ends meet at the moment, even with the £2½ million reduction which the Chancellor proposed last night.

4.45 p.m.

I am delighted that my right hon. Friend the Member for Huyton (Mr. H. Wilson) raised the question of the employees, because it is not only for the employers that we are arguing this matter. In any industry where receipts are so low, and expenses are so high that profits are negligible or nonexistent, it has always been the case that the employee has to suffer in his conditions of employment and rates of pay. If an industry cannot afford reasonable rates of pay, of course they become unreasonably low. That is without question the situation on the exhibiting side of the cinema industry. That can be tested by having regard to the turn-over of employees in any cinema.

The trade union rates which can be offered are so low, and the conditions of employment are such, that it is not surprising that, for instance, a young woman who is engaged in the morning fails to arrive in the afternoon, even before employment has started. The turn-over in all categories is enormous and makes life an absolute misery for anybody who has the unfortunate responsibility of trying to run a number of cinemas.

This is inevitably the case when profits are so low. I want the Chancellor to realise that he is not taking money out of the pockets of the patrons. That is a form of words which is utterly deceiving. He is not taxing a form of consumer expenditure. The patron's entrance fee would go to the cinema whether there was tax on it or not. The whole amount will go whether the tax is reduced or not. What the Chancellor is taxing is the ability of the cinema proprietor to pay decent wages to his employees. The right hon. Gentleman is taking money which would otherwise be in the pockets of these employees, because with the present level of takings and the present level of activity in the cinemas there is nothing left with which to pay decent wages.

The cinemas are struggling to keep on, hoping, as they did justifiably until this year, that there would be daylight either when the Chancellor was able to take a new look at television or, because of increasing revenue from other sources, he could forgo the tax on the cinemas.

I say, therefore, that the situation is most serious. It has been so for some time. The figures put before this Committee and the Chancellor, circulated by the trade, estimating the returns in the following year, have always been wrong. They have always been on the low side. They have always been optimistic as to profits. The figures have always turned out worse than they were estimated. I argued this point last year and I repeat it. Does the Chancellor accept the figures? If so, what is the justification for continuing to levy a tax on this one industry alone, a tax which falls on the particular cinema, the burden of which has to be shared by the proprietor and, more particularly, by the workers who are engaged in the industry?

There is no sensible reason in terms of the tax structure, because no profits are being made, only losses. There is no reason in terms of revenue because revenue can be sought elsewhere. There is every reason to help this industry by enabling it to stand on its own feet and to direct its attention to its own affairs, instead of continually having to direct the whole of its attention to fighting the Chancellor and the Revenue to get the tax removed. Let the Chancellor take off the tax and let the industry use all its endeavours to put its own house in order and have some co-ordination there.

We all recognise that the fact of removing the tax will not make every cinema proprietor a Surtax payer. What I stress is that so long as the main endeavour of the cinema proprietor is to get the Entertainments Duty removed, he will have a most profound psychological reason for devoting his attention to that, instead of looking at the affairs of the industry as a whole.

For all those reasons, and particularly because the Chancellor's suggestion is unworkable and unsatisfactory, I echo the hope already expressed that we shall register our opinion most strongly.

Mr. John Howard (Southampton, Test)

Like the hon. Member for Gloucester (Mr. Diamond), I had some little experience in the cinema industry before I came to the House of Commons. I hurry on to say that I no longer have any connection with the industry, although I still follow the same profession as the hon. Member for Gloucester. I do not take his view of the new Clause moved by my hon. Friend the Member for Shipley (Mr. Hirst) and which the Chancellor last night indicated he was prepared to accept in principle, although he had to do some tidying up on Report.

The proposals in that Clause have a number of merits. The Clause would retain the present organisation and the arrangements for a check by the Customs and Excise authorities, which are important in an industry which is handling cash and paying a film levy and in which the exhibitor is paying film hire to the renter. Some check is needed on the takings of the cinema. For that practical reason, there is some merit in retaining the present organisation. I am not saying that it is worth £9 million to the industry, but a trade paper recently reported the problems which face the industry in connection with a check of box office takings and referred to the activities of the Kinematograph Renters Society which undertakes the audit of the exhibiting side of the industry.

Mr. Diamond

Will the hon. Gentleman be good enough to explain, in view of this K.R.S. audit, what advantage to the industry there is in paying £6½ million to the Chancellor for this additional audit? Would it not be done equally well by the hon. Gentleman and myself, who could do it much cheaper?

Mr. Howard

I am sure that I should be delighted to work with the hon. Gentleman and to do it for a cut fee, but he will agree that the Customs and Excise audit is much more extensive. I do not wish to pursue the point too far, but it is one of the advantages of retaining the present structure.

Most of us have received representations from local cinemas. I certainly have and I believe that these proposals will go some way towards meeting the trading difficulties of the smaller cinemas. If he follows the proposals of the new Clause of my hon. Friend the Member for Shipley, the Chancellor will provide a rebate of £20 a week in the entertainments tax paid by a smaller cinema. It has been pointed out by the hon. Lady the Member for Flint, East (Mrs. White) that a considerable proportion of that £20 a week might well go in additional film hire, so that the exhibitor would receive a subsidy not of £20 a week, but of a sum rather less than that.

An exhibitor recently wrote to me to say that he put film hire as high as 50 per cent., so that the advantage to the small cinema would be limited to £10 a week if film hire were maintained at that rate. That exhibitor might have placed the cost of film hire on the high side, but that figure serves to illustrate the point.

For once in a way it is up to the trade to decide how this £20 is to be apportioned. Clearly, £10 will go to the exhibitor. Will the renter take the remaining £10, passing some to the producer, or will that section of the trade say that it relies on the small cinema for its livelihood and that it will be generous and allow the small cinema to retain the whole benefit of that £20 a week, disregarding the entertainments tax in computing film hire?

One thing is certain and that is that the relief in duty will not be passed on to the patron at the box office. It will clearly all be taken up by the trade. I rose only to make the narrow point that I hope that, having pressed Members of Parliament to rescue the small cinema and since there are now indications that some relief is at hand, the trade will itself consider being generous to the small cinema and will not wish to see it submerged through film hire taking nearly half of the relief which the Chancellor is likely to offer.

Mr. Stephen Swingler (Newcastle-under-Lyme)

After what happened last night, there is a strong temptation to continue this debate for a fortnight, but you have no need to become alarmed, Mr. Thomas. We are in a rather curious position. As hon. Members who have taken a consistent interest in the film industry will know, some months ago there was an all-party meeting in the House which was attended by representatives of the industry and by some of the outstanding artists in the trade. The meeting called for the abolition of Entertainments Duty.

After that meeting, in which there seemed to be considerable interest and substantial support for the abolition of what had become a cinema tax, some of my hon. Friends and I decided to promote a back bench Motion calling for the abolition of Entertainments Duty. We thought that we would get some support from hon. Members opposite. However, we were unfortunate in that respect and interest in the subject seemed to have declined.

On Budget day, the Chancellor made no mention of the position of the cinema trade and the film industry. Nor did he refer to Entertainments Duty. Later on we discovered that an Amendment had been put down by hon. Gentlemen opposite and last night we discovered that, having made no mention of it on Budget day, the Chancellor had suddenly become prepared to concede £2 million or more to the trade. That would be an interesting subject for a fortnight's investigation.

Whatever their technical merits or demerits, the Chancellor's proposals are totally inadequate and irrelevant to the whole problem. Those who attended these debates twelve months ago know that we discussed tax relief very thoroughly then. I can remember the sunshine and moonshine propaganda of hon. Members opposite about how we had reached the end of the fall in admissions and the end of the period of closures, and so on. However, those hopes have been proved to be unfounded and now the trade and industry are concerned only with the complete abolition of the tax.

I agree with those who have argued that the tax is discriminatory. We are now at the stage when the Chancellor has to justify singling out the entertainment of the cinema as compared with all other forms of entertainment. It is not now a case of why we should abolish the tax. It is now a matter of why the tax should not be abolished and why cinemas should be chosen for a special form of taxation when that taxation has been ended on all kinds of sport. What is the difference between admission to a cricket ground and admission to the Odeon cinema in this respect? No justification has been made out for retaining this special kind of discrimination for this form of entertainment.

5.0 p.m.

The second point is that nobody disputes the tremendous decline in the industry and trade. To put it harshly, the Treasury ought not to be an accessary after the fact to the murder of hundreds of cinemas. Many cinemas have closed down in the last few years, and it may be that many more will have to close because of falling attendances. Ought we deliberately to accelerate this decline and increase the difficulties for those in the industry and trade?

What my right hon. Friend said in opening the debate has special significance because the inference, from the Chancellor's view of the tax, is that there is to be some permanence in taxing the cinemas and discriminating against them compared with other forms of exhibition and entertainment. We should like a definite reply from the Chancellor about this, because it appears to be a flagrant case of injustice.

We know that some people in the cinema trade and film industry do not need the money. Some people are making considerable profits and there are other forms of taxation to deal with profits and high incomes. The question is whether it is any longer just and desirable to tax the receipts at the box office of a form of entertainment that is in a very serious decline.

My last point is that the abolition of Entertainments Duty is the only solution. We shall not get the sorting out in this industry that is necessary until that has been done. So long as any form of taxation remains on the cinemas, it is natural that those in the trade will continue to discuss the relation between the tax imposed on them and their economic difficulties as if the Entertainments Duty were a major contributory factor to their difficulties. Only when we have abolished taxation on the cinemas will we get a state of affairs in the trade where there will be a more realistic appreciation of the reorganisation of the industry that is required, and particularly in relation between the exhibition side and the production side.

If we pass the Clause today, there will still remain a most peculiar form of taxation on the cinemas, the so-called statutory levy. It is a form of taxation to subsidise production because of the peculiarity of the economics of the industry itself.

One of the things that the Treasury ought to know is the importance of maintaining the industry of film production. It is important not only because of its overseas earnings but because of the psychological significance of the exhibition of British films abroad. Not many hon. Members have mentioned this, but I know from my travels abroad and from consulting other people that in recent years British films have had an increasing amount of influence for this country, its ideas, its techniques, and its artistry, in all sorts of countries in which the cinema industry is expanding and not, as it is in this country, contracting.

If we fail to produce films to supply to these markets, other countries will supply them. In some of the Commonwealth countries, in South America and different parts of Europe, there has been a great development of markets for the exhibition of British films. This is a very good thing, but we cannot maintain the existing production industry unless there is a basic home market for the exhibition of films, and a reorganisation in the economy of the industry and the trade in the relationship between the exhibition of films and production. That will not come about until this tax has been removed. The trade will not concentrate as it ought to on its own internal reorganisation until this last penal measure, this discrimination against it as a form of entertainment in relation to others, has been abolished. The only thing that is of interest to the trade is the total abolition of the tax.

Mr. William Shepherd (Cheadle)

I doubt whether the hon. Member for Newcastle-under-Lyme (Mr. Swingler) is right when he says that the existence of the tax will slow down the process of rationalisation. I agree that there may be some psychological factors which may tend that way, but the whole weight of economic pressures is in an entirely different direction. In saying that, I do not mean to imply that I am in favour of keeping these extremely harsh economic pressures. There might be an argument for doing so, and I hope that the Committee will be mindful of that argument, because it is possible to prolong reorganisation to such an extent that one inflicts greater injury and hardship than if that reorganisation were brought about swiftly and without undue delay.

I have thought about these arguments towards rationalisation, and I have come to the conclusion that in the first place, those who are in this business are struggling so hard against such an enormous pressure of adverse circumstances that we ought to give them our consideration whatever the economic arguments. Secondly, in the main those who will have to go out of the business are now not in fact paying any tax, or at any rate very little, and therefore the maintenance of economic pressure to secure a more rapid process of rationalisation is not justified on pure economic grounds either. For these two reasons I want to see some relief for the cinema proprietors from the present burden of taxation.

We had a very interesting speech from the right hon. Gentleman the Member for Huyton (Mr. H. Wilson). It was interesting because he contradicted himself on what I thought was a fundamental point. He told us that he was appalled by the view of the Chancellor that we should maintain taxation on entertainment. It was something which outraged his soul, but earlier he said that what we have to do is to arrange for the tax to follow the entertainment. I suppose he was inviting the Committee to make a choice between those two points of view.

Mr. H. Wilson

I do not think that the hon. Gentleman followed what I was saying. I said that I was appalled that the Chancellor intended to make Entertainments Duty on cinemas permanent.

Mr. Shepherd

If the right hon. Gentleman reads his speech tomorrow he will see, and this is important, that he made the case, or was trying to, that taxation of entertainment as such was not an acceptable proposition.

Mr. Wilson

No, I did not.

Mr. Shepherd

The right hon. Gentleman made the point that taxation of entertainment was not a tenable proposition. It is not true that only the cinema bears Entertainments Duty. Gramophone records, which are demonstrably a form of entertainment, are taxed although some of us may not think that gramophone records are exactly entertainment. If we seek a principle, I think we might say that because of high costs, particularly of salaries, nowadays, we have been driven to taking Entertainments Duty off live entertainment but that Entertainments Duty still exists on mechanical entertainments, or on entertainments which are capable of being reproduced mechanically. I am not at all sure that it would be wise to do as some right hon. and hon. Members have done and rush to support the view that such a tax should be abolished in its entirety.

It is easy to say of almost any single tax which we discuss in this Committee that it amounts only to £X out of the £5,000 million of taxation and therefore the Chancellor can afford to dispense with it. It is certainly possible to say that about the £6½ million which the Chancellor hopes to draw from Entertainments Duty, if he is lucky, after he has brought the proposed reduction into operation. But I am concerned for a broader principle. We are tending to get far too much direct taxation in this country and far too little indirect taxation. With the exception of the United States, we are the country with the highest ratio of direct taxation compared with indirect taxation. If we continue to cut away at all forms of indirect taxation, we shall do away with the possibility of easing the burden on those who pay Income Tax, and there are above 80 million people who do so.

I ask the Committee to consider whether it is entirely desirable to abolish methods of indirect taxation one after another. I am inclined to support the view, which the right hon. Member for Huyton found so objectionable, that we should have a small, moderate tax on entertainment and that we might even pursue a policy of extending taxation on entertainment. I certainly think that we ought to have a much bigger slice from television than we get at present. I would remind the Committee that we get something from television and I have no doubt that we shall get a bigger slice. I think that the case for having some small measure of taxation on entertainment is a sound one because of the need to spread the burden of indirect taxation.

I wish to say a word about the proposal announced last night by my right hon. Friend the Chancellor. I suppose I may say that I almost originated this proposal. I tried to sell it to the right hon. Member for Huyton a year or two ago and I have also tried to sell it to the cinema exhibitors. On several occasions I have recommended it to the Chancellor. I realised that there are defects in this proposal and that there are difficulties regarding its operation, but because it concentrates the advantage on those who need it most I think it is desirable to try to overcome the administrative difficulties and I wholeheartedly support the proposal.

5.15 p.m.

Should we in fact be doing an irreparable damage to the cinema industry by keeping a moderate tax in existence? My view is that we should not except perhaps in a purely psychological sense. The trouble facing the cinema industry is not the £6½ million of taxation which it has to provide, but the appalling fact that in a relatively short period of years attendances have dropped by half. If we are to have this industry on anything like a reasonable footing, it is clear, even to a person of the meanest intelligence, that it will be impossible to maintain anything like the present number of cinemas.

Were the tax entirely removed, there would still be a compelling economic need to reduce the number of cinemas now in existence. Therefore, I say that we cannot by an Act of Parliament be—I was going to say generous, but it is absurd to talk about being generous when one is dealing with other people's money. If we made the gesture and removed the tax entirely it would not reduce the imperative need to reduce the number of existing cinemas very materially. As I said earlier, it may well be that the only effect of eliminating the tax in its entirety at the present time would be to prolong the period during which the reduction in the number of cinemas took place, and to inflict much more harm on the industry, and much longer-term harm, than would be strictly necessary. For these reasons I am inclined to accept the view of my right hon. Friend the Chancellor and his present proposals.

If there were further substantial reductions in attendances which would put into even greater jeopardy an ever-increasing number of cinemas, I should be prepared to reconsider the view which I have been stating to the Committee this afternoon. I base my present assumptions on there being a floor in attendances of about 650 million a year. If we experience reductions in attendances to below that point, we may well come to the conclusion that even the present level of taxation at £6½ million would not be tenable. But, in the light of the present figure of attendances, I take the view that the proposals of the Chancellor are the best to meet the immediate situation, and I hope the Committee will be advised to give them a trial, at any rate for a year.

Mr. A. E. Hunter (Feltham)

It is hard to follow the argument of the hon. Member for Cheadle (Mr. Shepherd) who has been arguing that it would be best to retain some form of tax in order to close cinemas because there are too many in existence. To me that appears an extraordinary argument. Every year hon. Members on this side of the Committee plead with the Chancellor to abolish the Entertainments Duty. I think it was the general opinion that in his Budget this year the Chancellor would abolish Entertainments Duty on cinemas, but there was nothing in the Budget although at a late hour last night the right hon. Gentleman made a minor concession.

In my opinion, my right hon. Friend the Member for Huyton (Mr. H. Wilson) was quite right when he said that the huge profits made today are not made by cinemas but by commercial television. Therefore, it seems to me that we are taxing an industry which is experiencing great difficulties. That is indicated by the fact that over 800 cinemas have been closed in the last few years and many others will be closed. It seems unfair that the cinema should be selected as the last form of public entertainment to be taxed. The tax has been removed from football and cricket and from the living theatre, and quite rightly.

In some towns the loss of a cinema means the loss of a social amenity. Recently a cinema in Feltham High Street was closed. It had been open for many years. The closure occurred just after the Budget in April and the reason given was that as there was no remission of Entertainments Duty, the proprietors could not carry on. One can see quite clearly, therefore, that the Entertainments Duty has caused the closing of cinemas. This is not a tax on profits or one which may be absorbed in manufacturing or distributing costs. It is a tax on receipts. Whether a profit of £5 a year or £1 a year is involved, or whether a loss of £100 a year results, the tax goes directly upon receipts, and not upon profits. Therefore, I support the plea put forward by my hon. Friends that Entertainments Duty should be abolished in its entirety.

The cinema industry is an important industry. It employs roughly 80,000 people in its cinemas, in distribution and in film production. Any industry that employs that number of people is one to which the Government should give some consideration. I cannot imagine the hon. Member for Cheadle agreeing to a tax on the sale of cotton that could not be absorbed in the manufacturing costs, yet we are taxing the cinemas directly on their receipts. An industry on which 80,000 people depend for their living is, in my opinion, an important one, and the employee's need every consideration.

The hon. Member for Newcastle-under-Lyme (Mr. Swingler) was quite right in what he said about the importance of the production side of the film industry. There is quite a good export market in films which could expand, and a good export market must depend on a home market as well. I think that, if the tax were abolished, the industry could be reorganised to its own benefit. There would be no further excuses for it. It would have to produce good films in order to get the people into the cinemas. The abolition of the Entertainments Duty would remove any excuse on those grounds, and the cinema industry would have to show results.

I know that the cinema industry has made mistakes in the past and that there has been some reorganisation. There could be more and better films. If the tax were abolished it would remove any excuses. Some cinemas have been in existence for 30 or 40 years. I remember some in London and Greater London which even during the war, with the bombs falling on several nights running, kept open and people went into them. It is extraordinary to me that cinemas can keep open with the bombs falling and yet that the Chancellor, by his Entertainments Duty taxation policy, closes them.

I appeal to the Chancellor to look again at the Entertainments Duty he levies, and if no further concession is given tonight I hope that we shall go into the Division Lobby to vote for the removal of the tax in its entirety.

Mr. Philip Goodhart (Beckenham)

It is obvious that the Entertainments Duty, as levied at the moment, has a very uneven repercussion on the cinema-going public as a whole. I live in London and as far as I can make out, a cinema at the bottom of the street in which I live is doing extremely well. There are often long queues in front of it.

If by chance this cinema were to close there are many others to which ray family could easily get if they wished to do so because it is inconceivable that all the cinemas in London would close. In fact, the Chancellor, if he wished, could put up the Entertainments Duty to an astronomic level and Londoners would still be able to get to a cinema fairly easily if they had the money with which to pay for admission. But in other parts of the country the situation is very different. It is rather different in my own constituency. There a number of cinemas have closed, no doubt owing in part to the Entertainments Duty, and it is difficult for people living in certain areas to get, in the evening, to those cinemas that are still open in the neighbourhood.

We have heard during this debate and in previous debates on the subject in this Committee that there are some areas of the country in which it is almost impossible for people who want to go to the cinema to get there. The point I am trying to make is that, above all, the cinema is a local amenity. I feel that there is a very great deal for saying that, if one accepts the cinema as a local amenity, the local authority should be allowed to set the rate of duty and Keep the revenue from it. In other words, Entertainments Duty should be turned into a local tax.

It might be that the Beckenham Council would decide that the rate of Entertainments Duty to be levied on local cinemas would, in fact, be nil. On the other hand, the Westminster City Council or any council of a large city might decide, if there were an ample number of cinemas in its area, that the levying of the tax was a legitimate means of getting some extra revenue for expenditure on desirable social purposes. Therefore, it might levy a stiff Entertainments Duty.

I can see very little object on ethical grounds for eliminating taxation from a whole field of entertainment as advocated by the new Clause. While we continue to have Purchase Tax on, say, stationery that is used in schools, I should have thought that on ethical grounds it would be much better to remove that tax entirely before doing away altogether with the Entertainments Duty.

I welcome the steps taken this year by the Chancellor to help in particular the small cinemas in the less built-up areas. However, I hope that in his Budget next year, he will consider, not eliminating Entertainments Duty altogether, but rather removing it from the field of central Government and turning it over to the local authorities.

Mr. Niall MacDermot (Lewisham, North)

A number of hon. Members, including some of my hon. Friends and even my right hon. Friend the Member for Huyton (Mr. H. Wilson), have expressed surprise at the concession which the Chancellor announced last night. In doing so they remind me of the apocryphal story of Dr. Johnson, who was alleged to have been found one day by his wife kissing the maid. When his wife said to him, "I am surprised", he rebuked her and said, "You should be more correct in your English. I am surprised, you are astonished".

I can understand hon. Members being astonished by the decision to which the Chancellor has come in this matter, but I find it difficult to understand how they can be surprised, because this concession has for some time been very widely predicted in the Press. The political correspondent of The Times has come in for some rather tart criticism of late in his ability as a prophet, but I think that in justice to him it is only right to point out that he predicted as far back as 25th May last that there was good reason to believe that the Chancellor would accept the new Clause— Reduction of Entertainments Duty—in the name of the right hon. Member for Blackpool, North (Sir T. Low). Indeed, the right hon. Gentleman indicated last night that he would accept the principle of it.

My hon. Friend the Member for Newcastle-under-Lyme (Mr. Swingler) said that we could have an interesting fortnight in discussing how this decision came to be made. I doubt whether it would be the wish of the House that we should spend quite as long that on the subject, but I should like briefly to investigate the matter. I suppose that if we were coming to it afresh it would be fairly easy to deduce how the matter would come about. It is usual for Chancellors to keep up their sleeves one or two million pounds which they propose to give away in concessions during the course of the Finance Bill debates. If they did not the debates would be even more arid than they sometimes are now.

5.30 p.m.

I suppose, also, that a prudent Chancellor—and prudence is surely among the virtues of the present Chancellor—would think to himself, "In making concessions, I suppose it is wiser to make those which will please my own back benchers rather than hon. Members opposite." He would then look at the Amendments and new Clauses which have been put down by Government back benchers and he would see one new Clause with a most distinguished array of names sponsoring it, including the chairman and vice-chairman of the Conservative Party Finance Committee, besides both joint secretaries of the Committee. He would then say to himself, "This looks a pretty good bet. The cost of it will be only about £2¼ million or £2½ million. That is the sort of sum I like to give away in Finance Bills Further, it is supported by some of the most distinguished Members of the Conservative Party Finance Committee." The prudent Chancellor would probably select that new Clause as being worthy of a concession.

That is the way in which one would expect the decision to be reached; but, according to what appears to be a remarkably well-informed article in a certain publication, that is not the way things work in the Conservative Party. Of course, we realise that it works in mysterious ways. I have here an article published in a newspaper called the Daily Cinema, of 13th May last. It is written by the Daily Cinema political correspondent. I had not heard of him before. His name is J. W. Murray.

Mr. H. Hynd (Accrington)

What is his constituency?

Mr. MacDermot

He begins by saying: A Government concession on Entertainments Tax is now generally expected in Parliamentary circles. Conservative M.P.s believe that the Chancellor may accept this proposal to cut out the first £20 of Tax per cinema each week. He then sets out the names of the distinguished Members to whom I have referred, who are sponsoring the new Clause, and then shows a remarkable gift of prophecy, because he says that he thinks the new Clause is likely to be discussed together with Labour Party and Liberal Party new Clauses dealing with Entertainments Duty. He was not right about the Liberal one, but he says: It is also possible that the Chancellor will accept the principle of the Tory new Clause bat prefer to table his own Motion on the Report stage. He should consider becoming the racing tipster of the Daily Cinema. It was a very good prophecy.

The interesting thing is the way in which he suggests this is to come about. He points out: So far the Chancellor has made no concessions and no others are in prospect which enhances the chances of Entertainments Tax relief. Nor is it conceivable that such leading Tory M.P.s would put their names to a Motion unless the Parliamentary 'grape-vine' had intimated favourable consideration. If this well-informed gentleman is right, it seems that, instead of the Chancellor giving way because of the pressure of distinguished hon. Members opposite, when the Parliamentary grapevine of the Tory Party—whatever that institution is —lets drop a hint distinguished Members of the party rush to lend their support to what seems to be a winner. It is like putting money on a certainty. I raise this matter only because it is interesting to know how Parliamentary proceedings work. When the Economic Secretary replies he may be able to tell us a little more about this Parliamentary grapevine and to inform us whether it is right that the Chancellor had intimated favourable consideration of the new Clause.

Mr. Geoffrey Hirst (Shipley)

I addressed the Committee at considerable length last night, and I shall not do so again, although many of the remarks made today have been very tantalising. I do not refer to the speech of the hon. Member for Lewisham, North (Mr. Mac-Dermot), but I am rather sorry that when he referred to the distinguished names supporting the new Clause he did not mention mine.

Mr. MacDermot

Perhaps I may point out that the author of the article predicted that the hon. Member for Shipley (Mr. Hirst) would move the new Clause.

Mr. Hirst

Having had the benefit of reading that article myself, I determined that that part of it was not going to be left out—which was not frightfully unreasonable of me in view of my very modest services in the matter in debates in this House over the last five or six years. Since we had a lot of fun over the article, I was determined that the hon. Member would not get away without a little comment about myself.

I rise to say that in view of the concession which the Chancellor made last night, and the assurances he has given concerning the Report stage, it will not be necessary formally to move the proposed new Clause—"Reduction of entertainments duty"—in the name of my right hon. Friend the Member for Blackpool, North (Sir T. Low) and others, including myself, although I naturally commended it to the Committee last night. I do not think that it is now necessary.

I appreciate from what the Chancellor said that there are many wise reasons why the wording of the Clause could not be accepted, and why he prefers to table something of his own. That is often the way. Back benchers do not have the benefit of the advice of the Parliamentary drafting department. All they can do is to word a clause as best they can, in the knowledge that if the principle is accepted more acceptable words can be introduced to implement it.

I believe that the Economic Secretary knows that the Chancellor ventured to make a point about the dual use of a place of entertainment by more than one proprietor, and also raised the question of the levy. Certain people whose takings are less than £150 are excused from paying the levy, but if a concession is made in terms similar to those of the proposed new Clause to which I have referred it is possible that the gross figures of small exhibitors will be increased to such an extent that they will become liable to pay the levy. That could not have been the wish of the House or the Government in making the concession.

I hope that my hon. Friend will be able to say that that point has been considered. Subject to that, I should like to say that I and all those who are associated with me are grateful to my right hon. Friend for making a 25 per cent. concession, which, in spite of the remarks that have been made, will be of great value and advantage to many small and medium-sized cinemas.

Mr. John Rankin (Glasgow, Govan)

I am sorry that the speech of the hon. Member for Shipley (Mr. Hirst) has been so disappointing. I thought that he would have told us something more. We are entitled to hear about what has gone on, and to an answer to some of the pertinent questions which were put by my hon. Friends.

The hon. Member should have explained to the Committee why, for the first time in this long series of debates which have gone on from year to year since 1951, we have had the biggest list of Tory sponsors for the proposed Clause that the Order Paper has ever seen; this example of coming events casting their very substantial shadows before them. Government supporters have admitted that there was very strong pressure upon hon. Members from the cinema proprietors throughout the whole country. It is a fair deduction that that pressure was then applied to the Chancellor.

Mr. Hirst

I did not press this too far. There are limits to what any hon. Mem- ber can say in inflicting himself upon the Committee. The pressure upon hon. Members to support the Clause came substantially from the extremely good circular sent out by the Cinematograph Exhibitors' Association, asking hon. Members to support which Clause they felt politically they could best support. It went to exhibitors throughout the country. Many hon. Members were asked to add their names to the proposed Clause, and between 70 and 80 did so.

Mr. Rankin

That explanation would be all right if it were not for the fact that for years the C.E.A. has been sending out very good circulars advocating the very course which Government supporters now sponsor, and that they fell largely upon deaf ears. There must have been some other sort of influence. With my hon. Friend the Member for Newcastle-under-Lyme (Mr. Swingler), I did my best to secure as many signatures as possible to a Motion urging the Government to abolish the tax. Strange to say, not one hon. Member on the Government side found it convenient to place his or her name to that Motion. Dark hints were spread around that we did not need to worry because it was going to be all right. How did those hints originate? Who was telling whom? Someone knew something, but no one was willing to talk.

With all respect to the hon. Member for Shipley, I suggest that somehow or other, if not through him, the feelings and desires of those who sit behind the Chancellor were conveyed to the Chancellor who was then faced with the question, "At what price can I buy them off? What is the cheapest sum that will keep them quiet?" The cheapest sum was £2½ million. It was the 30 pieces of silver over again, increased, of course, by the rise in the cost of living. That was the lowest sum that they were prepared to accept.

5.45 p.m.

I want to try a last-minute appeal, or a last-ditch stand, whichever metaphor the Economic Secretary chooses, to get him to realise that £2½ million is quite insufficient. It will not stave off the problems that invest the industry and he knows it. I want to ask a question which I think the Chancellor did not deal with last night. I thought the back benchers would have communicated to the Chancellor, through the unusual channels, that they wanted the Clause, the whole Clause and nothing but the Clause. They did not get that. The Chancellor said, "No. I cannot accept the retrospective part of the Clause."

Mr. Nabarro

My right hon. Friend got into trouble once before about that.

Mr. Rankin

Yes. Last year in the Budget it was retrospective from the middle of July until a date in May. [Interruption.] If I am wrong I shall stand corrected in due course, bow my head and apologise, but that is my information. Last year, the so-called £14½ million was made retrospective. I venture to put it at £4½ million because the figure was purely imaginary. It never existed. Who got the £14½ million? Nobody, because the amount of tax that the Chancellor expected to collect never materialised and because 50 per cent. of what was collected came nearer to £6 million, or even £4½ million than it did to the £14½ million.

I want the Economic Secretary to the Treasury to think on this. There are roughly three groups in the industry. There is the small cinema group, with which we have dealt. On this side of the Committee, if we cannot get a whole loaf we shall not reject the little bit of bread that has been offered. We accept, on behalf of the small people for whom we have been striving for so long, this £20 weekly tax rebate. Then there are the major circuits who are interested in television and who, because the Chancellor gave them special help in the Budget by abolishing the tax on replacement tubes, are able to pay the cinema tax without any trouble. In any event, they can always pay.

Between those two groups—the one which is getting help and the other which does not need help—is the large one consisting of more than half the total, the exhibitors whom we call the "independent" people. They represent nearly 2,500 cinemas and are suffering very badly indeed. I know many of them, with cinema houses of first-class quality which have seating accomodation of the 2,000–2,500 capacity type. In Glasgow today some of them have closed or are about to close because of the incidence of the tax. One of them was sitting here last night listening to the debate. He has been faced with that position.

These people will not get the help they ought to have by merely accepting the Tory Clause. It is not sufficient. If this seems funny to the Economic Secretary to the Treasury I would like to know where the joke is. It is not funny that we should have this burden on the bigger independent exhibitors who are receiving very little. They will receive something, but not sufficient. I hope that the Economic Secretary, like myself, does not want to see these people closing down.

I am not going into all the reasons for that. We have argued them time and again and the Economic Secretary is familiar with them. I want to make a proposal which would bring them in. I mentioned it last night. At the moment the tax-free allowance is 1s. 6d. Last night I suggested that the Chancellor, in a tidier and more acceptable fashion, could achieve the object he wants under the new Clause in the name of the right hon. Member for Blackpool, North (Sir T. Low) by changing the 1s. 6d. to 2s. For some strange reason he said that was not practicable. I think those were his words. Unfortunately, I cannot quote him because the report of his speech is not yet available to us. Why 1s. 6d. should be workable and 2s. not workable is something which perhaps the Economic Secretary will be able to explain, because now I ask him to make it not 2s., but half a crown.

Mr. Shepherd

Surely the hon. Member is not proposing to the Committee that in order best to help the small and medium cinema owners we should abandon this proposal for a rebate and raise the tax-free limit? That would help all the larger circuits, whereas the proposal which has been made takes greatest advantage of the reductions given.

Mr. Rankin

I do not think the hon. Member has been following me with his usual assiduity. Both these proposals would achieve the same purpose. If we allow the £20 to be deducted from the total tax liability, that will apply to the man who is liable for £200 or £300 of tax as much as to the man liable for £20 of tax.

Mr. Shepherd

Surely the hon. Member realises that if we allow £20 a week out of £20 tax it is a 100 per cent. relief, but that if we allow it out of £300 the percentage is very much smaller.

Mr. Rankin

We said all this last night in the absence, for excellent reasons I am sure, of the hon. Member for Cheadle (Mr. Shepherd). I do not want to go on to argue it again. The hon. Member has merely repeated what I am trying to say. He may have been saying it better, and that may be the reason for his interrupting. I was saying that the £20 relief from liability does not mean so much to the man with a big cinema as to the man with a small cinema. I used the argument last night that if we can have abolition of the tax for one group we could have it for all. We said all that last night and I do not want to repeat it today. I suggest that if we dealt with this adjustment by dealing with the tax-free allowance we would bring in far more cinemas than we would by the suggested method.

To put it crudely, if we raised the tax- free limit from 1s. 6d. to 2s. 6d., that would bring in the independents and the bigger type of cinema owner who, at the moment, has the bigger tax liability. It is important to do that because it is to them that we largely look for the regular application of the quota on which production depends. Fewer of these people apply for exemption and from them we get the greater amount of the statutory levy. That is why it is important that they should be considered more than the Government are now considering them. If we did what I am suggesting, in a full year it would cost £6 million and for the rest of this year it would cost £4 million.

I am asking for more money than the Tory back benchers are asking. They are getting off with a mean figure, but I say that £2½ million is not enough. Six million pounds is nearer the industry's needs if we are to treat it in a way which will enable it to carry out rationalisation with a freer mind than it now possesses because of the incidence of this Duty, and because the Government refuse to do what we on this side of the Committee want them to do—abolish the tax altogether.

Mr. Tom Brown (Ince)

I have promised not to speak for more than a few minutes because so much was said last night and has been said this evening about abolition of the tax on cinemas. It has been argued about for the past seven years. I want to put a point of view which is not the same as that of my hon. Friend the Member for Govan (Mr. Rankin), but which approaches the question from the effect of the Duty on cinemas in urban areas.

I am not pleading for large cinemas in big towns and cities, but for the proprietors of small urban area cinemas. Fortunately, or unfortunately, I have the honour to represent a constituency which has within it seven small urban authority areas. Five years ago there was a small cinema in each of five of those seven urban authority areas. They were playing a very important part in providing amenities for the people resident in those areas. Today there is only one such cinema. There is a great danger that unless something more tangible is done than what the Chancellor conceded last night that one cinema will go out of operation. If it does, the people who want to go to the pictures will have to travel five or six miles to a cinema. I do not think it fair that people in industrial areas such as Ashton-in-Makerfield and Ince should have to do that. The last cinema in Ince closed down a fortnight ago and the proprietors are not trying to dispose of it.

If this duty makes it compulsory for owners of the cinema in Princes Street, Ashton-in-Makerfield, to close down, there will be a population of 70,000 in my constituency with no cinema. I do not advance the argument that if the Chancellor conceded all we are asking all the cinemas which have had to go out of operation would be resurrected, but in my opinion it would prevent the closing down of the only cinema we have. That is why I advance the argument that if the Chancellor is not prepared to increase the concession he made last night, he might consider some other way of helping to maintain the existing cinema in Ashton-in-Makerfield.

I shall not weary the Committee by talking of the deterioration in attendances at that cinema. I am informed on good authority that it has come about because of Entertainments Duty. I am not in a position to say if that is so. I shall not give the figures of the fall in cinema receipts in my constituency, although they are alarming. I welcome the statement made by the Chancellor last night that a case had been made for some concession to the smaller cinemas, and I put the question to the Economic Secretary not so much from the tax point of view as from the amenity point of view. We have said many times that, particularly from 25 years ago, we began to advance the argument very strongly that the cinema provided a long-needed amenity. We are allowing that amenity to disappear.

6.0 p.m.

I know that the argument has been advanced that television is replacing the cinema, and there may be some strength in that argument, but we must remember that, particularly in the rural districts and some of the smaller towns, people do not always possess the money necessary to purchase television sets, and they must therefore content themselves with seeing the picture at the cinema.

On that score I hope that the Chancellor will have another look at this problem. I know that it is not easy for him to cancel an Entertainments Duty when it means that he must find £14 million elsewhere. He has conceded £2½ million and he can go a little further without damaging the revenue of the country. On the ground of maintaining cinemas in the small urban authorities which are placed at a great disadvantage by comparison with the big towns and cities, I hope that the Chancellor will look again at this problem and see whether he can concede something more than he conceded last night. I support the new Clause.

Mr. E. C. Redhead (Walthamstow, West)

If this debate has been somewhat prolonged beyond our original expectations, it will be appreciated that it is clue to the nature of the Chancellor's intervention late last night and particularly to his announcement that he rejected the new Clause containing the Opposition's proposal for the total abolition of Entertainments Duty but accepted in principle the proposal in the new Clause in the name of the right hon. Member for Blackpool, North (Sir T. Low), which provides that the duty shall remain unchanged but that each cinema shall be allowed to retain up to £20 a week of the duty which is collected.

In the course of his observations the Chancellor laid great stress on the fact that the Entertainments Duty is not a charge upon the cinema exhibitor, but a charge upon payments for admission to a dutiable entertainment borne by the patrons of the cinema, and, therefore, that the exhibitor acts only in the capacity of an agent in charging, collecting and remitting the duty to the Customs and Excise Department.

Let me say straight away that, technically, that is and always has been the theory of Entertainments Duty. Nevertheless, I do not think that it is right in practice that the Chancellor should take advantage of that argument to contend that it is, therefore, not a burden upon the industry. Quite clearly, it is a burden on the industry to the extent that it places the burden upon the exhibitor, because, having to add to the basic charge for admission to an entertainment, he is limited in his ability to raise that basic charge to an economic level lest in so doing the sum total charged, including duty, reaches such a level that it still further adversely affects attendances at the cinema.

Let me, however, accept the Chancellor's conception of the duty as one which is paid not by the cinema proprietor but by the public. If the Chancellor contends that, what he proposes is to say to the cinema exhibitor, "You shall continue to charge and to collect the duty from the public, but you can pocket for yourself up to £20 of what you collect".

I submit that that is an entirely new principle in taxation practice and certainly one for which I have not been able to find any precedent. In itself, I regard it as a most undesirable precedent to introduce. It is as if the Chancellor were to say to the registered traders for Purchase Tax purposes—and they, after all, are also agents for the Revenue—"I know that Purchase Tax is a restriction upon your trade and that some of you are having a rather difficult time. What I propose to do is to allow all of you to go on extracting this tax from the public, but to allow you to pocket for yourselves a proportion of it".

I regard that as a thoroughly bad principle, and if it is introduced in this connection I venture to suggest that the Chancellor or his successor may well rue the day when he created a precedent of this kind. Indeed, relief in this form is surely no more than a proposal to grant a subsidy of £2½ million from public funds to the cinematograph exhibitors, and I think that that is entirely wrong.

What is the Chancellor's justification for accepting the principle of this proposal? First, he says that he cannot afford to sacrifice revenue to the extent of about £9 million, which would be represented by accepting the Opposition's new Clause for the total abolition of duty, but that he is ready to forgo £2½ million. I can understand, although I am disappointed, that the Chancellor should make a gradual approach to the complete elimination of Entertainments Duty, as some of us thought he had been doing over the last couple of years. I can appreciate that the Chancellor finds it a very unattractive proposition to give up any particular and remunerative form of revenue. If he wants to make a gradual approach, however, I suggest that this is not an effective or desirable means of doing so.

Secondly, he says that his greatest concern and sympathy is for the small cinema or the single cinema in a small town. Again, I understand his concern, but this is not the way in which relief is already afforded to the small cinemas in the rural areas. There, it is not a question of permitting the proprietor to charge the duty in fact and in form and then allowing him to retain it in his own pocket but a question of definitely exempting him from the necessity of charging it to his patrons at all. Surely that is a much more desirable means of assisting the small cinemas, if that is the limit of the Chancellor's desire.

Accepting the Chancellor's limitation and his feeling that he cannot go the whole way—although I think that it would be justifiable to do so—and accepting his major concern to grant relief, to the limited extent that he feels that he can grant it, in order to give the greatest benefit where there is the greatest need, I again submit that the simplest and more orthodox way of doing it, without introducing any new and objectionable principle of the kind which I believe to be represented by the new Clause supported by hon. Members opposite, is that which has been suggested of reducing the rate of duty on the cheaper seats.

It is a perfectly simple proposition for which there has already been ample precedent. It is a proposition of charging the duty not, as it is at the moment, on one-third of the excess over 1s. 6d. but on one-third of the excess over 2s., possibly, or 2s. 6d.—which ever is the appropriate figure to give a total relief up to the limit which the Chancellor feels that he can afford.

If that is not acceptable, or if the Chancellor feels that that proposition does not meet the objective he has in mind, I beg him to look again at the possibility of expanding the existing provisions in regard to small cinemas in rural areas and to adopt that pattern if he wants to confine his relief to those which he considers to be the most needy cases. If, despite our plea and our adherence to the Clause which we have tabled, the Chancellor nevertheless decides to adhere to the broad principle of the new Clause in the name of the right hon. Member for Blackpool, North I can assure him that my right hon. and hon. Friends and I will look at his own draft of that Clause with very great care.

I should like the right hon. Gentleman to bear in mind two particular points in that regard. First, I appreciate that in adopting the principle of that new Clause he has had to say that he could not accept the full measure of retrospection contemplated by the mover. I suggest to the right hon. Gentleman that, if he is to give even this small measure of relief, he should give it as quickly as possible. Therefore, I urge him to consider the possibility of making the starting date 10th June to coincide with the date upon which he made his announcement.

Secondly, I should like the Chancellor to consider whether it is appropriate to do this in the form of a fixed figure of £20, or whatever it may be, arbitrarily fixed in relation to each week, or whether there is a case for some provision for carrying over from week to week, especially for the benefit of small cinemas in places which depend very heavily on seasonal trade and patronage For example, those cinemas which have very small attendances during the winter will derive merely the remission of the small measure of tax which they collect. while during the summer season they will obtain only £20 on their much higher revenues during that period.

The Chancellor went on in his speech last night to use rather ominous words. Reference has already been made to them. I want again to refer to the implication that he made that the Entertainments Duty on the cinema ought to remain a permanent feature. If we are wrong in the impression which we gained from the right hon. Gentleman's remarks, I hope that the Economic Secretary will reassure us on that point. It certainly betokens an entirely new line of approach. It is an argument which we have not heard in this connection before and we are entitled to know a little more about this development and what lies behind it.

The Chancellor suggested that cinema patrons should be expected to pay, in this form, a share of the general taxation which others bear in other ways. If that argument had any validity, it could as well have been applied to the live theatre, to dog racing, to horse racing, to football, to the speedway and the whole area which only two years ago was within the ambit of Entertainments Duty. But that argument did not deter the Chancellor's predecessor from removing those entertainments entirely from the burden of Entertainments Duty.

When the Government insist that there is still a case for the cinema in isolation to be subjected to this duty, whether it is a burden upon the patron or the proprietor, we are entitled to ask why it should be in respect of this particular form of entertainment and not in respect of others. It is an argument which might have had validity if Entertainments Duty had been conceived as part of a general balanced pattern of taxation, but it never was and now, applied exclusively to the cinema, it certainly is not.

6.15 p.m.

In earlier debates when discussing another tax I referred to the remarkable fact that taxes introduced as emergency measures, supposedly for limited purposes and periods, have a nasty habit of sticking. The Entertainments Duty is yet another tax of that character. We have been reminded that it was introduced in 1916 as a wartime measure to help pay for the cost of prosecuting the First World War. Though truncated, as it has been, particularly in the last few years, it is still with us after forty-three years—a temporary measure which, after all, is becoming a little ancient for its temporary status.

One had hoped that what the Chancellor has done in this connection over the last two years indicated a realisation that there was no longer any logical justification for this duty. It has undergone various changes of rates and incidence in the intervening years, but latterly it has been steadily whittled away, first by the introduction of varying rates of duty for different classes of entertainment and then by an enlargement of reliefs and exemptions, particularly the so-called educational exemption, until it became such a racket as to become administratively impossible and I believe that the Department was only too glad to drop it and, indeed, it gave great impetus to the idea that the tax should be removed altogether from the live theatre.

In 1957 the then Chancellor abolished the duty altogether, except in respect of payments for admission to cinemas and television shows, reducing the rate of duty for these and cutting the total yield to £26 million a year. From that time, without any question, this duty became a plain discriminatory tax on one particular form of public entertainment. Though last year the Chancellor further reduced the duty in its application to the cinema, reducing the yield to £12 million, the duty still remains a discriminatory tax. The reductions were welcomed, but the Chancellor clings obstinately to the residue of revenue which this duty represents and refuses to see the logic of the case for its complete abolition, which is now more than overdue.

Whatever justification there ever was for the view that a special tax ought to be applied to the cinema industry in its more prosperous days has clearly vanished now that the industry is facing what is admitted on both sides of the Committee to be most heavy competition and has contracted—indeed, it is still contracting—with attendances having fallen sharply over the last few years. Even the imposition of a £1 duty on T.V. licences has done nothing to arrest the decline. It has only created for the Chancellor fresh problems in other directions, to which I shall not allude.

We have had the appalling spectacle of over 800 cinemas having had to close in the last five years. In many instances, the margin between solvency and actual loss and the decision whether to keep on in business or to close the cinema has been represented by the approximate equivalent of the amount of duty collected by the cinema. No one has ever attempted to suggest—I do not suggest tonight—that the decline in the cinema industry has been solely, or even mainly, due to the Entertainments Duty, but it is clearly an added burden of an unfair character in the circumstances. It is imposed, as has been repeatedly said in the debate, regardless of the economic position of the cinema. To impose it upon a losing concern is manifestly inequitable.

To push a cinema out of business by the marginal effect—I admit that it is no more than that—of Entertainments Duty, even though the Chancellor last night appeared to view that sort of prospect with an undue degree of equanimity, is bad in itself, not only for the exhibitor and his employees—there are a considerable number of employees in the cinema industry—but bad also in the loss of a local amenity.

The Chancellor must not run away with the idea that this local amenity aspect has relevance only when we are thinking of small towns. Surprisingly enough, there is only one cinema in the whole of my constituency, which is in the Outer London area. That cinema closed its doors fifteen months ago because it could not maintain itself in business by the bare margin of the tax it was collecting and passing on to the Revenue. I am happy to say that when the Chancellor gave his remission last year, in response to local pressure, I persuaded the proprietors to take their courage into both hands and see whether the remission would enable them to reopen.

They were public-spirited enough to realise that there was a loss of local amenity. They took the risk, and opened the cinema, but last week the manager wrote to me saying that notwithstanding the reduced rate of duty, it still remains a razor-edge proposition. They are still losing money, and he says that if this tax is maintained even at the present level his proprietors, quite clearly cannot contemplate going on losing money. The balance will be tipped by the decision of the Chancellor.

Mr. Diamond

My hon. Friend referred to a cinema. Hon. Members on both sides have been concentrating on this as though the abolition of the tax, which would help the small cinema most, would solve the problem. The example given by my hon. Friend is typical of the single cinema being owned by owners—my hon. Friend said that it is run by a manager, and he talks of proprietors—owning a number of cinemas, who can continue to keep open a cinema that they are subsidising, and are prepared to subsidise, only if the others make profits. That is another reason for complete abolition of the tax.

Mr. Redhead

Yes, that is completely true in this case. This cinema is one of a circuit, so one knows that the proprietors have been able to sustain the loss only because they have been able to set it off against the slightly more profitable position of other cinemas in the combine. Quite clearly, however, that position cannot be maintained indefinitely. Unless there is further relief, the cinema will have to close again, and I shall have a constituency in the London area without a single cinema within its boundaries. That will be quite serious loss of a local amenity—and not least to many hundreds of old-age pensioners to whom, incidentally, this cinema happens to have been a very good friend.

We have abundantly demonstrated—and I shall not weary the Committee by going into this again—that the loss of business in this connection has a very serious effect on film production. We should remember that the film can play a very important part, not only in our export trade but in depicting British life and achievements to people in other countries. Anything that injures such an industry and makes it less capable of fulfilling that important function should be weighed in the balance against any trifling loss of revenue from a duty now truncated to its present level.

We have reached a stage when the imposition of any tax at all does more harm, and is more of an impediment to internal reorganisation of the industry than can be justified by the revenue obtained—whether it be £9 million, or the £7 million which the Chancellor is now prepared to contemplate. Faced with this position, we should frankly recognise the duty as one that has outlived its purpose and justification, and that the only fair and logical thing to do is not to tinker with it, not to introduce doubtful expedients such as are contained in the new Clause standing in the name of the right hon. Gentleman the Member for Blackpool, North—which I believe to be objectionable in principle—not to introduce new complications and minor reliefs—and, therefore, more administrative machinery—but to get rid of it altogether.

We on this side have not been persuaded by anything the Chancellor has said to depart from that point of view, and unless the Economic Secretary has something more forthright and far-reaching to say than was said by the Chancellor last night, I can assure him that that is the view that we will take into the Division Lobby.

Mr. Erroll

The right hon. Gentleman the Member for Huyton (Mr. H. Wilson) and the hon. Member for Walthamstow, West (Mr. Redhead) have both referred to some of the remarks that my right hon. Friend made last night, and have tried to read into them far more than was intended. They both seemed to imply that my right hon. Friend suggested that the Entertainments Duty in its present form must necessarily last in perpetuity.

We are in a slight difficulty because, as my right hon. Friend did not speak until after 10.30 last night, his speech has not yet appeared in the OFFICIAL REPORT. However, I have here a typescript of what he said, and when I read the appropriate extract to the Committee, hon. Members will realise that there is nothing sinister in what he says. Referring to the Opposition's new Clause, my right hon. Friend said: It would relieve entirely from indirect taxation about £80 million worth of consumer expenditure of a kind which is neither on basic essentials nor deserving of special encouragement on social grounds, and which, in the long term, I should think, would be able to support a moderate rate of duty along with analogous expenditure."—[OFFICIAL REPORT, 10th June, 1959; Vol. 606, c. 1132.] —for example, on gramophone records, television sets and licences.

That is no more than a statement of the Government's policy towards indirect taxation, which should properly bear its share in producing the revenue required each year. In fact, my hon. Friend the Member for Cheadle (Mr. Shepherd) referred to the importance of not whittling away, year by year, the yield of indirect taxation, because the total yield from it is such an important part of the total revenue.

Mrs. Eirene White (Flint, East)

Might we have a much clearer assurance on this very important point? Anybody who heard the Chancellor's words last night, or who has listened now to the repetition of those words—I myself was relying on The Times report which, in this instance at least, I think, is perfectly accurate—could take any view other than that it was the intention of the Chancellor to continue a tax upon the cinema industry in perpetuity—or during the term of his present office, at any rate—though, perhaps, at some lower level than the present one.

It is really most essential that we should be told quite specifically—and it is most essential that the industry should also be told—whether the industry must expect to continue to be taxed though, perhaps, at some slightly different level, and that there is no hope ever of the abolition of the tax because of the Government's views on indirect taxation.

The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory)

It might be simpler if I were now to intervene to say that what I said last night was not prejudging the requirements of the future at all. I do not know what those requirements will be, but when the time comes those requirements will no doubt be considered in the circumstances of that time.

Mr. Erroll

The hon. Members for Walthamstow, West and for Ince (Mr. T. Brown) referred to the amenity value of the cinema. In each of those constituencies the last cinema has either already closed, or is about to do so. But if, for example, the citizens of Ince want the cinema to remain open they should patronise it. It is no good their complaining, if they do, about the closing of the cinema there if they do not go to it when it is open. No cinema can stay open if it is not patronised, whether or not there is Entertainments Duty. I would suggest, further, that the amount of Entertainments Duty levied on the cinema at Ince was probably very small indeed——

Mr. Diamond rose—

Mr. Erroll

No; I gave way to a very long intervention a moment ago, and I must get on.

The right hon. Member for Huyton, and my hon. Friend the Member for Manchester, Blackley (Mr. E. Johnson) said that this tax was a discriminatory tax on one form of entertainment and that there was no taxation on any other entertainment. I have just obtained figures relating to the very high taxation on television. The television licence duty—that is, Excise Duty—yields, at present, £10 million, and the present yield of Purchase Tax on television sets is more than £30 million. That compares with a yield from Entertainments Duty on the cinema of about £9¼ million—which, if my right hon. Friend's proposals are accepted by the Committee, will be reduced by another £2½ million,—making the yield from the cinema £6¾ million as compared with over £40 million from television.

I am glad that the hon. Member for Walthamstow, West, referred to the reductions which the present Government introduced last year, and in earlier years. While not wishing to raise the temperature of the Committee, I think that I must point out that when a Socialist Government last had an opportunity of handling tax matters they put up the duty on the cinemas by about £7 million; that was in 1951—

Mr. Diamond

How many closed in that year?

Mr. Erroll

Film production was mentioned by the right hon. Member for Huyton, by the hon. Member for Newcastle-under-Lyme (Mr. Swingler) and by other hon. Members, and my right hon. Friend referred to it in some detail in his speech last night. All things considered, British film production is in a fairly healthy state today. I appreciate that there are not so many new films being produced, but they are probably of better quality, and longer, more expensive and worthwhile productions. I do not think that one can go entirely on the number of films produced—the sort of figures quoted by the right hon. Gentleman and others.

6.30 p.m.

Mr. Rankin

Would the hon. Gentleman not agree that it takes from conception to delivery about eighteen months to produce a film, and that every film we are looking at today was started over eighteen months ago, when the industry was in a different position?

Mr. Erroll

I appreciate that, and, as the fall in attendances will probably flatten out at some time in the near future, producers might be wise to put more films into the pipeline for exhibition in the months to come.

In discussing the principle which lies behind the duty, which was discussed in some detail by the hon. Gentleman the Member for Walthamstow, West, I think that I ought to remind the Committee that this duty is a tax on cinema goers—on the patrons: it is not a tax on the industry or on cinemas, although the industry widely believes that it is. It is, in fact, a kind of convenient oral shorthand to regard it as a tax on the cinema industry.

In pressing for the abolition of this tax, those members who support that Clause are really pressing for a measure to help cinema proprietors, many of whom, I admit, but by no means all, are having a difficult time. We must be clear that the reduced amount of relief proposed by my right hon. Friend would go to the proprietors and not to the public, who would continue to pay the same ad mission prices as before. My hon. Friend the Member for Southampton, Test (Mr. J. Howard) pointed that out in a very useful and compact speech. As the case has been argued in Committee both last night and this afternoon the same thing would happen again.

The hon. Gentleman the Member for Walthamstow, West rather suggested that the new Clause in the name of my right hon. and hon. Friends would, if accepted, constitute a grave breach of principle, because the proprietors would retain the relief of duty instead of passing on the benefit to the public. There is nothing in that point, because the proprietors would be quite free to pass on the duty relief, if they so wished, to their patrons in the form of lower admission prices. That would involve a certain amount of calculation as between one seat price and another, but it would be possible for them to pass it on over a period to patrons, if they wished to do so. There would be no compulsion on them to retain the relief of duty entirely for themselves, but we accept the fact that they probably would, as indeed they did last year, when very substantial reductions were given.

During the debate last night several hon. Members, including my hon. Friend the Member for Tynemouth (Dame Irene Ward), quoted examples of cinemas which, but for the duty, would have made a profit. I need hardly remind the Committee that the duty is not a part of the cinema proprietor's profit and loss account and is not entered in the trading profits of the cinema for Income Tax and Profits Tax purposes, so it is a dangerous form of argument to use to say that, but for the duty, the cinema would have made a profit and that it had made a loss only because of the incidence of the duty. The fact is that it would still be making a profit but not necessarily quite such a big one. If, despite the prospect of duty being removed, the cinema still made a loss there would, in the long run, be no real hope for that cinema.

Mr. Swingler

What does all this mean? If admissions were at the same level and the admission prices were at the same level, to take an example given in Committee, is the hon. Gentleman trying to dispute the fact that a number of cinemas in the country would, if it were not for the tax, be operating at a profit instead of a loss? This is a very simple point. Does he dispute that?

Mr. Erroll

Not necessarily. The point I am trying to make is that, strictly speaking, any reduction in the duty ought to be wholly passed on to the patrons in the form of reduced admission prices and not used, as it will be, to supplement the profit and loss account of an individual cinema. That is why it is not possible to consider total abolition of the duty in the present circumstances. What supporters of the Opposition new Clause are really asking is that patrons should go on paying the same amount, but that the duty to be remitted should go to the cinema proprietors and not to the Treasury.

Mr. Redhead

Would the hon. Gentleman explain how he would apply that argument in the case of the theatre and other forms of live entertainment?

Mr. Erroll

The yield from those other forms of entertainment was nothing like as big, nor was there the same regularity of attendances. This is a much bigger matter both with regard to revenue and the number of collecting points. If one is pressing for the total abolition of the duty, one is really asking that the patrons, if paying the same admission prices, should pay what would have gone to the Treasury over to the cinema proprietors. The Chancellor cannot possibly agree in the present circumstances to giving over £9 million to the cinema proprietors in this way.

My right hon. Friend recognises the very real difficulties of many of the cinema proprietors, particularly those operating small cinemas. Even so, I realise, as does my right hon. Friend, that it is not only a matter of the small rural cinema. There are special cases in large towns—particularly some of the very large capacity cinemas referred to by the hon. Member for Govan.

In studying the various possibilities of giving some form of relief to the industry my right hon. Friend was very attracted by the method proposed in the Clause—"Reduction of Entertainments Duty"—because it seems to be far and away the best method of giving maximum help without losing revenue which ought still to be collected from the cinema-going public. There are many advantages in this method. I should like to touch on them briefly and we shall probably be able to discuss them more fully when my right hon. Friend tables the new Clause on Report.

First, all cinemas throughout the country which at present pay duty will be helped. This means that almost half the cinemas at present collecting the duty from their patrons will be wholly relieved from paying any of the duty so collected. If one takes into account those cinemas which do not pay duty at present, that means that over half the cinemas in the country will no longer have to pay any Entertainments Duty whatsoever.

This method is much better than raising the admission price above which duty begins to be collected—a method particularly advocated by the hon. Member for Glasgow, Govan (Mr. Rankin). The method which he advocated was to raise the starting price from 1s. 6d. to 2s. 6d. a seat. That method is capricious and wasteful because a good deal depends on the seating structure of the individual cinema—whether it has a large number of high-priced seats or a large number of low-priced seats—and it also has the disadvantage of ensuring that all seats above the starting price get some reduction—even the very high priced ones—so that there would be a considerable loss of duty in respect of high-priced seats in cinemas which could well afford to go on paying duty as at present.

The next advantage in the proposed new Clause in the name of my right hon. Friend the Member for Blackpool, North (Sir T. Low) is that it is simple. The system would be simple to administer. The duty relief would be available each week and every cinema proprietor would know exactly how he stood. Finally, it is a reasonably fair relief. The small cinema would only begin to pay when it was doing well, and the large cinema—for example, those which are paying above £20 a week—would get over £1,000 a year in assistance towards their finances.

Like the right hon. Member for Huyton, I too have been receiving many letters on the subject of the Entertainments Duty. All mine have come through Members of Parliament from cinema proprietors. I have not noticed any letters coming from patrons complaining, because of course their method of complaining is to stay away from the cinema if they do not like the entertainment there. One must realise that this is mainly a problem of the cinema proprietors rather than of the patrons.

Of the many letters that I have received, some have included details of their profits or losses and the amounts paid in Entertainments Duty.

Mr. H. Wilson

Will the hon. Gentleman agree that if a cinema fails through inability to meet its costs owing to taxation, many patrons will then suffer? That has been happening all along

Mr. Erroll

It is surprising how few complain. A cinema usually closes because not enough patrons patronise it. That is the basic nature of the problem.

From the letters which I have received, I have analysed the figures which a number of proprietors have sent to me through their Members of Parliament, and I have tried out the different methods of relief which have been suggested, such as altering the starting price, relieving the first £20 and various other propositions. I have found that in almost every case the proposal for relieving the first £20 of duty gives the greatest degree of assistance. There are one or two special cases where another method would be more attractive, but for the majority of cinemas the most attractive method is that of relieving the first £20 of duty. This means that we can justifiably hope that the Chancellor's new Clause, when it is introduced later, will receive the support of the House, as it will be then.

In the meantime, therefore, I hope that the Opposition will not consider it necessary to divide the Committee, as my right hon. Friend has already promised a new Clause which will go a long way towards assisting the most hard-hit sections of the cinema industry.

6.45 p.m.

Mr. H. Wilson

Would the hon. Gentleman care to comment on the rather amusing story retailed by my hon. Friend the Member for Lewisham, North (Mr. MacDermot), about the grapevine? Would he say where the initiative lay in this matter? Did the Government put the back benchers up to the idea, or did the back benchers put the Government up to it? Would the hon. Gentle-may say, in whatever consultations there may have been, where the initiative lay and what was the nature of the consultations? We always cast some doubt on some of these stories that we read, but would the hon. Gentleman say what is the truth about this story, and, in particular, why the Government's acceptance of the proposal embodied in the new Clause tabled by the right hon. Member for Blackpool, North (Sir T. Low) was so widely forecast in the Press?

Mr. Erroll

Perhaps it would help if I explained that I never purvey rumours, nor do I ever try to track them down. It would be a very time-consuming business. All I would say is that, as the right hon. Gentleman must appreciate from his own experience, if one side of the House tables a Clause or an Amendment or a Motion, and no names are appended to it, it is not an uncommon practice for hon. Members on the other side of the House to table their own Motion and to append their names, very often in large numbers. I think that that is the explanation of this episode to which the right hon. Gentleman and his hon. Friends attach quite undue and unnecessary importance.

Mr. Wilson

The hon. Gentleman is right in saying that that often occurs, but I do not think that we are attaching too much importance to this matter. By a lucky accident the hon. Members concerned seem to have hit upon just about the right figure which the Government think is right for this industry. Secondly, by a similar strange coincidence, they seem to have hit upon exactly the right method. A number of alternative methods have been indicated. There are, indeed, many—far more than have been indicated—and by sheer accident or brilliance and ingenuity, these hon. Members have hit on the exact method.

We understand that the hon. Gentleman was sitting up at 6 o'clock this morning working out these things, to see whether the contents of these letters which he has received could be tested by this method. Would he tell us how it was that the back benchers were able so brilliantly to anticipate just what the Government were looking for? If the Government were looking for this method, why did they not put down a new Clause themselves? Will he not answer the question? I agree it is of minor importance, but it would he interesting to know whether at any stage there were consultations between representatives of the Government and the hon. Members responsible for the proposed new Clause.

Mr. Erroll

I do not wish to weary the Committee with this trivial point any longer. What the right hon. Gentleman has been saying is what we have already found to be the case. We are very fortunate in having so many brilliant minds among our own back benchers. I think the right hon. Gentleman was here when my hon. Friend the Member for Cheadle spoke, and he may remember that my hon. Friend said that he had been campaigning for this sort of change for years. He is probably as capable of doing his sums as the right hon. Gentleman is. He has doubtless on this occasion succeeded in influencing important back benchers in the party in tabling a new Clause which we have found so agreeable.

Mr. Wilson

We would like to congratulate the hon. Gentleman on his hon. Friends. Could he give an assurance that there have been no consultations at all between the Government and the back benchers?

Mr. E. L. Mallalieu (Brigg)

We have had a most unsatisfactory reply from the Economic Secretary, not only about the grapevine but upon the main question which we have been debating for some considerable time. I do not propose to take more than two or three minutes at the outside because I want to deal with only one aspect of this matter.

It is admitted on all hands that cinemas are closing. It is also admitted, I think, that there is more than one cause—economic reasons, apart from the tax—but the fact is that there is this reason. Here are the Government maintaining this reason which it is within their power to remove.

It is mostly the small cinemas which are affected, and, in spite of the remarks of the Economic Secretary, I would call it the cinema tax. He calls it a tax on the consumers, the occupants of the seats. Of course, all taxes come down to the taxpayer in the end, but this is commonly thought of as the cinema tax, and, I submit, conveniently thought of in that way. It is the small cinema, in the main, which is suffering as a result of these causes, among them being the cause which the Government themselves maintain.

It is the small cinema, mainly, which is the one which serves the countryside. I do not suggest that the countryside is dotted with cinemas, small or large, but I am not for the moment in the least interested in Leicester Square, Mayfair or anywhere else which may have big cinemas. I am interested in the small cinemas in the country towns, the villages and the urban districts about which my hon.

Friend the Member for Ince (Mr. Brown) spoke. These cinemas constitute part of the amenity of the countryside. A great many of us have complained for a long time about the flight from the land. We know that there are reasons for that, apart from the closing of small cinemas, but lack of amenity is one of the factors causing men and, perhaps even more, their wives to become fed up with living in the countryside.

There is on the Government Front Bench at the moment and in the incumbency of the Treasury a man who at one time, I thought, was interested in the countryside and its agriculture. For a very long time I have suspected that the party opposite was the party of big business, the party which was not really interested in the countryside because its tune was paid for by big business, and the countryside and the agricultural industry could go by the board. The security given by the Labour Party's Agriculture Act of 1947 has been gradually whittled away and undermined until it has virtually gone. The security of tenure given by Labour to the tenant farmer has virtually gone.

The Deputy-Chairman (Sir Gordon Touche)

Order. I hope that the hon. and learned Gentleman will relate his remarks to the new Clause.

Mr. Mallalieu

In my submission. Sir Gordon, they are very much related to the very thing we are discussing, which is, partly, amenity in the countryside. None of us wants to see these other things to which I just referred in passing become worse. This is one of the little things which will bring about a further deterioration if we have a Government in power who will not remove this extra straw which will otherwise do whatever it is that the last straw is supposed to do to the camel's back.

In my submission, many other people besides myself have been looking at the party opposite as the party of the things I have been discussing, the party which will not disclose its own accounts, the party which favours dividend stripping——

The Deputy-Chairman

That has nothing to do with the new Clause.

Mr. Mallalieu

If the party opposite does not want the country as a whole to regard this as just another nail in the coffin of the countryside it had better abolish the tax completely.

Mrs. White

I do not wish to detain the Committee, but I feel that I must do so because of the extraordinarily unsatisfactory reply which we have had from the Economic Secretary. I have a great regard for the hon. Gentleman. I always find him most sympathetic, most entertaining and, as a rule, most intelligent, but I thought that he was well below his usual form, if I may say so, in what he has just said. I assume that he has been working so hard on other matters, perhaps on some of the rather abstruse new Clauses which come later, that he did not have quite sufficient time to master the subject we are meant to be discussing now.

Some of his remarks about the tax were so extraordinarily inapposite that I was surprised that they came from him at all. My right hon. Friend the Member for Huyton (Mr. H. Wilson) and others mentioned the relationship between television and the cinema. The Economic Secretary suggested that we were mistaken in putting forward as one of our arguments the fact that, with their very large profits, the television companies were not contributing as much to the Revenue as the cinema was obliged to contribute in its much more difficult situation. He introduced into his argument not just the television licence, but also the Purchase Tax paid on television sets.

This is really utterly irrelevant. If he wishes to do that he must put into the balance sheet between these two interests the Purchase Tax which the cinema exhibitor, for example, pays on his carpets and on his seating, the tax which is paid on a good deal of the equipment, the tax paid in the studios on their furnishings and equipment, and so forth. The hon. Gentleman's argument about the tax paid on television sets is really completely irrelevant. If I may say so, he should really think again if he is minded to argue at that level.

The Economic Secretary brought in a comparison about the taxation of the industry under the Labour Government, when the state of the cinema industry was infinitely more prosperous than it is now. I am not drawing any other conclusions from that at the moment. I merely say that the state of the industry was very different then from what it is in 1959.

It was said by the Chancellor last night that the production side of the industry need cause us little, if any concern. He said that it was not in any serious difficulty, and the Economic Secretary suggested that we really need not worry about the production side at all. It is very important to know just what this relief we are discussing is meant to achieve, whether it is entirely for the exhibitors or is partly for other sections of the industry. Before we discuss that it should be said categorically that the production side of British films is not in a completely happy position.

One cannot judge everything by the statistics of the films which are in production at the present time by comparison with earlier years, but, nevertheless, the figures which my right hon. Friend the Member for Huyton gave in opening today's debate, showing a very sharp decline in British feature film production over the past three years, are, in our view, significant.

Earlier today, I asked one of our largest organisations, the Rank Organisation, about its production arrangements for this year. I was told that this year the Rank Organisation is directly responsible for ten feature films, compared with twenty last year. The other figures for the industry as a whole, obtained from the organisations responsible for producers in the industry, give rise to very serious concern.

Anyone who is in close contact with film producers today, who knows the difficulties which they are having in obtaining financial assurances and the way in which they had hoped that we might on this occasion, by abolishing the tax, have made their lives so much easier, cannot help feeling that the Chancellor is quite underestimating the difficulties of the production end of the industry. We are not at all convinced that the Chancellor is fully seized of the position in spite of the words he used yesterday about the general concern of the Government for the production end of the industry.

The nature of the tax remission which the Chancellor has told us he favours disturbs us very much, and the Economic Secretary made no answer whatever to the point of principle raised by my hon. Friend the Member for Walthamstow, West (Mr. Redhead), who has had very great experience in these matters. As far as I could follow what the Economic Secretary said, he quite misunderstood the argument because he suggested that the answer to my hon. Friend lay in the fact that the cinema exhibitors did not pass on to the public the tax remission, but, to put it in this way, that they increased their price by the amount of the remission.

That is what it comes to. They failed to reduce the price. The original was not simply the price; it was the price plus the tax, if the hon. Gentleman can follow that. But that was not the basis of the objection to this form of tax remission, whether it was passed on to the consumer or not. The objection is that the tax is legally levied on the person who buys the ticket. The Chancellor was at great pains last night to go into detail about this. I copied his words down in the Library. He said: This is a tax on admissions … on the patrons of the cinema primarily, and only indirectly … on the cinema proprietors. The cinema proprietors … are the collectors of the tax, in the same way as traders who collect Purchase Tax or retailers who collect the tobacco tax". 7.0 p.m.

Our objection to the method is that this is not a tax rebate because a tax cannot be rebated to somebody who has never paid it. What is said is, "The tax is collected from another set of people. It passes through your hands. It has not been paid by you, but we are telling you, nevertheless, that on its way from the consumer to the Customs and Excise you may keep a certain amount." That is the legal position. It is a very undesirable principle of taxation that somebody who has never paid the tax in the first instance but who acts merely as agent should be allowed to keep a proportion of it on its passage from the taxpayer to the Revenue. This is an important taxation principle. It has nothing to do with whether the customer ultimately gets the benefit of a price reduction.

The Economic Secretary paid no attention to this matter of principle which, I should have thought, would concern their Lordships at the Treasury.

Mr. Erroll

They are too practical.

Mrs. White

That may be, but I hope that they must still observe the law.

I should have thought that this matter would cause some concern to the Financial Secretary if not to the Economic Secretary. I hope that there has been consultation between them and that the Financial Secretary has satisfied his legal conscience.

This matter also has a practical significance, a point which was touched upon by the hon. Member for Shipley (Mr. Hirst) who, I think, now realises that the proposed method will bring one or two difficulties in its train. The hon. Gentleman asked the Economic Secretary to take some account of the difficulty which will be raised over the statutory levy. The statutory levy—I emphasise that it is statutory and therefore one must keep within the law—refers to the exemption which is given to a person whose net takings amount to £150 a week or less. Is the £20 regarded as Entertainments Duty or not? How will it be dealt with in the case of these marginal people who at the moment may be just below the £150 exemption, but who with the £20 may come in one period just above? Is or is not the £20 tax for the purpose of the statutory levy? Will fresh regulations be brought in, and, if not, why not?

We are entitled to know all these things and to know whether the matter has been fully worked out. We are entitled to have an indication from the Economic Secretary about where we stand. As I say, it appears to us on this side that a completely different principle of Entertainments Duty is being introduced, and if it is now to be regarded as a tax on the cinema proprietor we should not be told by the Chancellor in one breath that it is not a tax on the proprietor but on the patron and in the next breath that the tax should belong to the proprietor.

There is yet another difficulty on which we need a more precise definition for the reason which I gave earlier. I refer to the question of how far this remission is intended to apply to the industry as a whole and how far it is intended to remain entirely in the pockets of the exhibitor. As the Economic Secretary may know—after all, he was once at the Board of Trade—the practice in the industry is that the renter takes a percentage of the takings on feature films at least, and the percentage is calculated after tax, the statutory levy and the industry's own protection levy against television has been taken into account. That means that if there is a change in the tax a proportion of it, according to the percentage agreed with the renter, will benefit the renter and therefore indirectly will benefit the producer. If the intention is that the £20 should remain in the pockets of the exhibitor, then the ordinary custom of the trade would have to be altered. If it is not altered, then the money does not go to the exhibitor exclusively. He gets only his percentage which he has agreed with the renter, and the rest goes to the other sections of the trade.

We on this side are very much concerned about the exhibitor, but we are also concerned about film production. One of the great advantages of our new Clause as opposed to the new Clause which is likely to be tabled by the Government is that with total abolition there would be no difficulty and the benefit from total abolition would flow through the entire industry. The exhibitor would benefit, but so would the producer. We think that this is much more in the interests of the industry than an arrangement which would leave the entire benefit of any remission in the hands of the exhibitor only.

I grant that it is possible that this matter could be worked out domestically by negotiation in the trade, but that is not something over which we in Parliament have control. The Committee is entitled to know from the Government whether, for example, they have had consultations with the industry about this matter and whether the whole of the remission is to remain in the hands of the exhibitor or is to be taken into account for the other sections of the industry. Perhaps the Economic Secretary can tell us whether they have had such consultations.

Mr. Erroll

If any consultations are required they can take place before the new Clause is tabled.

Mr. Ellis Smith

We are very pleased with the way in which my hon. Friend is dealing with the matter, but while the Economic Secretary was speaking some of us were made uneasy with regard to administration. I should like my hon. Friend to probe this matter in order to find out how it will be administered and whether the Cinema Proprietors' Association has been consulted on the method of administration.

Mrs. White

I was trying to do exactly what my hon. Friend wishes. I was trying to probe, as he said, but the result of the probing is to discover that there have been no consultations about administration, which is a matter of some substance.

We are entitled to put all these points to the Government. It is true that we shall have a later opportunity to discuss the matter in detail when the Government's own new Clause appears on the Notice Paper, but that will be on Report, and it will then be difficult to table Amendments. It is therefore only right that we should at this stage advance these points which have concerned us very much and on which the Committee is entitled to an explanation.

Mr. Diamond

Now that my hon. Friend has ascertained through her probing that there has been no consultation, would it not be right for her to ask why there has been no consultation? The Government have had since 13th May, since when it has been known that

they would accept an Amendment. The whole world has known since 13th May that the Government would accept it. What have they been doing in the intervening weeks?

Mrs. White

Before we know all that, we would have to know a little more about the workings of this grapevine. The Economic Secretary has been very unforthcoming about it.

These points which I have put should have been given by the Economic Secretary, and not by me, earlier in the debate. They are matters of substance which we shall certainly wish to probe carefully when we get the Government's new Clause. I doubt whether we shall get anything satisfactory tonight. The hon. Gentleman has not had time to do all his homework. We still feel emphatically that none of these complications need have arisen and that we are entirely justified in saying that total abolition would be better for the industry and would be much the most practical and satisfactory and an entirely legal way of dealing with this matter.

Question put, That the Clause be read a Second time:—

The Committee divided: Ayes 162, Noes 196.

Division No. 128.] AYES [7.13 p.m.
Albu, A. H. Edwards, Robert (Bilston) Isaacs, Rt. Hon. G. A.
Allen, Scholefield (Crewe) Edwards, W. J. (Stepney) Jay, Rt. Hon. D. P. T.
Balfour, A. Fletcher, Eric Jeger, George (Goole)
Benson, Sir George Foot, D. M. Jenkins, Roy (Stechford)
Beswick, Frank Forman, J. C. Johnson, James (Rugby)
Blackburn, F. Fraser, Thomas (Hamilton) Jones, David (The Hartlepools)
Blenkinsop, A. George, Lady Megan Lloyd(Car'then) Jones, Elwyn (W. Ham, S.)
Bonham Carter, Mark Gibson, C. W. Jones, J. Idwal (Wrexham)
Bottomley, Rt. Hon. A. G. Gordon Walker, Rt. Hon. P. C. Jones, T. W. (Merioneth)
Bowden, H. w. (Leicester, S.W.) Greenwood, Anthony Kenyon, C.
Bowen, E. R. (Cardigan) Grey, C. F. Key, Rt. Hon. C. W.
Bowles, F. G. Griffiths, David (Rother Valley) King, Dr. H. M.
Boyd, T. C. Griffiths, Rt. Hon. James (Llanelly) Lawson, G. M.
Brockway, A. F. Griffiths, William (Exchange) Ledger, R. J.
Brown, Rt. Hon. George (Belper) Grimond, J. Lee, Miss Jennie (Cannock)
Brown, Thomas (Ince) Hall, Rt. Hn. Glenvil (Colne Valley) Lever, Leslie (Ardwick)
Burke, W. A. Hamilton, W. W. Lewis, Arthur
Burton, Miss F. E. Hannan, W. Lindgren, G. S.
Butler, Herbert (Hackney, C.) Hastings, S. McAlister, Mrs. Mary
Butter, Mrs. Joyce (Wood Green) Hayman, F. H. McCann, J.
Champion, A. J. Healey, Denis MacColl, J. E.
MacDermot, Niall
Clunie, J. Henderson, Rt. Hn. A. (Rwly Regis) Mclnnes, J.
Collick, P. H.(Birkenhead) Herbison, Miss M. McKay, John (Wallsend)
Corbet, Mrs. Freda Hewitson, Capt. M. McKay, Frank
Cronin, J. D. Hilton, A. V. MacPherson, Malcolm (Stirling)
Crossman, R. H. S. Hobson, C. R. (Keighley) Mallalieu, E. L. (Brigg)
Darling, George (Hillsborough) Holt, A. F. Mallalieu, J. P. W. (Huddersfd, E.)
Davies, Rt. Hn. Clement(Montgomery) Houghton, Douglas Mann, Mrs. Jean
Davies, Ernest (Enfield, E.) Howell, Charles (Perry Barr) Mellish, R. J.
Deer, G. Hughes, Emrys (S. Ayrshire) Mitchison, G. R.
de Freitas, Geoffrey Hughes, Hector (Aberdeen, N.) Moody, A. S.
Diamond, John Hunter, A. E. Morrison, Rt. Hn. Herbert(Lewis'm,S.)
Dodds, N. N. Hynd, H. (Accrington) Moyle, A.
Donnelly, D. L. Hynd, J. B. (Attercliffe) Mulley, F. W.
Ede, Rt. Hon. J. C. Irvine, A. J. (Edge Hill) Neal, Harold (Bolsover)
Noel-Baker, Francis (Swindon) Rogers, George (Kensington, N.) Thornton E.
Oliver, G. H. Ross, William Ungoed-Thomas, Sir Lynn
Oram, A. E. Royle, C. Viant, S. P.
Oswald, T. Shinwell, Rt. Hon. E. Wade, D. W.
Owen, W. J. Silverman, Sydney (Nelson) Warbey, W. N.
Padley, W. E. Skeffington, A. M. Weitzman, D.
Pannell, Charles (Leeds, W.) Slater, Mrs. H. (Stoke, N.) Wells, Percy (Faversham)
Parker, J. Smith, Ellis (Stoke, S.) Wells, William (Walsall N.)
Pearson, A. Sorensen, R. W. Wheeldon, W. E.
Plummer, sir Leslie Soskice, Rt. Hon. Sir Frank White, Mrs. Eirene (E. Flint)
Popplewell, E. Sparks, J. A. White, Henry (Derbyshire, N.E.)
Prentice, R. E. Spriggs, Leslie Williams, Rt. Hon. T. (Don Valley)
Price, Philips (Gloucestershire, W.) Steele, T. Williams, W. R. (Openshaw)
Pursey, Cmdr. H. Stewart, Michael (Fulham) Willis, Eustace (Edinburgh, E.)
Rankin, John Stonehouse, John Wilson, Rt. Hon. Harold (Huyton)
Redhead, E. C. Strachey, Rt. Hon. J. Zilliacus, K.
Rhodes, H. Stross, Dr. Barnett(Stoke-on-Trent, C.)
Robens, Rt. Hon. A. Swingler, S. T. TELLERS FOR THE AYES:
Roberts, Goronwy (Caernarvon) Taylor, John (West Lothian) Mr. Holmes and Mr. J. T. Price.
Robinson, Kenneth (St. Pancras, N) Thomson, George (Dundee, E.)
Agnew, Sir Peter Fletcher-Cooke, C. Manningham-Buller, Rt. Hn. Sir R-
Aitken, W. T. Galbraith, Hon. T. G. D. Marlowe, A. A. H.
Alport, C. J. M. Gammans, Lady Marshall, Douglas
Amory, Rt. Hn. Heathcoat(Tiverton) Garner-Evans, E. H. Mathew, R.
Anstruther-Gray, Major Sir William Glover, D. Maudling, Rt. Hon. R.
Arbuthnot, John Godber, J. B. Maydon, Lt.-Comdr. S. L. C.
Armstrong, C. W. Goodhart, Philip Medlicott, Sir Frank
Ashton, H. Gough, C. F. H. Molson, Rt. Hon. Hugh
Atkins, H. E. Graham, Sir Fergus Morrison, John (Salisbury)
Baldwin, Sir Archer Grant-Ferris, Wg Cdr, R. (Nantwich) Nabarro, G. D. N.
Balniel, Lord Green, A. Nairn, D. L. S.
Banks, Col. C. Gresham Cooke, R. Neave, Airey
Barber, Anthony Grimston, Hon. John (St. Albans) Nicolson, N. (B'n'm'th, E. & Chr'ch)
Barlow, Sir John Grosvenor, Lt.-Col. R. G. Noble, Michael (Argyll)
Barter, John Gurden, Harold Oakshott, H. D.
Batsford, Brian Harris, Frederic (Croydon, N.W.) O'Neill, Hn. Phelim (Co. Antrim, N.)
Baxter, Sir Beverley Harris, Reader (Heston) Osborne, C.
Bell, Philip (Bolton, E.) Harrison, Col. J. H. (Eye) Page, R. G.
Bell, Ronald (Bucks, S.) Heald, Rt. Hon. Sir Lionel Pannell, N. A. (Kirkdale)
Bevins, J. R. (Toxteth) Heath, Rt. Hon. E. R. G. Partridge, E.
Bidgood, J. C. Henderson-Stewart, Sir James Peel, W. J.
Biggs Davison, J. A. Hesketh, R. F. Pickthorn, Sir Kenneth
Bingham, R. M. Hicks-Beach, Mal. W. W. Pilkington, Capt. R. A.
Bishop, F. P. Hill, John (S. Norfolk) Pitman, I. J.
Black, Sir Cyril Hinchingbrooke, viscount Pott, H. P.
Body, R. F. Hirst, Geoffrey Powell, J. Enoch
Boyd-Carpenter, Rt. Hn. J. A. Holland-Martin, C. J. Price, David (Eastleigh)
Boyle, Sir Edward Hornsby-Smith, Miss M. P. Prior-Palmer, Brig. O. L.
Brewis, John Howard, Gerald (Cambridgeshire) Rawlinson, Peter
Brooman-White, R. C. Howard, John (Test) Redmayne, M.
Bryan, P. Hughes, Hallett, Vice-Admiral J. Rees-Davies, W. R.
Bullus, Wing Commander E. E. Hughes-Young, M. H. C. Remnant, Hon. P.
Ridsdale, J. E.
Burden, F. F. A. Hulbert, Sir Norman Rippon, A. G. F.
Butler, Rt. Hn. R. A. (SaffronWalden) Hutchison, Michael Clark(E'b'gh, S.) Robinson, Sir Roland (Blackpool, S.)
Carr, Robert Hutchison, Sir James (Scotstoun) Roper, Sir Harold
Cary, Sir Robert Hyde, Montgomery Ropner, Col. Sir Leonard
Clarke, Brig. Terence (Portsmth,W). Hylton-Foster, Rt. Hon. Sir Harry Russell, R. S.
Conant, Maj. Sir Roger Irvine, Bryant Godman (Rye) Sharples, R. C.
Cooper, A. E. Jenkins, Robert (Dulwich) Shepherd, William
Cordeaux, Lt.-Col. J. K. Johnson, Dr. Donald (Carlisle) Simon, J. E. S. (Middlesbrough, W.)
Corfietd, F. V. Jones, Rt. Hon. Aubrey (Hall Green) Smithers Peter (Winchester)
Craddock, Beresford (Spelthorne) Kerr, Sir Hamilton Spearman, Sir Alexander
Crosthwaite-Eyre, Col. O. E. Lagden, G. W. Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)
Crowder, Sir John (Finchley) Leather, E. H. C Stanley, Capt. Hon. Richard
Crowder, Petre (Rulslip—Northwood) Leburn, W. G. Stevens, Geoffrey
Cunningham, Knox Legh, Hon. Peter (Petersfield) Steward, Sir William (Woolwich, W.)
Currie, G. B. H. Lindsay, Martin (Solihull) Storey, S.
Dance, J. C. G. Linstead, Sir H. N. Stuart, Rt. Hon. James (Moray)
Davidson, Viscountess Lloyd, Maj. Sir Guy (Renfrew, E.) Studholme Sir Henry
D'Avigdor-Goldsmid, Sir Henry Longden, Gilbert Summers, Sir Spencer
Deedes, W. F. Loveys, Walter H. Taylor, Sir Charles (Eastbourne)
de Ferranti, Basil Lucas, Sir Jocelyn (Portsmouth, S.) Teeling, W.
Dodds-Parker, A. D. Lucas-Tooth, Sir Hugh Thomas, Leslie (Canterbury)
Doughty, C. J. A. McAdden, S. J. Thorneycroft, Rt. Hon. P.
du Cann, E. D. L. Macdonald, Sir Peter Thornton-Kemsley, Sir Colin
Dugdale, Rt. Hn. Sir T. (Richmond) McLaughlin, Mrs. P. Tiley, A. (Bradford, W.)
Duncan, Sir James Maclean, Sir Fitzroy (Lancaster) Tilney, John (Wavertree)
Eden, J. B. (Bournemouth, West) McLean, Neil (Inverness) Turner, H. F. L.
Erroll, F. J. McMaster, Stanley Turton, Rt. Hon. R. H.
Fell, A. Macpherson, Niall (Dumfries) Vickers, Miss Joan
Finlay, Graeme Maddan, Martin Wakefield, Edward (Derbyshire, W.)
Fisher, Nigel Maitland, Hon. Patrick (Lanark) Walker-Smith, Rt. Hon. Derek
Wall, Patrick Webster, David Wilson, Geoflrey (Truro)
Ward, Rt. Hon. G. R. (Worcester) Williams, Paul (Sunderland, S.)
Ward, Dame Irene (Tynemouth) Williams, R. Dudley (Exeter) TELLERS FOR THE NOES
Webbe, Sir H. Wills, Sir Gerald (Bridgwater) Mr. Chichester-Clark and
Mr. Whitelaw.