FILM INDUSTRY

HC Deb 20 December 1963 vol 686 cc1664-95

1.46 p.m.

Mrs. Eirene White (Flint, East)

I make no apology for asking the House now to turn its attention to another area of our activities—to the British film production industry.

I have two things to say at the outset. First, while I personally have no complaint whatever to make about the fact that the Parliamentary Secretary is to reply— because I understand the normal convention of this House, which is that the junior Minister, generally speaking, replies on the Adjournment— nevertheless this is not an invariable rule, as we have seen in the debate which has just concluded. I think that many people in the film industry will be deeply disappointed that the Secretary of State himself has not found it possible to be present, more particularly as it was he who received two recent deputations. I think that they would naturally have assumed that they would have a public reply from the Secretary of State today, which he was not, of course, in a position to give them at the time he received them at the Ministry.

Secondly, I have a personal point to make. I am a member of the Cinematograph Films Council which advises the Secretary of State, and I was one of the independent members of the subcommittee which advised the Films Council. I need hardly say that what I say today is entirely personal and should in no way whatever be taken to be representing the views of either the Films Council or that sub-committee.

However, it seemed to me that Parliament ought to discuss the affairs of the industry if only because at present we are all too acutely aware of the difficulties and confusion which exist. We must all have the greatest sympathy, particularly at this time—at Christmas—with the very many men and women in the industry who are either out of work or under notice that their jobs are likely to be terminated in the very near future. None of us can regard this with equanimity. The proportion of workers concerned is very substantial. It seems to me that, if only for their sake, we are entitled to ask for time to discuss the film production industry.

The industry is suffering from a very severe crisis of confidence. We have had crises in the film industry before, as some of us who are present are well aware. We had debates of great fervour some years ago when the exihibitors were the ones most concerned and we were trying to soften the stony hearts of successive Chancellors of the Exchequer about the Entertainments Duty. But in some way the present crisis is deeper and more worrying. Although one had the greatest possible individual sympathy for many of the exhibitors who were forced out of business, one felt that to some extent they were the creatures of circumstance in the capitalist jungle. Today we are faced with a crisis of confidence among the producers, and this touches us much more deeply because it is not simply a matter of commercial success and failure.

This is a matter of the expression of British ideas, of the emotions of the people, and of artistic creation. I feel very deeply concerned to find that the anxieties in the industry now so closely affect people who have been responsible for the renaissance of British film production. What is worrying is that the very people who have brought such renown to British films in the last 10 years are the most anxious about the future.

I say most emphatically that everyone who is concerned with the film industry has been extremely proud of the immense improvement in the quality of British film production over the past 30 years or so. It is something which gives us very considerable pride and for which we can take great credit. The contrast of the very recent successes, and continuing successes, of British films with the despondency which now prevails seems extremely unfortunate, and it is something that we should do all we can to obviate.

I am sorry to say that the crisis in the industry has also led to a certain amount of bad blood. We now have a position where personalities in the industry are writing letters even to The Times denigrating the efforts of one another. This also is serious because it will make any solutions, in an industry which is beset by difficulties anyway, even more difficult.

The background against which we must consider the problems which face the industry is, frankly, one of an industry which has been in decline numerically, although, as I say, the quality of its product on has on the whole greatly improved. The Guardian the other day gave some figures, which I believe to be correct, pointing out that in 1952 the earnings of the industry were £110 million in round figures whereas in 1962 the figure dropped to £59 million, which in terms of the money values of 10 years ago would have represented no more than £41 million. By any standards that is an enormous contraction. The seats sold in 1952 numbered 1,300,000, while in 1962 the number was 435,000. These are facts to which no one can close his eyes. When an industry has had such a sharp decline as that, any difficulties inherent in it are likely to be intensified. There is no doubt that that is what has been happening in the British film industry.

The complaints which have been brought before those of us who are concerned with this have been two-fold. As one effect of the decline, it is said that films which in earlier years might at least just have paid their way are now not viable commercially, whereas the more successful films are more successful than ever. "To him that hath shall be given" is nowhere better exemplified than in the British film industry at present.

This causes great difficulties and controversy as to methods of showing films and the position of independent exhibitors and so on. It is difficult to suggest any simple remedy for this. The subcommittee of the Films Council has made a number of detailed proposals to deal with some of the difficulties, but I do not think it would be very helpful to our general debate to go into those rather technical details today.

The major complaint is about the monopolistic tendencies in the film industry which have been evident for very many years past and about which we had reports some 20 years ago. The decline in the general size of the industry has intensified the monopoly.

I think that the House is aware of the general background. There are two major circuits in the British film industry—Rank and A.B.C. They are far more than retail outlets. Both organisations are vertical combinations and concerned with what one would call in any other business the retail, the wholesale, the manufacturing and the financing operations of film production. By and large they do not compete with one another. In the jargon of the film world, they are a "duopoly". They have spheres of interest. They divide the territory between themselves. Each has in tow a number of major distributors which rent their films regularly to either one or the other of the circuits. There is no real competition. There is only one firm which even attempts to rent to both equally, and that is British Lion, about which I should like to say more in another context.

Everyone who knows anything about the industry realises that there is virtually no competition between the two great circuits for films, and although when one looks at the statistics one might say, "How can one pretend that there is a monopoly in cinemas in this country when the circuits own only about a quarter of the total number of cinemas still open?", statistics, as usual, mislead. When one looks at the capacity and earning power of those cinemas one finds that they account for about 70 per cent, of the total earning capacity, and, in particular, they have the overwhelming position in the London area, where so much of the takings come from.

This position of monopoly, which is undoubted, has its good points as well as its bad. One must be fair. There is no doubt that both the Rank Organisation and A.B.C. have financed British film production, either their own or other people's in the past. They can fairly say, "We have shown a great many films which, commercially, were not particularly attractive, but we felt we were obliged to do so, to take the bad with the good." They can rightly say that many producers would have been far worse off had it not been for the existence of the circuits and for their finance.

Notwithstanding that, and giving all credit where credit is undoubtedly due, the fact remains that among some of the best and most original of our film producers there is the greatest possible reluctance to feel that they are dependent exclusively on one or other of these two circuits for their well-being. If one is dealing with people of creative talent these feelings are of considerable consequence.

The immediate cause of the difficulties with which the industry is confronted and of the ill-feeling which, I am afraid, has been aroused, was the assertion by a number of independent film producers that their films have been held up, that they have not been booked by the circuits and that, consequently, money invested in them is tied up and has not become available for ploughing back into future production. This has led, it is claimed, to the situation in which, for example, at Shepperton Studio there is no film on the floor and none in prospect for at least three months, while another studio is closed completely.

The independent producers concerned say that they are quite unable to make any plans for the future or obtain any finance for fresh production. I repeat that this applies not only to those who are not, perhaps, of the very first rank in film production, but also to those who have a very fine reputation.

The facts have been bandied about by the various interests concerned in such a way that it is extremely difficult for outsiders and even for some people inside the industry to know exactly where the truth lies. There are arguments about the quality of the films which have not obtained early bookings. There have been arguments about their profitability and about the wisdom or desirability of showing a number of American films which are, in the opinion of those who should know, at least no better than some of the British films not yet shown.

Various suggestions have been made about how one could clear this backlog of British films, and, what is even more important, of restoring confidence sufficiently to get the production process going again. As is well known, it has been suggested that a quota of 50 per cent. should be laid down for the showing of British films instead of the present quota of 30 per cent. At present 30 per cent. of British films have to be shown by the major circuits and those in favourable exhibition positions. But the actual proportion of British films played by the major circuits is already considerably above the quota—about 45 per cent. in the case of Rank, about 50 per cent. in the case of A.B.C. and, I understand, about 43 per cent. for Grenada.

The Cinematograph Films Council discussed this recently and, by a fairly close vote, decided not to recommend that the quota should be raised. There are arguments for and against. I think that raising the quota would bring only a temporary palliative. I do not believe that it would really solve the problems of the industry.

The real anxiety is not about what films are to be shown in 1964, for they are mostly already made or in the making Indeed, one of the depressing facts of the situation is that there are a large number of British films on the stocks already and people are asking when time is to be found to show them. Unless producers know what proportion of British films is likely to be shown in 1965, production is not likely to get off the ground in 1964 and finance is not likely to be forthcoming.

While I appreciate the difficulties of increasing the statutory quota for 1965, or of the Secretary of State saying in advance that he will do so, it might be a gesture if the two big circuits were voluntarily to indicate that they would play no less than the proportions they are playing already of British films. Why should they not do this? Why should more than half the films shown in this country be from overseas?

What would people say if more than half the books sold in the country were by foreign authors and could be bought in only two chains of shops? It is not unreasonable, when we have people waiting to make British films, for the two big circuits to say voluntarily that, in 1965, they will play at least as many British films as they are playing now.

This would, I believe at least help us to break this log jam of films at the moment, but, of course, there are wider considerations and although it would be very valuable it would still only be a temporary boost to confidence in the industry. Many people believe that the present position, with its duopoly, is unhealthy and that the independent producers will not feel able to give of their best while they are at the mercy of the judgment of only two big groups for the booking of films.

There was once a third circuit. It was in the Rank Organisation and we felt that it was not entirely convincing, as a third circuit, but it was nominally such. What the independent producers and others, including the unions in the industry, are concerned about is that there should be some third force. I am not using the words "third circuit" because we must be realistic and recognise that, with the contraction of the industry, to establish now a third circuit comparable in size with the existing two major circuits would be very difficult.

But if one could have a third booking force which to some extent overlapped the two circuits, we might meet the demands of the independent producers. They would feel that at least they had a chance to prove whether they were right orwrong—a chance they do not always have now.

We could have an organisation which could, for instance, get the best playing times in the year— which they do not always get at the moment— for independent films. If distribution were so organised that some of the Rank and A.B.C. cinemas, with some of the independents, including, I hope, the smaller circuits, could be used for the showing of films which, to the booking organisation, seemed to be the best, we would avoid the genuine objection to a third circuit that it would diminish the possible total earnings of the top winning films, which, of course, would be to the detriment of British film production.

I believe, therefore, that we must devise a system whereby the top winner could still take as much money as it does now on one of the circuits but that, nevertheless, when not playing a top winner concurrently there was a chance of getting a good return for one of the independently produced films. I fail to see, however, how such an organisation as this could come out of the existing industry without some Government guarantee. We have the examples of the National Film Finance Corporation and other devices in which Treasury money was used and from which, surprisingly, Treasury money is now coming out again. With the present state of the film industry, I see no possibility of such a project without some outside intervention.

I cannot see why the Government should not be able to give financial backing on the exhibition side in the same way as they have in the past on the production side. I do not suggest that the body to organise such a third force is necessarily the N.F.F.C., because in a way that would be setting up another vertical combination, which might also be undesirable. However, it appears to me that we will not get what is necessary for the health of the industry without at least a Treasury guarantee and probably some money in support.

Whether we would get agreement from the circuits to a voluntary arrangement of this kind is not for me to say. I do not know whether the Parliamentary Secretary is prepared to say what the Government would do if there were no voluntary agreement. However, if we embarked on this course, we would meet what has been a continuing source of frustration and discontent in the production industry. I say this at this moment especially, because today we have been told of another fact which will very much affect what may be called the psychology of the independent producers, namely, that the N.F.F.C. has bought out British Lion from the other directors. We very much wish to know—and I trust that we shall be told today—what the plans for British Lion are.

British Lion has been a buffer between the independent producers and the vertical combines. I do not pretend that everything that British Lion has done has been necessarily unimpeachable, but, on the other hand, it has been responsible for some of the best, most successful, most original and most distinguished British films. I am certain that if British Lion were allowed to go out of existence, or to be sold to private interests, the cloud of despondency already over the independent producers would become dark indeed.

Therefore, although we were gratified to learn that the N.F.F.C. has exercised its option and that British Lion for the time being is to be entirely in public hands, the statements by Sir Nutcombe Hume and Mr. John Terry as reported in today's Press leave some big question marks. What is to be the posi- tion of the existing directors, who have been a successful team? It is true that they have done much better financially from the bargain which was made than might have been supposed some years ago. On this side of the House, we sharply criticised the terms of their original contract, but a lot of water has flowed under the bridges since then and we do not propose to go over past history, although some of our criticisms were fully justified.

We are now more concerned about the future of British Lion. The suggestion that British Lion is to be sold to some private interests, unspecified, is something which we on this side of the House are not prepared to countenance, and we ought to make that clear. We are, therefore, entitled to be told what the proposals for British Lion are, how its independence is to be safeguarded and how it is to continue to improve the service which it has been able to render to independent film production in this country.

I have already taken more time than I intended, but it is only right that we should have these considerations before us. I hope that the Parliamentary Secretary will be able to tell us the Government's views on a third circuit, rather, a third booking force—it is difficult to get out of the old term—and on British Lion. There is a minor but important point concerned with the hold-up of films, and this is the statutory duty on companies not to book films more than six months in advance. This was inserted in the cinematograph legislation precisely for the purpose of ensuring that there was room for films from independent producers. While I have no doubt that the law has been observed in the letter, it appears not to have been observed in the spirit. I should like some comments from the hon. Gentleman on that point. I hope that before we finish the debate we shall be able to send a message of much better cheer to the British film production industry.

2.16 p.m.

Captain L. P. S. Orr (Down, South)

The hon. Lady the Member for Flint, East (Mrs. White) has done the House a great service by allowing us to have this preliminary debate on the crisis now facing the film industry. I say "preliminary debate", because the crisis is deeper and more worrying than any which has yet faced the industry and ought to be the subject of a full debate in the House before irrevocable decisions are taken. It is not sufficient merely to have a rather cramped adjournment debate of one and a half hours.

I profoundly agree with the hon. Lady's analysis of the present situation. The hon. Lady has considerable knowledge of the industry, and has done great service to it, and has been an independent member of the Cinematograph Films Council. I do not pretend to rival her knowledge. The problems of the industry have only recently come to my attention because of my friendship with some independent British film producers.

The hon. Lady herself was not able to say what I want to say about the Cinematograph Films Council. She was at pains to show that she was speaking as an individual and not in any way representing the views of the Council. I hope that she will agree that the Council was originally composed so that it should represent the views of producers, makers of films, renters, distributors, the trade unions, and the independents to hold a balance. If all had been able to speak in this proportion without any interests intervening, this would have been a reasonable body from which the Government could have taken advice.

However, because of the dominance of the large circuits, the two combines mentioned by the hon. Lady, and because of their vertical interest, it has now become almost impossible for many members of the Council to speak in a sense opposite to the views of the circuits. No one blames anybody on the Council or casts any aspersion on them for that reason, but the Government should be wary of the advice of the Council because of its dominance by the two circuit interests.

The hon. Lady referred to correspondence in The Times. In that newspaper this morning, there is a letter from Mr. Robert Clark, of A.B.C. The hon. Lady might like to know that I have been in touch with Mr. David Kingsley, of British Lion. For greater accuracy, I wrote down his views. Mr. Clark's letter calls upon independent producers to publish statistics, covering the last four years, of the films that they have produced. He asked them to name their films and to state the cost, and so on. Mr. Kingsley told me: We at British Lion shall be very happy to make this information available on all our films. We will do this through our Trade Association, the Federation of British Film Makers—provided that all other producers who are members of the Federation and the British Film Producers Association agree to do the same. But we do not see why the provision of this important information should be restricted to independent producers. We hope that the two major cinema owning combines and the American companies will provide the same information about their British productions. In this gathering of statistics, cinema owners must also give information about their average takings, running costs, amounts paid to producers in film hire and the amounts involved in ancillary sales of ice-cream, confectionery, cigarettes and advertising. Lack of statistics has been one of the constant problems of the film industry. Now is the moment at which they could be of vital help to the Government and the industry itself in finding solutions to its problems. It seems a fair answer.

The hon Lady first spoke of the decline in the industry, and of that decline there can be no doubt. My hon. Friend the Member for Spelthorne (Sir B. Craddock) has, unfortunately, lost his voice, but he is present. The Shepperton studios lie in his constituency, and my hon. Friend asks me to point out that at Shepperton— which is the only studio to carry or business for the last four years on a profitable basis—of the 53 most successful box office pictures in the last five years, 27 were British, only 10 were financed by the combine, and were made in my hon. Friend's constituency. He also asks me to say that in August the peak pay roll was 1,040. That has now been reduced to 510, and if this decline goes on it will be a very serious matter for his constituency—

Mr. Ronald Bell (Buckinghamshire, South)

I wish to say nothing to the detriment of Shepperton studios—I have known for some time that there were films made outside South Bucks.—but I would venture to join issue on my hon. and gallant Friend's use of the word "only". As I understand, the Pinewood studios, in my constituency, have also been operating at a profit.

Captain Orr

I am very much obliged to my hon. Friend—we are glad to see him here, too. I cannot vouch for what he says, but I will take his word for it.

The real root of the trouble is the domination of the industry by the circuits. The hon. Lady pointed out that although the actual ownership of cinemas does not amount to more than about one-third, about 41 per cent. of the cinema seats are owned by the two combines. That, as she herself pointed out, is not in itself a true picture, because London is the key. The London revenues account for about 30 per cent. of the United Kingdom gross, and if a producer cannot get a film shown on the London circuits he is not likely to get it shown anywhere else. It has to start in London. In 1961, the Rank Organisation accounted for 44 per cent. of the bookings of new films in London, and A.B.C. for 28 per cent., so that, between them, the two circuits controlled 72 per cent. of bookings. The plain truth is that two men in this country now decide whether or not a film shall be shown, and in an industry that is suffering in this way such a situation cannot be allowed to continue.

Although the hon. Lady suggested that voluntary arrangements might be entered into to provide either a third circuit, a limitation on the size of circuits for booking purposes, or the creation of a third force, it is not for us to suggest how this situation shall be remedied. That is for the Government to decide. Something must be done to induce more competition within the industry because, without it, the British film industry will disappear.

The hon. Lady touched on a possible analogy. The situation is rather like that which faces the newspapers. We are at present concerned about newspapers closing down, but when a newspaper closes down that is, at any rate, due to the free exercise of public demand. The public have a free choice whether they will read one newspaper rather than, say, the Daily Mirror or the Daily Express. But if the Daily Mirror and the Daily Express between them owned W. H. Smith & Sons, Ltd. and all the other retail outlets involved, and so operated that they had their newspapers prominently displayed and the others tucked in a corner wherever they could be fitted in, that would be the complete analogy with the present position in the cinema industry. That cannot be allowed, and I should have thought that no Government could allow it to continue.

The one exception has been British Lion. The two combines now so act that if one refuses to take a film the other will not take it either, except in the case of those distributed by British Lion. That means that the whole future of British Lion is of immense importance in this matter—in fact, in many ways, it is the key to the situation.

Some of the independent producers saw some of my hon. Friends and myself in the House about a fortnight ago, and put to us this problem of the dominance of the circuits. We were impressed with their case, and decided to see my right hon. Friend the Secretary of State for Industry and Trade. He told us that he was very busy before Christmas, but that in January he would have the report of the Films Council and would not take any decision concerning the general future of the industry, the question of competition, the question of the quota, or any other suggestion that had been made, before receiving that advice, and before seeing us.

Judge of our surprise when, yesterday evening, we were told that this option had been exercised on behalf of the N.F.F.C. to take over the remaining shares in British Lion, and, in fact—although it is not the stated aim—to oust the present management. We at once asked some members of the present management to see us last night after the Division. I was horrified by their story, and perhaps I may be allowed to tell the House very briefly just what the story is.

As the House knows, British Lion had been suffering losses since the end of the war. In 1955, the N.F.F.C. took it over. It was still incurring losses in 1958, when the present management came into the business. Since then, it has repaid the £600,000 Government loan, has made a profit of £1½ million, and has, as the hon. Lady has said, produced some of the best British films we have since seen. It has provided an outlet for independent producers, and a nucleus of the third force for which the hon. Lady has pleaded.

On 27th November, the present management received some indication from the N.F.F.C. that it was considering exercising its option. That would be subject to the Board of Trade. The management was told in the strictest secrecy, but they did not take its seriously—perhaps they should have—because they could not see why, in a situation like this, with successful management and production, the Government should wish to alter the situation. They were anxious that Government finance should remain, and they did not see any reason for the change.

Judge of their surprise, when, on Friday, 13thDecember—last Friday—they received notice that the N.F.F.C. would exercise its option. At the same time they were told that if they wished to raise the necessary money they could buy the whole company back if they did so before 31st December.

This was clearly a completely derisory offer. It could not possibly have been expected that they would have done so. They were asked to find, within what was tantamount to one week— because of the Christmas holidays— £1 million to buy a company, in very great conditions of uncertainty within the industry, and when they were already pressing the Government to make some arrangements to provide competition in the industry. They said that they could not do so. But the offer was never intended to be accepted. I believe that it was completely derisory, and that the whole story is something of a scandal.

The hon. Lady asked an important question. I suggest that my hon. Friend should ask our mutual right hon. Friend the Secretary of State for Industry and Trade to ask Sir Nutcombe Hume to see him, and to tell that deep displeasure has been expressed in the House of Commons about what has happened. He should ask Sir Nutcombe Hume, first, whether the offer made to the present management of BritishLion was intended to be accepted. If it was, he should be asked why a time limit fixed for 1st January. Why was not a reasonable time offered?

If the answer is that the offer was not intended to be accepted— and I do not think that it was—I should like to know what is the intention of the Government. Does the N.F.F.C. intend to retain ownership and put in a new management? It has been said that it was intended to keep the present management for the time being, but members of the management have been asked to place their resignation at the disposal of the N.F.F.C. so that the members can be changed at any time. It is obvious that the N.F.F.G wants to get rid of the present management.

I suggest that this is a shabby manoeuvre, to get rid of the present management and to put in someone to run British Lion who is more amenable to the two circuits, or to the monopoly. I believe that we are likely to see a consortium of Tom, Dick and Harry with offices next door to Rank's. It will be all above board on the surface, but underneath there will be an influence which will see to it that British Lion does what it has been under pressure to do— align itself with one of the two circuits and so end competition in the industry for all time.

I hope that my hon. Friend will tell the Secretary of State for Industry and Trade that many of us are gravely concerned about the situation. If he cannot postpone the taking up of this option we shall view it as a breach of faith with us, whom he promised he would see before a final decision was reached. This possibility raises a wide issue, on which the House of Commons should have a chance of expressing its views in a full and proper debate before a final decision is taken.

Mr. Douglas Jay (Battersea, North)

The hon. and gallant Gentleman is very familiar with the facts of the situation. Does he suggest that Sir Nutcombe Hume had any consultations with the Board of Trade before taking this decision? Secondly—and I accept the facts that he has given—what does he think to be Sir Nutcombe Hume's motive in wishing to make British Lion more amenable to the two circuits?

Captain Orr

I am unable to answer the last question, because Sir Nutcombe Hume is not the sort of man whose motives are readily discernible. As for the first question, the N.F.F.C. had to have the sanction of the Board of Trade before it could exercise its option. I suggest that my hon. Friend may have failed to see the significance of the situation in the context of his promise to improve the whole structure of the industry. I am telling my hon. Friend, who told us to look at the matter in the context of what he said, that if there were a change in the structure of British Lion it would be a breach of faith with us. What the film industry needs—I am sure that this will be agreed by all hon. Members—is an injection of some competition. It is not for us to say how; it is for the Government to find a way.

2.36 p.m.

Mr. Stephen Swingler (Newcastle-under-Lyme)

I know that you were worried about the timetable, Mr. Speaker, and I shall endeavour to be brief. The hon. and gallant Member for Down, South (Captain Orr) has raised some very serious issues, and has said that this is an urgent matter and that we should have a discussion in the House, since there is considerable State responsibility for the situation, so that we can consider the circumstances confronting us. Many people forecast a long time ago that with the contraction of the market and the decline in cinema admissions there would be a tendency for the cinema industry to be dominated by two main circuits.

We now have a monopoly position, with a handful of tycoons competing for control of the industry, with the danger of a complete collapse of independent production. We are faced with the question whether we want to maintain a healthy and expanding film production industry in Britain. I believe that the answer is "Yes". The next question is: can it be done by the ordinary operation of the law of supply and demand? The answer is "No".

Over the years we have seen that we must build up a considerable apparatus in order to maintain a healthy film industry and produce a variety of British films. That is why we have the British quota, the National Film Finance Corporation, and the statutory levy, It is quite clear that in present circumstances these things are jeopardised, and that in a short time our talented producers might disappear—either go abroad or go into some other industry. This is a very difficult business to maintain, and it is important that there should be continuity of employment and main- tenance of staffs of talented technicians, artistes and so on.

Policy in the past has been based on the idea that we should have a film industry not merely for economic reasons—although economically, it has not been unsuccessful in the past—but also for the sake of art, science and so on. The instruments of the quota, the N.F.F.C. and the levy are in the hands of the Board of Trade and the Minister precisely to prevent a collapse of independent film production, and to given a stimulus to the circuits to show more British films.

It is therefore not all that wonderful that we should ask that half the films shown in British cinemas should be British. I never have thought that that was an excessive demand, and I believe that the N.F.F.C. has been wrong not to recommend that the quota should be increased. I hope that the Minister will urgently consider the possibility of this, even if it is only for a temporary period.

This quota instrument has been such an important one in the past in maintaining the market for the exhibition of British films, especially independent films, that it should be the weapon which the Minister should use to give the extra stimulus, and he should do it in conjunction with consultations with the managers of the circuits about the release position next year. That is the urgent matter now—to do something to speed up the release of already-produced British pictures next year.

It is not satisfactory that Mr. John Davies should judge whether the pictures are good or not. Let the public judge after having had an opportunity of seeing the pictures, and seeing them more rapidly. Then we shall know whether the pictures are good, bad or indifferent. It is not right for anyone to set himself up as a final arbiter of taste, entertainment value, and so on. Therefore, I think that the Secretary of State ought to use the quota instrument, and use it rapidly. Secondly, I think that he ought to take the immediate step of having consultations with the circuit managers and to request the speedier release of British pictures next year so that the studios can maintain the flow of employment and production.

2.42 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. David Price)

I am aware that there are a number of hon. Gentlemen on both sides of the House who would have liked to speak, but I understand that it would be for the convenience of the House if I were to reply now as there are other hon. Gentlemen who wish to speak on other matters in subsequent debates.

I hope that the hon. Gentlemen who would have liked to speak will, if they have any ideas on this subject, let me have them. I think that it would be discourteous to hon. Gentlemen who have come here today not to say this, but one has to consider other debates. I am also sorry that my hon. Friend the Member for Spelthorne (Sir B. Craddock) has lost his voice, but he might have been frustrated because of the difficulty of getting in to the debate.

The hon. Lady the Member for Flint, East (Mrs. White) raised the question of why my right hon. Friend the Secretary of State was not present. I think that she knows that my right hon. Friend already had a prior engagement before he knew that she had chosen this subject and that he was committed to going to South Wales, where he is at present.

It may help the House in considering this somewhat complex subject of films if I make it clear that in talking about films I shall be referring to films made primarily for exhibition in cinemas as distinct from those made for television or for instructional purposes. The basic fact which we have to face is that the number of cinema films which can be produced depends not on the number which our producers would like to make, nor even on the number which would maintain film studios in full production and the present labour force of film studios in their current jobs; but that it depends on the number of films which cinema audiences are prepared to pay to go and see. It is, in fact, the test of the market.

In this industry, as in any other, it is no use producing goods which the customer will not buy. One cannot hide the fact that the film industry is at present, as it has been for many years now, a declining industry. It is a declining industry not because the Government has willed it so, but because the public have willed it so.

I should like to give the House some statistics which show the extent of the decline of public support for films exhibited in cinemas. Film audiences are now 70 per cent. lower than they were 10 years ago. As a result, there are now only half he number of cinemas that there were then. Whereas once any average film could be counted upon to provide a reasonable audience and to pay its costs, the situation now is that while people will still flock to see what they consider to be a good film, the cinema which shows a bad one will be empty and the cinema which shows an average one will be half empty.

In 1952, the number of cinema admissions was 1,350 million and gross box office takings amounted to £105 million. In 1962, admissions were 415 million—less than one-third of what they had been 10 years earlier—and takings were down to £59 million. The House may like to know that the indications to dare are that in 1963 admissions have declined by a further 8 per cent. and that a further 7 per cent. of cinemas have closed.

Moreover, there has been a continuing change in the nature of cinema audiences which I am not sure that the industry has wholly appreciated. I understand that the age group of from 12 to 25 now constitutes about 60 per cent. of the total cinema audience. This characterises the problem for producers.

Of course, the growth of television has undoubtedly been the main cause of this decline. In 1952, there were fewer than 2 million licensed television receivers in the United Kingdom; in September of this year there were over 12½ million. And I am sure that the House will agree that the quality of the entertainment provided by television has also improved enormously in recent years. So it is not surprising if the owners of television sets are no longer attracted to cinemas by the sort of run-of-the-mill film which could once be sure of a regular audience. Today, the cinema must offer something which television cannot provide.

The exceptional film can still attract a large and profitable audience, but there are too few films which can reasonably be called "exceptional". This is no personal criticism of producers, because they are only human like the rest of us and they cannot be expected to produce a winner every time. In these circumstances, it is not surprising that there should be an atmosphere of crisis in the industry. With a major change in the size and nature of its market going on over a long period, bumps and jolts are inevitable.

Despite the decline in admissions to cinemas the production of British films has hitherto stood up fairly well. In 1952, 79 British films with a playing time of 72 minutes or more were registered by the Board of Trade. This figure rose to a peak of 96 in 1957 and has since fallen back gradually. It was 71 in 1962, and the comparable figure so far for 1963 is also 71.

The registration figures only reflect past production, however. The producers' and unions' current concern is with actual and threatened slack in the studios. It is hard to arrive at any precise measurement of the present falling off in production. The average June employment figures in the industry have been just over 4,000 over the last five years, whereas the comparable December average up to and including 1962 was about 3,600. So the House will see that there is a seasonal fluctuation. By comparison, employment this December is at about 3,100. So far, these figures indicate no dramatic falling off in activity. The fear is, however, that employment opportunities will dry up much more significantly after Christmas, through the absence of any independent production.

Independent production normally accounts for about a third of British film production, so the inference that about a thousand more people face unemployment, at least in the early part of 1964, is, on the face of it, not an unreasonable one. Nevertheless, my right hon. Friend's inquiries in the last few days have established that the studios' detailed estimates, compiled in mid-December, for the period up to the end of January indicate that, even on a pessimistic view, there should not be more than a further 120 dismissals in that period.

The other two-thirds of British production is attributable in roughly equal parts to production financed wholly or in part by the major circuits, on the one hand, and American interests on the other. As far as we know, there is no prospect of the Americans reducing their financial support of British film production, and both the major circuits have assured us that, subject to certain practical considerations—for example, the suitability of subjects—there should be no reduction in their activities in 1964.

My right hon. Friend understands that work will be continuing in the studios at least until the early part of January on four first feature and one second feature films and that two films which are at present being shot on location will return to the studios in due course. The five first and second features now in the studios are at Elstree, M.G.M.—Boreham Wood—Bray, and Merton Park.

Against this background of decline, it is not perhaps surprising that there should be a feeling among those working in the industry that somewhere or other there must exist a cure for its ills. However, too frequently those in the industry seem to think that the decline in demand for cinema films can be reversed merely by good intentions and by more public money from the Government. As I have pointed out, the public is reluctant to provide this money through the box offices.

I should like now to examine some of the proposed cures for the ills of the industry. In the summer of 1962 the then President of the Board of Trade received complaints from a group of independent exhibitors that one of these ills was an abuse by the two dominant enterprises in the industry—Rank and A.B.C.—of their superior booking power in a number of ways detrimental to the rest of the industry. This view was shared by some of the independent producers. The power of these two combines springs from the fact that each of them controls a circuit of cinemas, and that these circuits represent the only groups of cinemas which are big enough to ensure the possibility of a reasonable profit for any film which they book.

The President of the Board of Trade referred these complaints to the Cinematograph Films Council, which is a statutory body on which all sections of the industry, including independent producers, are represented, and which, in addition, has independent members and an independent Chairman. The hon. Lady the Member for Flint, Hast is one of the most prominent of those independent members. I do not know whether she or her colleagues on the Council would agree with some of the criticisms made by my hon. and gallant Friend the Member for Down, South (Captain Orr). Certainly, it would be most improper for me to comment on them either way.

The Council set up a sub-committee of its independent members to examine the structure and trading practices of the industry. Inevitably, it found itself obliged also to examine the problems of independent producers, as well as independent exhibitors. Although the subcommittee reported to the Council last June, the Council decided to get the reactions of the industry to the Report. I understand that it now proposes to consider the Report and the reactions of the industry at its meeting next month. My right hon. Friend should then receive its considered advice on the diverse and complex problems of the industry and all the many proposals that have been made for dealing with them. Until this advice is available, I think the House will agree that it would be premature for my right hon. Friend to adopt any new policy for the film industry.

Mr. Jay

Can the hon. Gentleman assure the House that, until this advice is available and the Secretary of State has considered it, nothing will be done by the N.F.F.C. to sell British Lion to private industry?

Mr. Price

I will come to that and if the right hon. Gentleman is not satisfied with what I say, he can interrupt me. I am trying to be as succinct as I can with what is a rather long story.

I should like to deal with one proposed remedy which the Council has already considered and on which it has reported to my right hon. Friend, with a limited number of other matters. The proposed remedy, which was put forward by some independent producers; by the unions and by the hon. Member for Newcastle- under-Lyme (Mr. Swingler), was that the screen quota should be raised from the level of 30 per cent., at which it has been for the past 12 years, to 50 per cent.

As hon. Members will know, the quota is a system by which cinemas, unless specifically exempted by the Board of Trade, must show at least a given percentage of British first feature films. There are certain minor consequential obligations which I need not now go into. As the hon. Lady said, the Cinematograph Films Council has advised against the proposal for increasing the quota and my right hon. Friend accepts that advice. There are a number of reasons why my right hon. Friend has accepted the advice. Of course my hon. and gallant Friend suggested that my right hon. Friend might take other advice. The principal reasons are these. First, the two major circuit companies will have achieved during 1963 a quota of as much as 45 per cent., possibly more. They have announced, without any pressure from me or from my right hon. Friend, that they are reasonably confident of achieving a similar performance in 1964.

Captain Orr

What about 1965?

Mr. Price

At this rate an increase in the quota to 50 per cent. would mean no more than the showing of an additional five or so British films a year. When audiences are still declining at the rate of 7 per cent. or so each year, it is surely unwise to restrict further the freedom of exhibitors to show what they consider to be the most attractive programmes.

Moreover, we cannot expect to unload our difficulties on to the shoulders of foreign suppliers of films without the danger of retaliation in some form or other. It is worth remembering that nowadays nearly half of the income of our film production industry comes from the export of British films. We have also to remember that imports have already borne the brunt of the decline in the market. In 1952, 258 American feature films were registered. By 1962, this figure had fallen to 117. This decision of my right hon. Friend's means that the quota, which is settled annually and announced about June of each year for the succeeding year, will remain for 1964 at 30 per cent., as originally announced last June.

My right hon. Friend will, of course, be considering the quota for 1965 during the spring of next year. I can give an assurance that when the level of quota is considered we will take account of any developments which may have taken place in co-production. We are doing our outmost to provide our producers with facilities for co-production and I hope that, as happened on the Continent, the wider access to markets and finance which co-production offers will bring a genuine stimulus to our studios.

Although the Cinematograph Films Council has not reported on the other matters which were referred to, I think I can at least say a little about these matters.

Mr. William Shepherd (Cheadle)

I am grateful for the assurance about the films for 1964. But they have been made, or are being finished. Is it possible that the two circuits can give an undertaking that, subject to the availability of films of the requisite quality, they will maintain the same percentage of British films in 1965 as they will show in 1964? That would go a long way to restore confidence in an uncertain situation.

Mr. Price

Obviously, I cannot, from this Box, speak on behalf of A.B.C. or Rank. But I will take note of the point made by my hon. Friend.

The main burden of the complaint which the Cinematograph Films Council is considering is that since there are now only two releases, that is, groups of cinemas each regularly showing the same programme, those who control them have too much power in deciding which films should be shown and which should not. These two companies do not, in practice, compete with each other for the supply of most of their films and it is alleged that they reserve the best dates for their own films or those in which they have finance.

It is further alleged that they discriminate against independent producers by making them wait an unduly long time before their films are shown. The Cinematograph Films Council Subcommittee's proposal for meeting this situation was the encouragement of co-operative booking by substantial groups of independents. As an extension of this principle the Sub-committee expressed the hope that the industry would reopen, and bring to a successful conclusion, its negotiations to re-establish the now defunct third release.

Perhaps I might elaborate a little about this third release. There used to be three releases—and sometimes a fourth—when there were plenty of cinemas and plenty of audiences and therefore plenty of films needed to satisfy them. Whether a third release could now be reconstituted is a matter upon which I shall be greatly interested to hear the views of the Council. I was extremely interested in the comments of my hon. and gallant Friend and of the hon. Lady the Member for Flint, East.

I should have doubts about any proposal forcibly to separate off from their present allegiances roughly a third of our 2,400 cinemas, because it would involve the inevitable result, or the very probable result, that the earnings of all films shown on what are now the two main releases might fall proportionately.

Mrs. White

It is very important to get this clear. If there were three separate circuits in the old sense that is true, but if one had one circuit which could overlap the other two for certain films, even though on other occasions it did not overlap them, the real winners would still maximise earnings.

Mr. Price

There is considerable force in that argument, but I was discussing circuits in the old terms and we should be quite clear what would be involved in that proposal.

I understand that the circuits are experimenting with plans for making their releases more elastic. It has never seemed entirely sensible to everyone that a good film with limited appeal, and perhaps costing less than the average, should have to conform to the pattern and be shown in all or at any rate the majority of the cinemas that make up a release. Last week and the week before Ranks divided their release into two, showing one programme in some cinemas, where it seemed likely to appeal, and another in the rest.

I do not know how practicable these ideas about elasticity will prove to be, but they seem to have the makings of being perhaps a more subtle and more effective means of achieving at least some of the objectives of the third release proposal. I hope that they will be given full and careful consideration.

The hon. Lady mentioned the practice of the two circuits of doing what is called in trade jargon "pencilling in" dates for the showing of films well over six months in advance. She suggested that this was contrary to the spirit as well as the letter of Section 34 of the Films Act which provides that no renter shall procure the giving by an exhibitor of an undertaking, which, if legally binding, would impose on the exhibitor an obligation to take delivery of films which are for exhibition at a date later than six months after the giving of the undertaking. I will keep the hon. Lady's suggestion in mind and have it carefully examined, but my immediate reaction is that this practice of "pencilling in" may, on the whole, be beneficial to the producers as well as to the exhibitors.

It is claimed that in this way producers can obtain the benefits of audience research and can, if necessary adjust films in the making to meet changes in taste. It is also useful for the producer making a film suitable for Christmas, for example, to know in advance what dates are likely to be available, other things being equal. Moreover, circuits try to avoid showing X films at the same time, and they are understandably anxious to find attractive family programmes for holiday periods. All these things need some planning in advance.

I now come to the allegation made recently that there are about 20 British films on the shelf because they have been unable to obtain circuit bookings. I understand that at the beginning of this month there were very few British films on the shelf. The producers have given me a list of 11 which have been completed, but not yet booked. I understand that five of these are recognised to be of second rather than first-feature status; two have been offered release as co-features; two were never intended for general release in the first place; and one is not yet on offer. That leaves one.

It is true that some of these films have had to wait several months before getting a booking, but I understand that a number of them were X films which exhibitors who aim to satisfy family audiences are understandably reluctant to book, particularly during holiday periods.

It is also being argued that there are already about 70 British films made, or about to be made, which are waiting to be shown and which, without any further production, are more than sufficient in themselves to enable a quota level of 50 per cent. to be achieved during 1964. Frankly, I am a little sceptical about this argument I shall be very surprised if, in the event, a number of these films do not turn out to be second features, or at least co-features.

The fact of the matter is that there has obviously been some over-production of films recently and that until this is cleared production will not get back on to a continuous basis. Nor, for the reasons I have already given, can or should the industry expect to resume as though nothing had happened. I have no doubt that if the standard of film production were to be so high as to attract back some of the missing audiences, producers would find themselves with more resources at their disposal and more opportunities open to them. But that is asking a great deal.

An alternative method of maintaining a reasonable level of film production would be for the industry to pay greater attention to those factors of cost, efficiency and productivity which would reduce the amount of money a film needs to make in order to make it pay. It would be hard to say that the effect upon costs of some of the things that are done both by producers and on the labour side of the industry could not be improved upon. It is inevitable, I suppose, that the industry should first direct its complaints to the Government when it is in difficulties, but I do not think that this is justified.

The British film industry is certainly not one which the Government have neglected. Indeed, the Government have consistently gone out of their way to try to help to preserve the industry. In addition to the screen quota, to which I have referred, there is the statutory scheme known as the Eady Levy, whereby money collected at the box office on the showing of all films, British or foreign, is distributed to the makers of British films, so that on average, their commercial earnings in this country are increased by about 60 per cent.

There is also the National Film Finance Corporation which has made available over the whole of its career finance to the tune of £8 million on the basis of revolving loans to producers. The actual benefit received by producers from this has been over £20 million. About £6 million of the N.F.F.C. capital has been contributed directly by the Government and the remaining £2 million by Government-authorised borrowing.

At this point I turn to the subject of British Lion. British Lion is now a thriving company, which is much more than it was six years ago. As the House will remember, my right hon. Friend's predecessor announced on 8th March that under an agreement of 1961 between the N.F.F.C. and the other five shareholders in British Lion a series of purchasing options would apply early in 1964 providing for the acquisition by one party from the other of its interest in the company at an independent valuation, the price being the fair value of the shares on the basis of a sale as between a willing buyer and a willing seller of the entire issued share capital of the company on the open market. Both parties recognised the need to avoid the disturbance which continuing doubt as to the future of the company would have caused, and the option arrangements were therefore brought forward.

As hon. Members will have read from the N.F.F.C.'s Press notice issued last night—no doubt, it has been read by all hon. Members who have taken part in this debate—the Corporation decided to exercise its first option to buy and has thereby become the holder of the whole of the issued share capital of the company. Both the Government and the N.F.F.C. have said that they consider that this company should be in private rather than in public ownership. This remains the view of Her Majesty's Government and the Corporation.

Mr. Jay

Is that all the hon. Gentleman intends to say about British Lion?

Mr. Price

I have not finished. I was only turning a page of my notes.

My hon. and gallant Friend the Member for Down, South mentioned the second option to the ex-deferred shareholders. I should like to say this without embarking on the broad policy, although I shall certainly pass my hon. and gallant Friend's comments on to my right hon. Friend. With regard to the general suggestion that the shareholders have not had a fair chance of coming in, I am informed by the N.F.F.C. that for many months past the five ex-deferred shareholders have made it abundantly clear to the N.F.F.C. that they did not propose to exercise their second option to acquire the business themselves and that if the N.F.F.C. did not exercise its first option, they would exercise their third or "put" option, and thereby require the N.F.F.C. to buy them out.

More recently they have been asked whether they would agree to extend the existing options by, say, three years and they have categorically refused to do so. I am giving to my hon. Friend merely the information I have been given by the N.F.F.C. I thought that in fairness to the House I should put it on the record, and I undertake to my hon. Friend that all the points he has raised will be brought to the attention of my right hon. Friend.

The N.F.F.C. has agreed with my right hon. Friend that it will be a condition of sale of British Lion that the purchaser will give firm assurances that the facilities which the company now makes available to independent producers will continue to be made available to them, and that the company will continue to be operated as a third force in the industry.

Mrs. White

Surely this by itself is an empty assurance. All it really means, presumably, is that whoever buys this company—and we do not even know who this may be—will not be allowed to accept an offer for a take-over from one of the two circuits. In other words, I presume that some kind of stipulation will be put into the articles of sale that they could not accept a take-over from one of the two major circuits. That would be the absolute minimum stipulation. But as we know, there are ways and means in the film industry of tying people up without necessarily having them bought up. It seems to us on this side of the House that any private sale—I am not speaking of a possible partnership arrangement— which removed entirely the public interest from British Lion is bound to be to the detriment of independent producers.

Mr. Price

As the hon. Lady knows, my right hon. Friends have made it clear that they regard it as right that British Lion should go back into private hands. I repeat the undertaking that the purchaser will be required to give firm assurances that the facilities which the company now makes available to independent film producers will continue to be made available and that the company will continue to be operated as a third force in the industry. I think that the House will understand that I cannot go into greater detail today. However, I give the assurance that, as soon as a decision has been made, my right hon. Friend will inform the House.

Mr. Jay

That is not nearly good enough. Does not the hon. Gentleman realise that, if the Government really believed these assurances, which he professes to believe, they would not be in favour of selling the company to private interests at all? If the hon. Gentleman cannot say today that no sale at all will take place to private interests, my hon. Friends and I will be bound to raise the matter again at an early date.

Mr. Shepherd

Am I correctly interpreting the statement which my hon. Friend has made as not precluding the sale of this company to Rank or A.B.C. and that he is only assuring the maintenance of facilities? Presumably, an undertaking of this kind could be given by Rank or A.B.C. Secondly, are we going to make certain that this company will not be sold to American interests? I should take the view that it would be very damaging if we did allow a sale to an American-controlled interest.

Mr. Price

I shall convey my hon. Friend's fears to my right hon. Friend, but today—

Mr. Swingler

We want assurances.

Mr. Price

I cannot give the assurance for which the right hon. Member for Battersea, North (Mr. Jay) asks—

Mr. Jay

I am sorry to interrupt again, but this is important. Does the hon. Gentleman mean that he cannot even give an assurance that these shares will not be sold to Rank or A.B.C.?

Mr. Price

I think that that assurance is implicit in what I have said.

Mr. Swingler

No.

Mr. Jay

If it is implicit, cannot the hon. Gentleman make it explicit and say that the Government will not allow the sale of these assets to Rank or A.B.C. or any majority-owned subsidiaries of those companies?

Mr. Price

I cannot go further than what I have said already to the House.

I realise that nothing I have said can deal with the immediate problem of those workers in the industry who are out of a job or who fear that they soon will be.

Mrs. White

Can the hon. Gentleman say what is the position of the present directors? Are they to be offered fresh contracts or have their resignations been demanded? They are the people who have made British Lion so successful and have earned the profits.

Mr. Price

I understand that their resignations have been made available to the new full owners, the N.F.F.C, but, in the meantime, they have been asked to carry on.

Mrs. White

Is it true that those resignations have been asked for and they were not offered?

Mr. Price

This is a matter for the N.F.F.C. which is directly responsible for British Lion.

Captain Orr

Perhaps I can help. The resignations were asked for, not offered.

Mr. Price

I am assured by the two large combines that they are doing all they can to maintain employment in their own studios both on film and television work, but, fundamentally, the only way to maintain steady and continuing work for an appropriately sized labour force in the film industry is for the industry to relate production more closely to effective demand, and costs more closely to effective takings.

In the view of the Government, the size of the British film industry should be determined by the public rather than by the Government. Of course, it may be argued that the present system of distributing films does not give the public a fair chance to exercise its choice. As I have already said, this aspect of the problem is being investigated by the Cinematograph Films Council and my right hon. Friend is awaiting its conclusions.

Sir Lionel Heald (Chertsey)

Would my hon. Friend give us an assurance that he will impress on the President of the Board of Trade the importance attached to this matter by all those who have come into contact with it at very short notice? Those of us who are not concerned with the film industry, and cannot claim detailed knowledge of it, are very much concerned about the question of monopolies. The date which has been mentioned indicates that an irrevocable decision might be made before the House has had a chance to consider it. I hope that my hon. Friend will impress on the President of the Board of Trade that that would be a very unfortunate thing.

Mr. Price

I assure my right hon. and learned Friend that I will convey his views to my right hon. Friend.

With this essential proviso, I repeat that it is the public, and not the Government, who determine the size of the film industry. It is, therefore, to the public rather than to the Government that the industry should direct its energies.