CINEMATOGRAPH FILM (LEVY) (Hansard, 5 June 1967)

§ The Minister of State, Board of Trade (Mr. J. P. W. Mallalieu)
I beg to move, That the Cinematograph Films (Collection, of Levy) (Amendment No. 5) Regulations 1967, a draft of which was laid before this House on 5th May, be approved. I think that it would be for the convenience of the House to take with these Regulations the following Regulations: That the Cinematograph Films (Distribution of Levy) (Amendment No. 2) Regulations 1967, a draft of which was laid before this House on 5th May, be approved. The regulations are made by virtue of the powers conferred by Sections 2 and 3 respectively of the Cinematograph Films Act, 1957. This Act gave statutory form to a scheme which had been operated voluntarily by the industry since 1950 and which is often referred to as the "Eady Levy". Under these arrangements, Her Majesty's Customs and Excise collect from cinema exhibitors one-ninth of the excess on any seat price over lld., except in respect of educational and charitable entertainments and indoor entertainments in rural areas.
Customs deduct the expense of collection and thereafter the proceeds are paid to the British Film Fund Agency. After 575 deduction of the cost of administration and after making a payment to the Children's Film Foundation, the Agency distributes the fund to producers of British films in proportion to their earnings.
The Regulations at present in force expire in October of this year. The relevant films legislation was also due to expire in October, but its term was extended by the Films Act, 1966, for a further three years in order to provide time for a comprehensive review of films legislation. The main effect of the regulations now before the House will be similarly to extend for another three years the life of the existing regulations. We propose, however, to take this opportunity to make, as from October of this year, two small changes, both of which are designed to assist the cinemas whose box-office takings are low.
Amendment No. 5 to the Collection of Levy Regulations embodies these two changes. At present, a cinema which takes at the box office no more than £350 in any one week, disregarding takings from charitable, educational and children's entertainment, pays no levy on its takings for that week. The amendment raises the exemption limit to £400. The number of people going to the cinema continues to fall, and both the Cinema Exhibitors' Association and the Association of Independent Cinemas have made representations asking for some measure of relief for the cinema owners. It is not possible to assess exactly what the cost of this proposed raising of the exemption limit by £50 will be, but our estimate for what it is worth, is that the figure will be, in a full year, about £100,000.
The second change gives a new and, I think, more sensible form of relief to cinemas whose takings marginally exceed in any one week the exemption limit. Up to now, cinemas have had to pay into the levy fund the full amount of any excess of takings over the exemption limit whenever such payments are less than they would have to pay if they paid levy at the standard rate. This is a severe discouragement to enterprise and effort to attract more custom.
The amendment now proposed provides a marginal rate of 25 per cent.; 576 that is, an exhibitor whose takings marginally exceed £400 in any one week will pay 25 per cent. of the excess until levy at that rate equals levy at the standard rate. Again, I cannot give an exact forecast of what the cost of this change will be to the fund, but we estimate that it will be in the region of £200,000.
The effect of the two amendments may be to reduce the fund by about £300,000 in a full year. The fund is at present yielding £4½ million or thereabouts. I believe it is in the best interests of the industry as a whole that these small adjustments should be made. The film studios, I am delighted to say, are busy at present. I do not think that a reduction of this order in the yield of the fund will significantly affect the level of British film production. The increased reliefs will enable some cinemas, which otherwise might have to close, to remain open and this will benefit producers and distributors as well as cinema owners.
Amendment No. 2 simply prolongs the existing arrangements for another three years. Various proposals for amendment of these Regulations have been made and they will all be very carefully considered during the review which is now taking place of film legislation and policy. The Government do not think it right to make changes in the levy distribution arrangements in advance of completion of this review. Accordingly, we propose as regards distribution of levy simple prolongation for three years of the present Regulations.
The Cinematograph Films Council has been consulted and recommended the proposals I have outlined. I hope that they will prove acceptable to the House.

§ Mr. F. V. Corfield (Gloucestershire, South)
I understand that the purpose of both these Regulations is to deal on the one hand with the collection of the levy and on the other with its distribution, but I also understand that a certain amount of taxpayers' money goes to support the film industry. Am I right in assuming that what we are dealing with here is merely an adjustment between the payment and collection of the levy and we are not in any way expending any Exchequer contribution which goes to the film industry?

§ Mr. J. P. W. Mallalieu
That is quite right. No taxpayers' money is involved.

§ Mr. Corfield
That is what I understood, but I thought I should get it on the record.
The only other point I make is not a criticism in any way of the amendment proposed, but simply to put to the hon. Gentleman that in view of the recent Report by the Monopolies Commission the House will expect in due course to have the Government's views on the Report and to be given some indication of how the Government view the recommendations and what they are doing about implementing them. I do not know whether the hon. Gentleman is in a position to tell us about this, but from what he said about the continuing fall-off in cinema audiences it seems that probably a rather radical review of the present situation is called for.
I should have thought that probably in the more artistic field it might be sensible to bring in the Arts Council for cinemas in exactly the same way as for theatres rather than attempt to subsidise films which, for various reasons, the public do not appear to want to see and to make them economic. This is a wider problem, but if the hon. Gentleman could give some idea of when he hopes to make a statement on the Monopolies Commission Report, it would be helpful. I have no adverse comments to make on the Regulations themselves.

§ Mr. J. P. W. Mallalieu
I speak again by leave of the House. I am grateful to the hon. Member for Gloucestershire, South (Mr. Corfield). The review of legislation and policy on the film industry will take a considerable time yet, but my right hon. Friend will make a statement on the Government's views on the Monopolies Commission Report very shortly indeed.