§ Order for Second Reading read.
§ 11.56 p.m.
§ The Under-Secretary of State for Trade (Mr. Eric Deakins)
I beg to move, That the Bill be now read a Second time.
I commend this Bill to the House. It is short, and it has the support of all sides of the industry. Its aim is to divert a very small part of the British Film Fund to the National Film Finance 412 Corporation, where it will be used for financial assistance at the pre-production stage of film production, including script writing.
Before going into the details of the Bill itself, perhaps I should outline the circumstances which have led to these proposals being brought before the House at a time of such crowded parliamentary business. For years past the cinema and film production industry in this country has been declining. There are now just over 1,600 cinemas in Great Britain compared with nearly 2,000 10 years ago, and nearly 5,000 at their peak in the late 1930s. The number of admissions in 1974 was 138.5 million. Ten years ago the figure was 385 million, so there has been a drop of 246.5 millions, or nearly 61 per cent. This decline has been largely due to television. We must accept that people wish to sit at home and watch television. We cannot be reactionary and attempt to put the clock back to the 1950s.
Nevertheless, while the huge attendances of the immediate post-war years are unlikely to return, there is still a large audience for good films in cinemas, and I am happy to say that the benefits from the very considerable investment in the twinning and tripling of cinemas are now being felt, for the number of admissions has gone up by nearly 4 million, from 134.2 million in 1973 to 138.5 million in 1974. If we can continue in this direction the proper place of the cinema as a means of mass family entertainment may well be preserved. Cinema takings in 1974, including VAT, totalled £69.3 million, and are up by about £11 million on the previous year. These increased takings, however, are due far more to inflation than to increased business, and credit is due to the many cinematograph exhibitors who throughout this economically difficult period have remained in business despite these difficulties, which cannot always be met simply by increasing seat prices.
It is, however, at the production end that the most immediate concern lies. For many years past about 80 British feature films have been produced annually. At one period in the late 1960s about £46 million was invested in film production in this country in one year. 413 Nearly 90 per cent. of this money came from American sources, but this has now been withdrawn, and we must do our best to find alternative sources and to encourage the use of more British finance. Despite this withdrawal of American finance, 78 British films were made in 1974, but present indications are that the total number of feature films made here in 1975 will be about 65.
Lack of investment is not the sole cause of the present serious situation. There is also a shortage of good projects. This is illustrated by the fact that the consortium—which was set up three years ago in conjunction with the NFFC to provide assistance to the industry—still has about £500,000 available, but has considerable difficulty in finding suitable projects.
The Cinematograph Films Council looked at this alarming situation last year and in its Annual Report for 1973–74 made a number of useful and constructive proposals. The proposal which led to the Bill has the unanimous support of all members. It is also supported by the Film Production Association of Great Britain, the Writers' Guild of Great Britain, and the Federation of Film Unions—all of which played a part in devising the scheme.
This proposal has been put forward because financiers are, not unnaturally, reluctant to risk their money on a project which has not been explained to them fully. It follows that, however attractive a project may appear to its sponsors, it must be effectively worked up before it can attract financial backing. The experienced and well-known film producer may well be able always to raise finance for his films whenever he has a good project to offer. This is not true, however, of the younger, less experienced and less-well-known producers who, if they are not permitted to develop their ideas and abilities because of economic difficulties, will be lost to the industry in years to come, so that there may eventually be no one to succeed today's experienced producers.
It is hoped that this measure will go some way towards solving this problem and remedying the shortage of good projects. The scheme will enable someone who comes up with a good idea but who has not sufficient funds himself to develop 414 it to the point where he can attract investment capital for production to get additional finance to enable him to develop his idea. He would be able to prepare a complete script, and so reach the stage where he could convince potential backers that the project is worth pursuing. If a measure such as this is not taken, the industry may well continue to decline, and by the time we come to its rescue it might not be there at all.
This is particularly important in view of the need to encourage British investment. I hope would-be British investors will have taken note that a number of films made with the help of British finance have recently been successful, and one such even spectacularly so.
The money for assistance under the proposed scheme will come, as I said, from the British Film Fund. It will thus be the industry's own money, and the Bill will not lay a new burden on the taxpayer.
The Bill is necessary because the existing Cinematograph Films Acts prescribe the uses to which levy money may be put, and these statutory uses do not include the kind of financial assistance which we have in mind.
Although the Bill does not itself limit either the amount to be made available or the period during which the scheme will operate, it is my right hon. Friend's intention to follow the recommendation by the CFC in its 1974 Annual Report, and to make the sum of £200,000 available in each of the first two years of the scheme, after which it will be reviewed. That sum will be divided up so as to provide enough money for script writing and pre-production expenses for about 20 projects in each year. The intention is that assistance will normally take the form of loans, repayable whenever a project actually goes into production. No single project will receive more than £10,000, including the script fee.
§ Mr. Terence Higgins (Worthing)
The hon. Gentleman said that assistance would normally take the form of loans. I understood that under the Bill it would always take the form of loans.
§ Mr. Deakins
It would normally take the form of loans, but in certain circumstances—and we want to retain as much flexibility as possible for the NFFC and 415 the advisory committee which will be set up—other forms of assistance will perhaps be necessary. Basically the idea is that loans will be made. The sum which I have mentioned will be divided between script writing and pre-production expenses for about 20 projects a year.
That brings me to the operation of the scheme itself, which will be governed by arrangements approved by the Secretary of State. An advisory committee comprised of persons appointed by the Secretary of State, and including representatives of film producers, writers, and persons employed in the film industry, will assist the NFFC in selecting suitable projects to receive financial assistance under the scheme. The committee will have regard, among other things, to the likely capacity of the applicant of bringing a project to fruition as well as the adequacy of the project itself.
The full amount of an advance will be repayable to the fund, plus a premium, immediately a project goes into production. The premium is necessary, and justifiable, because the fact that the project is to go into production indicates that someone expects to make a profit, and it is reasonable that the fund which has helped launch the project should claim a modest share of that profit.
I turn to the Bill itself. The first clause authorises the British Film Fund Agency to make payments to the National Film Finance Corporation for these purposes.
The use of the moneys in the British Film Fund are confined, under the Cinematograph Films Acts 1957 to 1970, to payments to makers of British Films and to payments to three bodies which are mentioned in the Acts. These are the British Film Institute to provide assistance towards the cost of making films, the National Film School and the Children's Film Foundation Ltd.
Clause 1 of the Bill will add the NFFC to the bodies which may receive payments. The Bill does not specify how much these payments will be, but follows the precedent whereby the Secretary of State is required to consult the Cinematograph Films Council in every case before approving a payment to these bodies. Hence, the industry will have ample opportunity to make recommendations as to the amount to be used.
416 The moneys will be administered as a separate fund, unconnected with the other funds held by the National Film Finance Corporation, and Clause 2 of the Bill directs that the NFFC shall apply the payments to the purposes I have described in accordance with arrangements to be approved by the Secretary of State. Those arrangements will set out the basis on which applicants for assistance under the scheme will be selected, and the conditions on which assistance will be given. I am sure the House will agree that a scheme of this kind must remain flexible, and it must be possible to make modifications and changes in the light of experience. The arrangements will also ensure that any project which is assisted will, if it goes into production, result in a British quota film eligible to receive levy payments.
Subsection (2) of Clause 2 is necessary because, in the course of its normal lending business, the NFFC is restricted as to the period of a loan and as to the interest which must be charged. Financial assistance under this new scheme will take a different form, and these restrictions would be inappropriate. Subsection (3) of Clause 2 will confine the scheme to projects intended to result in the production of films primarily for exhibition in cinemas.
Clause 3 includes the normal statement on citation. Subsection (2) follows the precedent of other Films Acts, which generally do not extend to Northern Ireland, but this subsection would not debar a citizen of Northern Ireland from eligibility to receive financial assistance under the scheme.
Finally, as hon. Members will be aware, the Prime Minister has set up a working party to examine the long-term viability of the film industry, and it is probable that the working party's reply will lead to more legislation. The other recommendations made by the Cinematograph Films Council are still under consideration and, if adopted, may also need legislation.
The assistance provided under this Bill is still an experiment, and the Bill itself may ultimately be consolidated into further legislation, though this will depend on the report of the working party. Nevertheless, this is a useful measure which will provide some modest help to a hard-pressed industry.
417 Finally, the House will have noted that the proposal is based on a unanimous recommendation of the Cinematograph Films Council, the statutory advisory body concerned and, as it thus has the support of all branches of the industry, I confidently hope that the House will accept it without Division.
§ 12.8 a.m.
§ Mr. Michael Shersby (Uxbridge)
It is at the least unusual for the Government to introduce a Bill so late in the Session during the spill-over of business after the Summer Recess. That the Bill concerns the finances of the film industry is a fact that explains a good deal, for it is believed in some quarters that the Prime Minister has had a soft spot for the film industry ever since he became President of the Board of Trade.
In welcoming the Bill tonight on behalf of the Opposition, as I do, I hope that the film industry will realise that the House as a whole is able to demonstrate that it recognises the serious problems that the industry faces from time to time and our desire to assist it by giving a greater degree of flexibility to the way in which British films are financed.
I was glad to hear the Minister say that the Bill has the support of the British film organisations. Having spent 10 years in the film industry, I can claim a modest degree of expertise in this field, although I am no longer connected with the industry.
The Bill provides for payments to be made by the British Films Fund Agency to the National Film Finance Corporation and for the making of loans or the giving of assistance at the pre-production stage, including loans to scriptwriters. The Bill will provide what is called "seed" finance, and script preparation will be the main beneficiary of the new arrangements.
The other provisions of the Bill are the result of the recommendations in the 1973–74 Annual Report of the Cinematograph Films Council. Those recommendations were made because the future prospects of the film industry are bleak owing to the serious drop in finance available for film production. We know that to a large extent this is due to the competition suffered by the film industry from television. I was interested to read in the report of the Cinematograph Films 418 Council, based on figures relating to Belgium, that 3.25 per cent. of viewers regularly see films in the cinema, that 96.75 per cent. of viewers see films on television, and that 96.5 per cent. of all revenue accruing to the film industry comes from television. In face of this worrying situation, it was natural that by the summer of 1973 the number of feature films planned for 1974 and 1975 should have been much fewer than the number envisaged in past years.
One of the main reasons for this, apart from competition from television, was the situation whereby traditional source of finance for British film production—namely, finance from the United States—had diminished over the years—not because British films are not the best in the world, as we know they are, but for other reasons connected with the American film industry. Therefore, it has been necessary for the British film industry to look elsewhere for finance if production is to be maintained at previous levels, if employment is to be maintained, and if Britain is to continue to enjoy substantial export earnings from the exhibition of British films overseas.
It will interest hon. Members to realise that one of the most recent successful examples of British films earning large sums of money over the years was "Murder on the Orient Express", which is based on Agatha Christie's novel. It is the first British film ever to top the list of dollar earners and is now expected to gross about £19 million worldwide. That speaks for itself and is a tremendously creditable example of first-rate British film production.
The Cinematograph Films Council, in an effort to see what can be done to improve the availability of finance, set up a working party which, in turn, made a number of recommendations, some of which appear in the Bill. The first recommendation related to a levy known as the "Eady levy", which should yield £2½ million to £3 million a year. I should like to know whether that prospect is likely to be fulfilled. The second recommendation was that each year £55,000 should be set aside from the fund to finance the writing of scripts—a basic necessity for good film production. The third was that £145,000 should be set aside each year from the fund to finance pre-production projects. This gives a 419 total of £200,000 for pre-production finance and scripts. It is not much money, but it is important to the industry at this time.
Clause 1 adds the National Film Finance Corporation as a recipient of the British Film Fund, which in turn depends for its income on the levy, or the "Eady" money, as it is generally known. The Bill directs the National Film Finance Corporation to apply that money in accordance with the arrangements to be approved by the Secretary of State. I was alarmed when I saw that this was included in the Bill, as in the past year or so we have become accustomed to this formula, which is not tight enough, as it frees loans made out of that money from the restrictions which apply to loans made in the course of normal business.
I am glad that the advice which the Secretary of State will receive before making his decisions will come from the advisory committee which is to be set up for the purpose. The film industry will give excellent advice to the Secretary of State, who I am sure will implement it. I should like to know whether the advice to be received by the Secretary of State from the advisory committee will affect the arrangements whereby the national film finance consortium, consisting of the corporation and 10 groups in the private sector, constitutes the only channel through which the corporation will be permitted to make loans.
During the past 20 years the National Film Finance Corporation backed 721 British feature films, which is approximately half the total number of films made in that period. That is a creditable record. It deserves our praise. That is why the Opposition welcome the Bill. We hope that the additional £200,000 to be provided from the levy will do much to encourage successful new productions, which we are glad to hear will be British quota films.
We hope to see better employment prospects for those engaged in the British film industry and a corresponding rise in export earnings. We wish the Bill well.
§ 12.18 a.m.
§ Mrs. Gwyneth Dunwoody (Crewe)
I welcome the Bill, although it is a small, uncertain step in the dark. The amounts we are discussing, when compared with 420 the problems of the British film industry, are infinitesimal. Without the pre-production work and the investment going into the early stages of film production, no producer has any hope of attracting finance from outside sources. Only two or three of our senior British producers are capable of attracting that finance owing to their reputations and the films which they made in the past.
This evening we heard useful tributes paid to the work of Nat Cohen. Men of the calibre of Nat Cohen and Sir John Woolf have proved how British films can survive in an international market. However, we are in a highly dangerous situation. There is hardly any point in producing a British film if there is nowhere to show it in the home market. The film industry is one of the few British industries which have the equipment and the ability to think in terms of 1980. It has improved not only the handling of its material but the equipment it uses to produce films. It has cut down the ratio of men to production. It is using the management techniques it developed in the 1930s and now suffers from the decisions taken then.
For example, the Under-Secretary of State referred to the drop in the number of cinemas. I must declare an interest in that I am an adviser to the Association of Independent Cinema Owners, which is deeply concerned at the way cinemas are going out of business at an ever-increasing rate. Anyone who is interested in the production end of the industry must also be concerned. Young people in towns want cinemas, not necessarily twinned and tripled, but small, comfortable cinemas, and they want the opportunity to see good films in those cinemas.
The producers who will apply for the pre-production money in the fund will produce films which are capable of standing up on the international market. There is never any discussion in Britain of the fact that rising costs have pushed up the cost of producing a film into the realm where it must recover its negative costs from the international market if it is even to begin to be a viable proposition. That will put a tremendous strain on the fund. We are talking about only 20 projects a year. One matter which I should like to clear up concerns the conditions under which the projects will 421 be chosen. I am all for an advisory board chosen from the industry. In the past, too many projects have used Government money without taking advice from the people who actually do the job. Will my hon. Friend give an undertaking that the people who provide the advice will not in any way be able to benefit financially from the scheme while they are advising the National Film Finance Corporation? Even a suggestion that the scheme might turn into an "old boy" network, with people sitting in on the projects and deciding which of their friends should have the money, would be damaging both to Parliament and to the British film industry.
I enter a caveat about the National Film Finance Corporation, and I am sorry to have to say this after working for many years with the Corporation. I welcome the setting up of the Prime Minister's working party. I hope that it will examine distribution, the relationship between television and the film world, the scheme in France which gives practical assistance to cinema owners in modernising cinemas and, more than anything else, the organisation of the Corporation. In its time the Corporation has been a tremendously useful organisation, but it should be reorganised.
The Conservative Government—I am not making a political point—for reasons of their own decided that the Corporation should not have all the money owed to it under the Films Act and should not be allowed to continue to operate. A consortium was set up and great hopes were raised. Everyone in the film industry believed that producers would have access to funds to enable them to make new and better films. What has happened? The Corporation continues to exist. It has helped a certain number of projects, but the total number of British films has fallen. The consortium still has money in the kitty, while there is a 60 per cent. unemployment rate in the film industry.
If the Corporation is to handle this fund and is to be responsible for the rejuvenation of the film industry, will it proceed on the slightly neutered giant basis which it has adopted up to now, or will it show a little courage and imagination, try to do what it did before 1970, give support to imaginative projects and produce films which may have a risk element but are capable of attracting 422 enormous audiences? Or is it going to do what it has done since 1970, and drop gently behind the other commercial companies, only picking up projects where money has already been committed by people from other sources, and never giving the young British producer the chance which he so desperately needs and never even picking up the people who have made their first films through the British Film Institute funds? Or is it now going to show that it has the imagination, ability and courage to do what is essential in backing new and better British films?
I hope that this is the first piece of legislation about the cinema industry. It is astonishing that, whilst Italy protects her film industry by restricting the number of feature films shown on television during the week and not allowing the showing of feature films at the weekend, while Germany has made specific funds available through her Films Act for films made for television, and while France makes use of the prize system to ensure that French films are used as an arm of the propaganda machine and shown all over the world to show French goods or French starlets—to use the market term—we do nothing to use our film industry either to help project British products or even to produce constant employment for the existing technicians at home.
It does not matter which film maker one meets, whether American, French or German, he will say that the standard of intelligence and ability of the British film maker is higher than that of any other nation. Why in Malta do I see British film crews being employed on American projects? Why do Anglo-German projects—few enough as they are—employ entirely British crews? It is because this country still has a fund not just of writers, actors and producers but of technicians who are of a standard one does not find readily everywhere and who are yet facing considerable problems every day while they seek work, even if it is only for a few weeks.
The television industry in this country has very strongly resisted any suggestion that it should pay any contribution towards the film industry. The very film fund we are discussing contributes to a film school which in turn produces a number of highly skilled technicians who do not go into the film industry but 423 into television. The television industry, with its overseas sales, is gaining more and more money from those markets whilst using the very techniques, the very abilities which have been developed by the film industry in Britain.
It may be sad enough that we have already left it so late with the television industry that it has got into considerable financial difficulties and may almost have a small, though not, I think a very real, excuse for saying that it does not wish to contribute anything in any large measure to saving the British film industry. But I do not make the plea on cultural grounds for this support. I say that the television industry in Britain actually bleeds the film industry constantly.
§ Mr. Robert Cooke (Bristol, West)
While I agree with the hon. Lady in wanting to save our film industry. I remind her that the film industry itself recognises that the Government are bleeding the television industry white by taking such an enormous levy.
§ Mrs. Dunwoody
That is nonsense. The television industry is not subject to a levy unless it is in a considerable profitable situation, so what the hon. Gentleman says is not on. I am surprised he even bothered to say it at this time of night.
Further, we are not taking the necessary steps in distribution. There is not only the duopoly situation. We should be doing something about booking patents. My hon. Friend must know that our patent procedures still do not work.
After all its continuing problems, the film industry still finds itself in a situation in which no one is prepared to consider the effect of the consolidation of the American distribution houses, which has reached the stage where we shall soon have only three bookers for the six or seven major companies. The British are already consolidated into two booking agencies, with booking patents, which means that the independent exhibitor does not get a fair showing of the good No. 1 pictures. I hope that all those matters will be considered.
Production is the beginning of the line, but distribution and exhibition are the matters that make the industry viable. I am disappointed that we should be dis- 424 cussing the Bill, inadequate though it may turn out to be, before such an empty House. It is one of the disappointments of my life that when the House decides to talk about art in its finest form we get a full turn-out by both major parties, but when we are talking about the cinema, which used to be called mass entertainment, although I am afraid we can no longer use that term, the attitude of the House is that it is one of the industries which can be left to go to the dogs, without any consideration being given for the cultural aspects, the artistic aspects or even the export earnings, which are considerable when we are turning out the normal number of films per year.
I enjoyed my work in the film industry over the four years that I was out of the House. I am grateful to it for the friendship and kindness it has shown me. I am delighted that even in the European Parliament I am able to continue in some small way with my involvement in the interests of the film makers as a whole.
We must decide in simple terms exactly what we are endeavouring to do. If we intend to leave the industry in the hands of those who have presided over its decline, be they exhibitors, distributors, producers, members of the National Film Finance Corporation or members of the consortium, we are doing a disservice to the young film maker, to the actor, to the up-and-coming man in the industry who must be our future.
I do not intend to stand aside and see that happen. I am happy that my hon. Friend has made it clear that he gives his support to a much wider range of legislation. I hope that he will also make plain to his colleagues in the Government that the time has come for urgent action. We are not talking about 20 projects a year; we are talking about the survival of a means of cultural expression which is virtually disappearing from this country. If my hon. Friend wants an undiluted diet of American pap turned out through our cinemas and television screens, occasionally lightened with the odd sex film from Copenhagen and Germany, I must tell him that he is very much alone. That is not the future that I shall accept for the film industry. We want some urgent action now.
§ 12.34 a.m.
§ Mr. Fred Silvester (Manchester, Withington)
Unlike the hon. Member for 425 Crewe (Mrs. Dunwoody), I do not have any direct interest in the film industry. However, I have been watching it for some years as an interested outsider.
The debates that have taken place in the House have the curious effect of suggesting that we have been in this situation before. Articles in the Press are always telling us the same story.
§ Mr. Silvester
Indeed. It is a cyclical situation in which we stagger from crisis to crisis. Whenever there is a crisis, the House brings forward a piece of legislation which it hopes may in some way tinker with the problem. Tonight we are tinkering again. It seems that there is an element of wishful thinking in the way in which the politician deals with the cinema industry.
We are giving new powers to the National Film Finance Corporation. It has been going for 25 years. At no stage has it been able to contribute more than 10 per cent. of the film production of this country, frequently—and certainly at present—much less. We are talking about a decline now, as we have at some stages in the past, of an order which makes anything the NFFC can do appear to be peanuts.
We are in a situation in which all the agencies available to us through Acts of Parliament are small beer compared with the major movements going on inside the film industry. We are talking about the Americans, and I was sorry to hear the hon. Member for Crewe speak of "American pap." As far as I can understand it, the British film industry is at its most prosperous when there is a conbination of American money and English skill. The times of greatest health in the industry were when we had the right skills and talent to capture the American market. We do it from time to time, but we do not do it all the time or anything like enough at present.
The £200,000 which we are currently discussing is for 20 projects. We hope that young and enterprising producers will come along with their ideas for films which they can work up in the early stages. That is fine. I remember conversations in the industry going back, 426 certainly to the late 1960s, in which people were then saying how difficult it was for young men to get started and how they would find it impossible to raise finance. That was not true. Over the years, if a person has had the right skill and the right outlook, he has been able to find the finance. So I raise this subject of wishful thinking. It is doubtful whether this £200,000 will necessarily have any effect.
The Minister speaks of an advisory committee. He has not said who is to be on it. I am sure that he will tell us when he replies. That £200,000, and the effect it has, will depend entirely upon the skill of these six people who will be on the committee. They will have to get it going. They will have to find not only people who show skill in the art of film making—after all, some of those are now supported by the British Film Institute—but those who have a nose for commercial success. That is what we are talking about. It is commercial success which keeps people employed. The state of the cinema as an art form is something to which we shall have to give a lot of attention. Without basic commercial success, we have not a hope. That is a big burden to place upon the advisory committee.
I agree with much of what the hon. Member for Crewe has said. The NFFC has been losing money—if it is averaged out over a period—at the rate of £400,000 a year. It has been less in recent years because it has been doing less. That means that there has been a subsidy of about £400,000 a year. It is doubtful whether the NFFC has the vigour it once had. There has been a certain hardening of the arteries. Although it will be found that it made a profit on "Stardust", as I understand it, in that case it was a film which had already got adequate finance and the NFFC almost begged its way in so that its funds would have a profit. I do not believe that it is the function of a Government-sponsored agency to take over the rôle—
§ Mrs. Dunwoody
I completely agree with the hon. Gentleman. He will remember that it was his Government that put the NFFC in this position in the first place because it was they who said that the NFFC would have to work 427 through the basis of the consortium to be able to continue.
§ Mr. Silvester
I do not accept that. I do not want to get into a long argument about that. The basis of the consortium was an attempt to bring into the NFFC a source of private money in the hope that it would stimulate greater financial involvement from other private sources. It is rather sad that it does not seem to have done so, but it does not necessarily follow that the NFFC's method of working has been handicapped by that decision. The NFFC has always sought, not always successfully, to back films which would make a profit. That was true long before the consortium was established.
I welcome most strongly the setting up of the working party. I do not think it is generally recognised that the amount of money going into films is quite considerable. Broken down, the 1973 figures show that the NFFC's loss was running at the rate of £400,000 a year. The grant to the National Film Institute was £900,000; the Film Production Board accounted for £99,000; the National Film Archives, £70,000; the Children's Film Foundation, £310,000; and the National Film School, £367,000. That is a total of £2¼ million going in one form or another to some part of the film industry, and it has arisen in a higgledy-piggledy fashion.
I remember the discussion on the National Film School, and the question was then very seriously raised by the Film Production Association in relation to the Eady levy. What we are doing, albeit with the full support of the corporation, is making an ad hoc decision. This leaves it with quite a lot of money. There will still be over £4 million in the kitty, but again it is an ad hoc decision.
There was some very interesting correspondence published in The Times a year ago when virtually everybody in the industry was involved in discussing the suggestions for the Eady levy. Even then the Film Production Association, although prepared in certain circumstances to give a nodding agreement in regard to the Eady levy, raised some very severe questions about whether it was wise to do so. It emerged from that correspondence and from the con- 428 versations in the industry that nobody was quite sure whether the levy was effective or whether it helped British film production as, say, the Boultings would claim.
There are these crunch questions arising and I hope that the working party will look at them and try to get some evidence on them. What is to be done with the £4 million lying around is rather fundamental to the whole of British production finance.
The money made available for films is always compared with that for television. I understand that at the moment there is a buyer's market for films to be shown on television, and the rates paid for films have declined. It is a simple example of the operation of the market. A lot of old films have been released for showing on television.
I find it rather sad—the hon. Lady echoed it—that the television and cinema industries are always seen as being in conflict with one another. I do not think that makes any sense. The hon. Lady may have seen our film crews at work in Malta. If people are trained for films and find jobs in television, they are nevertheless using their skills in a way for which they were trained. They are being provided with jobs and opportunities. There are jobs for actors, producers and technicians. It is time we started looking at the two industries together and tried to find ways in which they could cooperate with one another to their mutual benefit.
The figures that my hon. Friend the Member for Uxbridge (Mr. Shersby) quoted from Belgium were straggled. It is quite clear that there is some imbalance there, but I do not believe that it will be cured by animosity between the two media. I believe that this problem should be one of the working party's major considerations. Of all the small things that we can do with the money available, I believe that the priming of the pump in this way is one of the most valuable. I wish the scheme success.
§ 12.46 a.m.
§ Mr. Tony Durant (Reading, North)
I welcome the Bill and especially the contribution by the hon. Member for Crewe (Mrs. Dunwoody), with a great deal of which I entirely agree. The British film industry has gone awry in many ways 429 since the war and much of what the hon. Lady said emphasised that. However, I challenge the hon. Lady's view that the origin of the industry was entertainment, because I believe that historically it was for scientific research and documentaries. In any event, I shall not labour that theme.
I turn to the comments of my hon. Friend the Member for Manchester, Withington (Mr. Silvester) about the conflict between television and cinema. We should try to find a way of getting these two sectors together. The fault lies principally in the court of television, because when it began, it was looked upon as a new creative art. In fact, it was only a new way of projecting.
From my limited experience of the industry I believe that the only fundamental production difference between the two industries is that one has to arrest people's attention at the beginning of a programme instead of after the first five minutes when they have sat down. However, there was a phase when it was thought that the two industries were different. The reality is that television is dependent to a great degree on the film industry even to the extent of keeping a station going. The amount of live material broadcast on television decreases week by week. Pre-recording and the use of film techniques are increasing.
I take the point that the two industries should get together. However, television should stand its corner. It has got away with it for far too long. It has used the talent, expertise and background of the film industry and made a lot of money.
I am especially interested in the Children's Film Foundation, the British Film Industry Production Board and the National Film School. I want to be assured that this proposal will not in any way penalise them as there is now a quarterly arrangement instead of a four-monthly arrangement.
The Children's Film Foundation has been established for a long time. It has provided a great service in the Saturday viewing for school children and made some extremely valuable children's films. The British Film Industry Production Board has provided new and exciting talent. We have tremendous talent in this country. We had a long drawn out battle to establish the National Film 430 School. There was much argument and difference of opinion. I should hate to see any damage.
Hon. Members and the country as a whole must recognise that Britain has tremendous talent, which is one of our greatest assets. Indeed, it is one of our servicing skills, and goes alongside mundane things like banking, insurance, public relations and so on. We have talent for putting things over, for directing and for production. For too long we have neglected an industry which is important to Britain and which has provided a great part of our culture and our heritage.
I hope that we shall not be content with this Bill, but that we shall push the Government hard, so that when we receive the report from the committee we shall get some extra help and impetus for what I believe to be an important industry.
§ 12.50 p.m.
§ Mr. Jonathan Aitken (Thanet, East)
This is one of those rare but happy occasions in the House when such is the degree of harmony that we are all agreed on congratulating the Under-Secretary on bringing forward the Bill and we are agreed on its general purposes. In common with other hon. Members, naturally I welcome the Bill. I agree very much with most of the points that have been made, particularly that by my hon. Friend the Member for Reading, North (Mr. Durant) that television must stand its corner and contribute far more handsomely than it does now to such things as the National Film School.
The Under-Secretary rightly pinpointed the real cause of the present crisis in the film industry, namely, the withdrawal of American finance. The hon. Gentleman was right to do so, because for the last 10 years or more, 90 per cent. of the finance for British films has been coming from American sources. It is a valid point, and I hope not too contentious, to point out to the Under-Secretary that if only there had been a little more co-ordination between some of the Government Departments and his right hon. and hon. Friends, at least part of the crisis relating to American-source money for British films might have been avoided.
Just over a year ago every Member of the House received a letter from Mr. 431 Alan Sapper, the General Secretary of ACCT. This source, which could hardly be described as a high Tory one, pointed out that the feature film industry in Britain would face extinction unless something was done about the 1974 Budget provisions, which caused United States citizens resident in Britain to pay up to 83 per cent. tax rates on three-quarters of their United Kingdom earnings. This affected an absolutely tiny number of people. It was a foreign jealousy tax. It was very regrettable that Mr. Sapper's wise words of advice were not heeded.
The 1974 Budget provisions had the effect of sending an infinitesimally small number of talented and creative American producers, directors and others working in the film industry back to their own country, where they were faced with much more modest rates of tax. America has a total tax rate of only 50 per cent. I suggest that the Under-Secretary makes this point when he has discussions with his right hon. and hon. Friends about the future of the film industry in Budgets to come.
The Under-Secretary spoke about a lack of good projects. This was a slight case of putting the horse firmly behind the cart. The lack of good projects is due to the fact that there is a complete lack of confidence in the industry, not to the fact that there is a lack of creative inventiveness latent in the film industry. The financial crisis is caused by the factors I have mentioned and by the fame drain of many top creative artists going to live overseas, and this is stopping many projects from coming forward.
We should seriously start to consider whether Britain should not follow the Irish example of creating a special tax category for creative artists, directors and writers. The Labour Party hates anything which might tend to create a new élite. Those who care deeply about this subject regard the Irish example as worthy of examination, because the Irish have benefited considerably from the arrangement.
We are talking fundamentally about a search for new financing methods. The Government would do well to consider Middle East money as a new source of finance. I know the Under-Secretary and his colleagues are to have talks with Saudi 432 Ministers in the next few days. I hope they will try to get Arab money for the British film industry.
This is not a high-flown idea. There is one feature production—"Cinderella"—being made with the help of Arab money now. I declare an interest as director of a company that is trying, so far not too successfully, to raise Arab money for the British film industry. We have distinguished Arabs on the board and we believe that what we are trying to do will be a growing trend, but these trends have to be started mainly by inter-government discussions and agreements.
It is disappointing that we are having this debate in such an empty House and with not enough of a clarion call to Parliament to take an interest in this vital industry. If it goes down, we shall say goodbye to an industry of high exports and creative talent. I would regret that and I welcome the possible sign of hope that the working party, if it really gets working, may be able to instil confidence into this industry.
§ 12.56 a.m.
§ Mr. Terence Higgins (Worthing)
The lateness in the Session for the introduction of this Bill is matched only by the early hour at which we are debating it. It reflects the shambles into which the Government's programme has fallen. This is a most important industry and it is unfortunate that we should be debating the Bill at such an early hour.
My hon. Friends have already dealt with a number of issues raised by the Bill and we listened with great interest to the comments of the hon. Lady the Member for Crewe (Mrs. Dunwoody). We have had a very knowledgeable debate and at this late hour I shall concentrate on some more technical aspects of the Bill. The general points have been made very well by my hon. Friends.
This is not a major measure and does not involve large sums of money, but we wish it well and hope it will do something to help the preparatory side of film production. There is no doubt that the 1974 Finance Act, which we debated in great detail, has had an adverse effect, with the taxation changes deterring a number of people from continuing to work in this country. It also had an adverse effect on British people working abroad, 433 and in an industry like films, where people are very mobile, this has been most regrettable.
The Bill does not involve extra money from taxation. The money will come from the Eady levy and I suppose Sir Wilfred Eady is the only Permanent Secretary at the Treasury to have had anything named after him. Such allegedly faceless men do not often get such interesting memorials.
We are dealing essentially with widening the scope of distribution of money in order to cover pre-production finance. That being so there are one or two points I should like to raise.
The point that the Minister raised about Northern Ireland also crossed my mind when I read the Bill. It would seem a curious situation for the levy to be raised only on this side of the Irish Channel, but for it to be distributed on both sides. Perhaps he will clarify that. It seems to be an unusual arrangement.
I am concerned about certain other aspects. Clause 2 refers to the arrangements approved by the Secretary of State, but to what extent is the House, which has a degree of expertise in these matters, to be made aware of the arrangements which are to be approved by the Secretary of State? Are they to be laid before the House in the form of a statutory instrument, or in some other way? No doubt they will be detailed. We appreciate the need for flexibility, but it is important that information should be provided for the House in some form, and the negative resolution procedure might be appropriate in that respect.
Another point which causes me concern is that there are to be consultations with the Cinematograph Films Council about payments into the fund. But there is also to be an advisory committee which will be concerned with payments out of the fund. Presumably, it will advise the fund on those to whom the money is to be given. There is reference to consultation with the Cinematograph Films Council, for example, in Clause 1(2), but there appears to be no reference to the advisory committee. The Bill is tightly drafted and perhaps this point is comprehended by the reference to earlier legislation.
434 The advisory committee, I understand, is to be a new committee, and if that is so the point raised by the hon. Member for Crewe is important. The House should consider whether the membership of the committee might be influenced in the way in which it allocates money. It might even be difficult to find people to serve on the committee who are sufficiently expert but who do not have some interest in the way in which the money is spent.
If I am right and the committee is not mentioned in the Bill, we need to know who the members are to be and by whom they are to be appointed. Ought not the Secretary of State seek the approval of the House on the suitability of the appointments?
I am still not clear whether all the finance is to be provided in the form of grants or loans. I understood that the original intention was to make loans, but I understand also that there could be other payments. I am not clear on what criteria it is to be decided whether a matter should be dealt with by a loan or some other payment. I do not sea how the advisory committee or the fund will decide which form the payment should take. Am I right in thinking, however, that the loans are to be interest-free, and if so, why?
The Under-Secretary said that the loans would be repaid, but with a premium. That seems a curious expression. One would normally repay a loan with interest, but a premium seems to suggest that the main charge for the use of the loan is in some way to be related to the success of the project, if it is eventually carried through. If that is what the hon. Gentleman has in mind, I am not sure that it is desirable. I believe that if it is a loan, it should be at interest. The person carrying the venture forward further will then know exactly how much he has to pay. I do not see the point of having a premium on the loans as the Minister outlined.
I shall be grateful if the hon. Gentleman will clarify those points. I have concentrated on the details because we shall have to consider them at Committee stage later this week. The overall welcome given to the Bill is appropriate, and we do not wish in any way to oppose its passage.
§ 1.5. a.m.
§ Mr. Deakins
With permission, I should like to reply to the debate.
A number of detailed points have been raised, and I shall be happy to answer them all tonight if that will ensure that we have a shorter Committee stage on Thursday evening, or perhaps early on Friday morning. However, if the House feels that it would be better to concentrate on the broad principles, I shall be happy to do that, leaving other questions for answer in Committee.
§ Mr. Higgins
If we do not know the answers, we shall not know whether to table amendments. The Minister may well be able to anticipate amendments and avoid their being tabled.
§ Mr. Deakins
In that case I shall try to answer all the points raised in the debate.
The hon. Member for Uxbridge (Mr. Shersby) gave the Bill a welcome, for which we are most grateful. He was concerned, as was his hon. Friend the Member for Reading, North (Mr. Durant) and my hon. Friend the Member for Crewe (Mrs. Dunwoody) with the question of the television levy and the relationship between the cinema and television industries. The matter is being considered by the working party set up by my right hon. Friend the Prime Minister. I can make no comment about what the outcome will be.
We know that the Cinematograph Films Council recommended that there should be a levy on films shown on television, a recommendation which was not entirely welcome to people working in television. Nevertheless, I think that the House will agree that the two industries have been separate for a long time, and that anything which can help bring them together in their mutual interests will be good. There are individuals with great experience of television represented on the working party.
§ Mr. Robert Cooke
The Minister will appreciate that if there is a levy on films shown on television it will simply put up the programme companies' programme costs, and the Government will get less in television levy out of the programme companies. Therefore, the Government will have to pay out of taxation anyway.
§ Mr. Deakins
I am not advocating a television levy. That was recommended by the CFC, representing the film industry, not the television industry. The matter will have to be worked out by the working party.
The hon. Member for Uxbridge also asked about the advice from the advisory committee. That advice will be given not to the Secretary of State, but to the National Film Finance Corporation, and it will relate to the making of loans under the Bill. The advice will not affect the arrangements that the NFFC has with the consortium. There will be no relationship whatsoever.
In an interesting speech, based on her great experience of the industry, both from speaking as a Minister in charge of the industry and with experience of the commercial side of the industry, my hon. Friend made a number of points which I and the House heard with interest. She stressed the importance of the international market for British films. I believe that it is now genuinely recognised that while there may still be some specifically British films, such as the "Carry On" series, which I understand is making an impact overseas as well as in this country, our film makers are increasingly directing their attention to the needs not only of the home market, but of the international market. As my hon. Friend rightly said, it is essential to venture into that market, for otherwise one cannot cover one's costs and make a profit.
My hon. Friend asked whether the members of the advisory committee would be put in a position to benefit from the Bill. I can give her a complete and categorical assurance that they will not be able to vote on or take part in the consideration of any application for a loan in which the person concerned or any company with which he is associated has any interest. In any event, the final decison will rest with the NFFC.
§ Mrs. Dunwoody
I am not sure that I understand the way in which my hon. Friend is using the term "NFFC ". Will the advisory committee advise the officers of the NFFC or the board of the NFFC? If the work of the consortium and the NFFC and the pre-production and script writing scheme are to be totally separate, 437 the industry would like to know who make up the NFFC in that sense.
§ Mr. Deakins
It will be the members of the NFFC. The advisory committee will have some day-to-day contact with the managing director. Much of the work will be fairly detailed and mundane, but I am sure that the board of the NFFC would wish to be consulted on any issue of policy, for example. In any event, the fund will be kept separate from the consortium operations because we are to set up a separate account for the NFFC funds.
§ Mr. Higgins
The hon. Lady has raised an interesting point which had crossed my mind. Are we to understand that the ultimate decision will rest with the board of the NFFC? My impression was that it would simply administer the money. If it is to take decisions as against simply agreeing with the advisory committee's decision, that is an interesting point which we should consider further.
§ Mr. Deakins
The people on the NFFC are very experienced but are not, by virtue of the terms of reference under which they are appointed, experienced in the making of films. The advisory committee must be an advisory committee to the board as a whole, but one would expect and assume that the board would depute the management of its day-to-day role to its officials and the managing director in particular.
In the last resort, the NFFC will be able to reject the advice of the advisory committee. It will be only an advisory committee. If the NFFC does not wish to make a loan to a young person who has been recommended by the advisory committee, the NFFC will have the statutory right to make that decision. If the NFFC wanted to do something against the advice of the advisory committee, it would be able to do it.
My hon. Friend also mentioned the question of distribution. I assure her that the terms of reference of the Prime Minister's working party are very widely drawn. Organisational matters are not excluded from consideration by it, and there are representatives of virtually every section of the cinematograph and film-making industries on it.
The hon. Member for Manchester, Withington (Mr. Silvester), in a very in- 438 teresting speech, said that we were tinkering with the problems of the film industry. I have not claimed, and I do not think that the CFC would claim, that the Bill is the answer to the industry's problems, or even part of the answer. It is merely an attempt to ensure that more projects come forward and that priming-the-pump operations are not hindered by lack of adequate finance.
The hon. Member for Withington also asked who were to be the members of the advisory committee. The advisory committee will be composed of persons representing producers, writers and persons employed in the film industry. The Secretary of State will consult the appropriate associations and organisations before he makes appointments to the committee.
§ Mr. Deakins
Yes, it is pretty wide, because on an advisory committee of this nature we want to take advantage of the wide-ranging expertise that exists in many sectors of the British film industry.
I was also asked about the evidence we have of the use of the Eady money and whether it is being put to the best possible use. This is a matter which is not debarred from the working party's considerations, as it was not debarred from the considerations set out in the report of the Cinematograph Film Council, to which reference has been made.
The hon. Member for Reading, North made an important point about whether there would be a penalty imposed in the form of, perhaps, reduced payments out of the Eady money to the Children's Film Foundation, the National Film School and the British Film Institute Production Board. I can assure the hon. Gentleman that that is not the case. The new scheme will in no way prejudice the payments made from the levy to those three institutions and the Cinematograph Films Council will continue to be consulted about all these payments. That is an adequate safeguard for those organisations and for the industry.
The hon. Member for Thanet, East (Mr. Aitken) suggested that perhaps I had the cart before the horse in that the lack of projects was due rather to lack of confidence than the other way round. 439 Whatever the reason may be—and I do not want to hark back on recent history—I hope that he will agree that the Bill should help in some way to put the position right.
He also made an interesting suggestion about trying to get hold of Middle Eastern money. This country is already in receipt of quite a lot of Middle Eastern money. It may be that the people in charge of the finances of those countries might be interested in film production. It is certainly an interesting suggestion. I assure the hon. Gentleman that I shall consider it further, not necessarily in connection with the current visit but in connection with future contacts with people from that area.
The hon. Member for Worthing (Mr Higgins) raised a number of points about the levy. First, he said that it seemed to be payable to makers of British films, which includes those in Northern Ireland. The levy is not payable by cinemas in Northern Ireland and that is why it is excluded from the Films Acts. It is confined to cinemas in Great Britain. The Eady money is not levied on the prices of cinema admissions in Northern Ireland However, the levy is distributed to makers of British films, but not on any geographical basis. If this is an anomaly—and I do not accept that it is—it has always existed in respect of payments to the British Film Fund, and so on.
The hon. Gentleman asked about the arrangements. I can assure him that the arrangements will be published. They have not yet been agreed and they have to be worked out by consultation with the industry. Indeed, they will have to become public knowledge because we want to attract film makers, script writers and so on. If we are to attract them, they must know what the conditions are for application to the National Film Finance Corporation for a share of this money.
The hon. Gentleman also mentioned the advisory committee. I reiterate that the advisory committee is not mentioned because it is advisory to the NFFC and not to the Secretary of State. The NFFC will be the statutory body with which the Department will have its relationship.
§ Mr. Durant
The Minister has not mentioned the distributors. Does that mean that they are not included?
§ Mr. Deakins
The provision refers to those working in the film industry and I should not like to say whether that includes distributors. Since this is a project designed basically to help film making, the answer probably is in the negative. But if, in the light of experience, it were shown that there was an urgent need to have distributors on the advisory body because of projects that might lead the production of films unfit for distribution to the British cinema-going public, there might be a case for having a distributor. But one hopes that good sense from people either working in or with experience of the industry will suffice to ensure that projects chosen are suitable not only as British-quota films, but as films fit to be seen in producers' and exhibitors' cinemas.
The hon. Member for Worthing asked about loans and other financial assistance. At present it is not intended to give assistance other than loans, but the Bill would permit grants to be given if that is considered advisable later. We shall start oft with loans, and, indeed, I hope that we shall continue with loans, but much will depend on the success or otherwise of the scheme and whether it succeeds in attracting people with the ability to produce films that the British public want to see.
The hon. Gentleman's final point related to whether the premium was a replacement for interest. There is no interest payment as such. The premium is partly in lieu of interest and partly because if the film is put into production it is only fair that the fund should get back some recompense for the money it has advanced—not merely the capital sum, but some small share of the profit.
The amount of premium is still being considered by the industry. I mentioned a figure of 50 per cent. and that may not turn out to be the right amount, but some of the projects that would benefit under the scheme may never come to fruition. We must recognise that as well as successes there will be failures.
§ Mr. Deakins
My hon. Friend may be right in saying that the majority of them may be failures—failures in the sense that they will never reach the stage of exhibition in a cinema. But if the scheme results in British-quota films coming forward—films made by the British film maker— 441 it will be an investment of the industry's own money that is well worth while.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Committee of the whole House.—[Mr. Harper.]
§ Committee tomorrow.