Films (Distribution of Levy)

HC Deb 21 July 1982 vol 28 cc489-505 10.14 pm

The Minister for Consumer Affairs (Dr. Gerard Vaughan)

I beg to move, That the draft Films (Distribution of Levy) Regulations 1982, which were laid before this House on 8th June, be approved. I should like, first, to consider the reasons for the regulations, then to give the background to them and, finally, to comment on some of the points in them. They consolidate as well as amend. That will mean that people in the film industry who use them will find reference to a single document a good deal easier than to several as they do at present. The regulations are necessary to ensure that rules applied in distributing film levy conform with the provisions of the Treaty of Rome on freedom to provide services and freedom of movement of labour throughout the Community.

We are strongly committed to the preservation of the United Kingdom film industry. The measures are designed to ensure that every film receiving funds from the levy will contribute fully to our production and processing infrastructure. The levy was set up on a voluntary basis in 1950, following negotiations that were sponsored by Sir Wilfred Eady, to provide a levy on cinema admissions for the benefit of makers of British films in proportion to their success at the United Kingdom box offices. The scheme, usually called the Eady levy, was made statutory in 1957.

The proceeds from the levy are paid to the British Film Fund Agency. The National Film Finance Corporation automatically receives £.1.5 million from the fund, or 20 per cent. of the total, whichever is the greater. Other payments can be made to, for example, the Children's Film Foundation, the British Film Institute Production Board, and the National Film School. The balance is then distributed to makers of films which are eligible in accordance with the distribution of levy regulations, which the draft now before the House consolidates and amends.

Registration as a British film requires that 75 per cent. of the labour costs, with some exceptions, should be paid to British subjects or citizens of the Commonwealth or Republic of Ireland. That was widened by the Films Act 1980 to allow the inclusion of citizens of any member State of the European Community. The modification will be brought into force by a commencement order to take effect on the same day as these levy regulations.

An EEC maker of a British film can already, by virtue of the European Communities Act 1972, share in the levy distribution if he meets the residence qualification contained in the definition of eligible film, although in practice none has yet qualified. The regulations will extend this residence qualification in the definition of eligible film to include—this is important—residence in, or, in the case of a company, registration and control, in any member State of the Community.

I am glad to say that the regulations will also introduce some new safeguards. In framing these in the most effective way we have had considerable help from the industry. The Government believe that the measures will work. That belief is, I think, shared by producers and unions in the film industry. There will, for example, be a deduction of the amount of levy payable if more than 20 per cent. of an eligible film is shot outside the United Kingdom, although the abatement will not apply if the shooting is based here. It is also graduated so that a film that is shot wholly abroad and not based in the United Kingdom will not be entitled to any levy. That is an important safeguard.

The other major amendment in these draft regulations is the removal of the ban on levy entitlement for films which at the time of registration for cinema exhibition were the subject of an agreement for showing on television. That rather complicated arrangement follows the recommendation of the Cinematograph Films Council, and of the interim action committee on the film industry. It is not the intention to divert funds from in-house television work to films, but to make it easier for television companies to invest in United Kingdom films rather than buy foreign ones, at the same time as helping film producers raise finance by pre-sales to television.

Films will continue to be ineligible for levy if they are shown on television within 12 months of registration. The industry's current arrangements, which, with exceptions, prevent a television showing within three years remain in force and are in no way affected by these regulations. As hon. Members will know, the Government intend to provide for a transitional tax regime whereby films that would be eligible for the Eady levy can continue.

10.22 pm

Mr. K. J. Woolmer (Batley and Morley)

There are many important matters in the regulations. The background to them is confusion and ineptitude in Government policy towards the film industry at a crucial stage in its history. The Government have failed to produce a coherent and constructive policy for the film industry.

After a marked recovery between 1976 and 1978, cinema attendances have fallen drastically by about 15 per cent. in 1981 and up to 30 per cent. in the past 12 months. In the past two or three months there has been an almost catastrophic collapse in cinema attendances. The British film industry, which produced many marvellous, popular and successful film in recent years, has been having a difficult time.

Video and other important technological changes are thrusting themselves on the already blurred but complex interaction between films, the cinema and television. The interim action committee on the film industry continues to produce its valuable and often constructive reports, yet the Government appear to be spellbound and incapable of thinking through and promoting a policy in response to the changing situation.

Playing around with the present levy and quota system is no substitute for the reappraisal of policy that is required. The other proposed regulation to suspend the films quota system is both badly timed and inept as a contribution to the search for a positive way forward for the industry. We shall insist on a debate on that in the autumn.

The raising of the film levy and its distribution is concerned with the wider issue of how to raise the money to help finance a lively and successful film industry. Before the levy is distributed, it must be raised. Is enough money being raised in the right way? Is it being distributed in the right way? Anyone looking at the film industry must surely feel that a major review of those issues is urgently needed. I shall briefly refer to those matters in a moment.

I refer to the regulations as narrowly presented to us tonight. As the Minister rightly said, there are three main issues. First, we have the part of the regulations that widens the basis on which EEC film makers may share in the distribution of the film levy. What is the Minister's assessment of how this part of the regulations will affect our own film makers? Is this another case of Britain playing by the rules of the game while others ignore those rules? How do other EEC countries, especially Italy, France and Germany, treat our film makers with their industry assistance schemes? What film industry aid schemes do they have? Can British film makers benefit from them?

The second matter refers to regulation 10 which appears to offer an alternative way of ensuring that the levy fund is paid out mainly to finance film making in the United Kingdom. The objective behind this, as the Minister presented it, seems reasonable to me, although one could argue about the arithmetic of the formula. I should prefer to see film industry finance aimed directly at British film makers. Does this regulation conform to EEC obligations? Is there any prospect that that regulation will, in turn, subsequently be weakened?

The third matter concerns the removal of the disentitlement to a share of the film levy fund in the case of films where there was, on registration, an arrangement for showing them on television. Here we are in the middle of a complex system of relationships and, as the Minister said, in the middle of a potential conflict of interests. On the one hand, we all recognise that television is a heavy user of films and a source of film viewing appreciated by millions of families. Television ought to put much more money back into film production. The question is whether this is the best way to do it, because the regulations drop the effective ban on prior agreement to showing films on television in the reasonable expectation that television and other companies will be more willing to finance new film production, backed by prior agreements on the sale of TV rights.

On the other hand, if cinema films are shown quickly on television two problems arise that must be recognised. It may help to produce better television films, but it may damage the cinema. Why pay to go to the cinema when the film can be seen on "the box" in one or two years' time? I shall refer to that point in a moment. Secondly, this development could lead—the Minister recognised the possibility—to the bypassing of established ways of producing TV films and programmes. This is bound to concern the trade unions involved. Did the Minister consult the trade unions on this aspect of the regulations? If he did, what were the observations of the trade unions?

The Minister argued that the three-year trade bar on the showing of new cinema films on television will still reduce the problem. However, it seems highly likely that the removal of disentitlement and, hence, disincentive, will bring substantial pressure on that trade bar. It will be such that the one-year bar will become the effective restraint. Does the Minister agree with that, or does he stick by his view that the three-year bar will remain effectively in force? That seems contrary to the expectation of raising the disentitlement.

I said earlier that money can be distributed only if it is first raised. How best to distribute the money surely depends in part on how it is raised and on how much is raised. The interim action committee on the film industry, in its fifth report in March this year, considered that problem and its relationship to the changing media and technology. It said in paragraph 41 of its report on page 10: The distribution and exhibition sectors of the British film industry have, for some years now, been undergoing continuous changes and considerable contraction … Where does the future health of the British film industry lie? That is a matter on which the Minister should give his views and those of the Government. The report continues: Over the next decade, the exhibition of films on television, the transmission of programmes by cable television and satellite and the use of video discs and video tapes will have a considerable impact on the distribution and exhibition, as well as on the production, of feature films". The report went on to say All the new exhibition systems should be developed only on the understanding that the exhibition or sale of feature films by these means should carry with it a contribution to either the Eady fund or a similar scheme, the proceeds of which would be returned to the industry in such a way as to encourage film production in this country … The application of the Eady levy or a similar scheme … would in part redress the existing anomalous situation in which cinema theatres are required, through the levy, to help financially in the production of films, while films exhibited on television make no such financial contribution". It is a serious problem and I am distressed to see the Minister come to the House yet again and not face up to the urgent issue before the film and media industry. These are important issues, fundamental to the financing, viability and vitality of our film industry. The Minister should be using opportunities such as this debate to give his views on it and to instil a sense of urgency and direction into his actions.

There are also many important matters concerning the distributing of the finance raised to assist, support and develop our British film industry. In the short term, faced by declining cinema attendances—but not, we note, by declining television or video audiences—the film levy is falling sharply in real terms. The committed sums to bodies such as the National Film Finance Corporation, the National Film School and the other bodies the Minister mentioned mean that the finances they have are grossly inadequate in themselves but also that the balance for distribution among film makers is becoming so marginal as to be ineffective.

What assurance can the Minister give on the diminishing funds available from the levy so that the key film industry organisations and British film makers are assured of a significant and meaningful financial input? Will he review the whole position in the light of the very deep recession and the changing structure of film viewing technology and media, to which he made no reference whatever this evening? Is he really content to continue with greatly divided and numerous film agencies and Government departmental responsibilities? How can 'we develop coherent policies for our film industry when the Departments of Trade, Education and Science, and Industry, as well as the Home Office, all exercise separate conflicting and jealously guarded responsibilities?

Will the Minister look again at the proposal for a British Film Authority? It was first made by the interim action committee and endorsed by the Labour Party. While recognising the need for care in getting the right framework to encourage flexibility and to prevent over-centralisation and the stifling of innovation, the Opposition believe that such a step is an essential part of promoting and strengthening the British film industry.

The film industry has to adapt to and evolve with the times. Changes are occurring rapidly and will continue. The industry will need to build on the changes in media and technology so evident to us all in this House. Assistance should go, not only to film makers, but to exhibitors, including cinemas. Films and cinemas are, in part, a social phenomenon, to be absorbed and enjoyed in a social atmosphere. Far too much of our changing technology is reducing our social experience and enjoyment. We need a film industry, not just for the sake of the jobs, the craft and the artistic expression, but as part of the contribution to a wider social enjoyment and appreciation.

In part, these regulations are acceptable. In part, they raise serious concern. Above all, they represent another lost opportunity to put forward positive and progressive policies to build up our film industry for the benefit of us all.

10.35 pm

Mr. Tony Durant (Reading, North)

I start by declaring an interest. I am a consultant to the British Film Producers Association, which is certainly not against these regulations.

I want to follow up one or two of the comments of the hon. Member for Batley and Morley (Mr. Woolmer). Indeed, I want to endorse some of the things that he said. First, cinema attendance has been dropping steadily over the years. The result, as the hon. Gentleman rightly said, is that the amount of money that is left in the Eady levy, after paying the statutory requirements, is diminishing. The levy is gradually becoming a non-existent activity. The sums of money are getting smaller and smaller. The Government will have to decide whether it is worth while going on with it in the long run, unless we involve television, and in my opinion television should take its responsibilities seriously in film production.

The demands of television are enormous. The consumption in material is fast, ever-demanding and ever-increasing. Here is a wonderful opportunity for a creative industry in this country, which makes good films and has a good reputation, to make films for marketing abroad, not only in the United States but in other countries. I urge the Government to look again at the role of television in this connection.

The video cassette, the disc, the cable and the satellite are all methods of projection. There are certain technical differences in the production of a film for television as against the cinema, but basically they are all methods of projection to the audience in one form or other. We are talking about a creative medium. We have to make a product which then has to be sold to the system so that people have an opportunity to see it.

It is time that the Government discussed with the television industry ways of helping film production. That is what we are talking about—not the composite world of the film industry, but film production. We have only one small studio left in this country, and that is Pinewood. It is the only fully operational studio. There are others where one can hire a lot, but Pinewood is the only studio where there is everything—plumbers, electricians, carpenters, and so on. At the moment, Pinewood is being backed by American money and is making a big American production. It lives from day to day and sees no definite prospect for the future.

Mr. Tim Brinton (Gravesend)

Will my hon. Friend confirm that when companies, such as the American company, hire Pinewood, and the producer qualifies in residential terms, he qualifies for Eady money? Is that correct?

Mr. Durant

I believe that that is so. The Government have tightened the provisions relating to capital allowances in the Finance Bill, but I think that the producer will still qualify for the Eady levy. I am not sure whether that is a good or a bad thing. I take a neutral stance. At least it provides work for a studio which employs many people. The Government and the House should consider ways of helping the industry.

There is tremendous talent in the British film industry. The American film industry has spent a lot of money in Britain—although it has now returned home because of the recession there—and respects the talent of our movie business. The Government should recognise that.

I do not agree with the suggestion of the hon. Member for Batley and Morley about a British Film Authority. It would be another bureaucratic machine. I accept his point that there are already too many different establishments involved in a small industry, but the proposal in the Wilson report for a film authority is not the right way to proceed. There may be an argument for the amalgamation of many of the existing establishments.

I support the general measure. My only reservation is that if the industry continues as it is film making will become non-existent and the Eady levy will decline so much that it will no longer be important. The Government must come to grips with television production and bring it more into the area of new outlets. If we do not do that we shall have mainly American-type entertainment, which the public do not want. They want British material. I commend the proposal, but we are not doing enough about television.

10.41 pm

Mr. Bryan Magee (Leyton)

My right hon. and hon. Friends and I welcome these changes in the regulations, which are improvements to the operation of the Eady levy. As the Minister said, the changes are welcomed both by film-makers and by the industry's trade unions. The Association of Independent Producers has been clamouring for such changes for a long time. However, as has been said by everyone except the Minister, the changes do not go far enough, and his failure to put forward broader vistas or proposals for the industry represents a failure by the Government to play their part in the present and future prosperity of one of our potentially most important industries.

The Eady levy system is in serious danger of breaking down. The reasons for that can be stated concisely. The fundamental idea of the levy was to channel some of the money paid by the mass audience watching films into film production. Since it was set up when the bulk of film viewing was in cinemas, it took the form of levying a proportion of the price of each ticket and sending that money to the film producers, as well as to other organisations that creamed a little off the top.

Since that system was set up more than 25 years ago, film watching in Britain and in other countries has changed fudamentally. The mass audience watches films not in cinemas but on television. We also have video cassettes, and cable television is about to start. So, because of technological and historic change, we now have a system for financing films that does not recognise the nature of the mass audience. The Eady levy, as it works today, is a levy on a tiny proportion of those who watch films and therefore attracts only a tiny portion of the money that it should obtain to channel to film producers.

The fundamental reform that is required is a restructuring of the system of who pays the Eady levy. We do not need the British film association proposed by the hon. Member for Batley and Morley (Mr. Woolmer). That is yet another centralised, State, bureaucratic, monolithic piece of old-fashioned nonsense.

Mr. Bob Cryer (Keighley)

Nonsense. The hon. Gentleman cannot even get the name right.

Mr. Magee

The hon. Member for Keighley (Mr. Cryer), who is sitting with his feet on the Bench, is talking his own characteristic nonsense. A single authority is not the answer to the problem we are facing. We need to tap the mass television audience, the video audience and, in future, the cable audience. At least two of these sources do not provide serious difficulty. It is within the Government's competence and power to introduce legislation that would require the television companies, both the commercial companies and the BBC to pay to the Eady fund a levy on all films shown on television.

Cable has not yet begun, so it is within the Government's power to make a contribution to the Eady fund a condition of any franchises that are given to cable. Video cassettes present more of a problem because the great bulk of them are illegally made and distributed. I noticed only this week in Screen Digest that the trade assessment of the proportion of video cassettes that are illegal is 78 per cent. If anything like that figure is correct, it means that this country is the international headquarters of a giant illegal industry.

I was pleased to see that, only the day before yesterday, the Minister for Trade showed in the House that he was aware of this scandal and specifically said that he sees the need for legislation to clear it up. If the Government are as good as their word, the way lies open to tapping the sources of money that would be available from all the media in which films are predominantly shown, and will continue to be so—television, video and cable. That money can then be put back into film producing.

That is the approach that the Government should be adopting. The differences in the sums involved are tremendous. I am advised that this year the Eady levy is likely to raise about £3.5 million. Over a year ago, the Boulting brothers, giving evidence to the Select Committee on Education, Science and Arts, said that if the contributions to the fund were widened in the way that I have suggested, they would produce a revenue of between £50 million and £80 million. That was an expert valuation, and in the values of more than a year ago.

So the difference between what is being raised by the present system and what could be raised by the perfectly feasible system that I have outlined is a difference of many millions of pounds. It would transform our film industry. What is more, we are now at a time when, after years of serious depression, our film industry is beginning to show signs of what could be a major renaissance.

It is not just that we have succeeded in producing some of the best films for many years, such as "Chariots of Fire", which are both unprecedently commercially successful and also very good films in their own right. It is also, and chiefly, because we are about to open a fourth TV channel which is to be run by people who recognise the opportunities that will be available to them in the promoting and financing of film making.

In some countries, such as Germany and Italy, television, which is the chief user of films, is also one of the chief financiers of films. We have a channel about to open where the need for this, and the opportunity presented by it, is recognised by the people who are to run the channel. The Government have the power to put the two ends together. They should take the opportunity to do so in this Session of Parliament.

10.49 pm

Mr. Tim Brinton (Gravesend)

May I first declare my interest? I am a paid-up member of the Association of Cinematograph, Television and Allied Technicians as a producer, although, unhappily, I have had no benefit from the Eady levy for a long time. I am also a member of the Select Committee on Education, Science and Arts, which is in the process of making a report on the arts, including film, as has been mentioned. I shall seek not to pre-empt any conclusions that it may make. I shall speak personally tonight.

I want to say a little more strongly than have other hon. Members tonight how absurd it is that we are looking at the problem in this way in order to make new regulations for the Eady levy. The hon. Member for Leyton (Mr. Magee) said that this year's estimate of proceeds from the Eady levy was £3.5 million. What has not been said is that the figure for 1978–79 was £7.7 million, for 1979–80 it was £6.1 million and for 1980–81 it was £6.7 million. Therefore, there is a steady downward drift.

If one considers that a major international feature film will cost double £3.5 million—perhaps more—one begins to see how pathetic are the proceeds of the Eady levy, as we know it today. People's habits have changed. I do not believe that any amount of incitement under present circumstances is likely to cause a huge growth in the number of people going to cinemas. After all, they can films at home. Without dwelling on it, I would go along entirely with those hon. Members who have suggested that television, in all its forms, must be persuaded urgently to contribute to the feature films that it often gets so cheaply from the feature film industry.

The feature film industry is different, with a different production technique, from television. The whole economy of television is contrary to the loving care and length of time that is spent on the feature film. Therefore, it is vital that the ordinary feature film audience that has now transferred its attentions to the living room should pay the Eady levy contribution that it used to pay when the levy was created in 1950. That is all that we are asking.

Last year, with a group from the Select Committee. I visited the United States of America. I had the pleasure of meeting a senior American film and television executive. The first thing that he said was that if I wanted to know what was wrong with the British film industry, one thing that could be done straight away was to stop people, such as American executives who make big finance pictures, from benefiting from the Eady levy.

The amount of help that is given to the American who comes over here and qualifies for the Eady levy is, in terms of the big international film, infinitesimal. It does not matter to him. However, if the regulations were tightened to prevent that money from going out of Britain—that assuredly is what it does; it does not go into producing more British pictures, which is what we want—then that would at least top up the fund a little.

There are other matters that I am sad have not been tackled in this interim attempt at solving the problem. It is well known in the industry that often the Eady levy does not get back to the man who makes the film. It may be free trade for a hard-pressed producer to do a deal with a distributor in such a way that the distributor ultimately gains that Eady money, in which the Government should not interfere. However, the Government have a duty to see that that levy should go directly into the production of new films. This can be done, as I believe happens on the Continent, by imposing a condition whereby the money has to be used within 12 months for a new production. This would be an incentive to producers to make new films.

I have implied, with regret, that we have not begun to tackle the problem. The Government should carry out a major overhaul of their responsibilities for films, television and all the appurtenances spread over at least three Departments. They should also examine ways to preserve the esentially private freedom of the feature film maker who is not, as some people believe, a rich, fat cat living off the contributions of cinemagoers. The feature film maker is eternally struggling to raise the monumental sums needed to keep a flourishing British feature film industry in existence.

10.56 pm

Mr. Bob Cryer (Keighley)

An eligible film is defined in the regulations as "a co-production film" and as a film which is registered as a British film and as a quota film". Under an order shortly to come before the House, quotas will be suspended. It would be interesting to know the effect of that order on the regulations now being discussed. Although the Eady levy was designed to benefit British film production, its effect almost certainly goes wider, because the definition of a film registered as British is not sufficiently tight to ensure that the levy goes back into British film production.

Some changes have been made to the Eady levy. A number of smaller screens have been exempted, largely as a result of the development of multi-screen cinemas. This has resulted in a decline in the product of the levy. I should like to know how the Minister sees the levy developing. It is important in maintaining an indigenous British film industry and as a means of reflecting the cultural aspirations and views of the community and the nation. The cinema and the production of films is still the most important popular art form today. There is need for a cinema that is not involved in a mid-Atlantic multinational concept but reflects the important values and attitudes of the nation.

The film "Gregory's Girl" was produced relatively cheaply and financed by the National Film Finance Corporation. If the Eady levy money diminishes markedly—I shall be interested to hear the Minister's views—the possibility of future films like "Gregory's Girl" being made will be diminished. Sources of money for film production in this country are slim. The National Film Finance Corporation represents the only indigenous source of money specifically directed towards British film production.

The total revenue of the Eady levy would have been soaked up by "Chariots of Fire", another highly successful British film. The producer of "Chariots of Fire", David Putnam, and the director of "Gregory's Girl", Bill Forsyth, have combined after making two highly successful films. They won Oscars in the United States of America and awards in this country. The films have been highly successful in America, not because they imitated, but because they showed our country in a bold and imaginative way. The producers and directors of those two films had the greatest difficulty in raising money outside the United States of America for the production on which they are about to embark.

We need to recognise the importance of the Eady levy in maintaining a British film industry. Although it is important to have American investment, we do not want to be swamped by it, and we should recognise the precarious nature of such investment. Pinewood is the only full-time studio which employs permanent staff, which has a regular apprentice intake, and which is recognised throughout the world as maintaining high standards of craftsmanship. There are other studios on a four-wall basis. Pinewood is producing two films which occupy all 16 stages. If there were a change in the exchange rate, American investors might feel that they could invest more profitably elsewhere. The British film industry would again be in serious difficulty, not only at Pinewood, but at Shepperton and Elstree.

I echo the point that has been made by several hon. Members about the need to extend the levy to television. In the past, television companies and the BBC have waxed fat by obtaining highly popular films too cheaply. Recently, more realistic fees have been negotiated. I believe that they should make a contribution to the British film industry. The Minister should bear that in mind.

I agree with my hon. Friend the Member for Batley and Morley (Mr. Woolmer) that this measure is a piecemeal approach to the problem. The whole matter should be fully examined. The National Film School, which is financed by the Eady levy, provides technicians for the television industry, yet television provides only a fraction of the money that is required. The cinema finances the training of film technicians, but, because there are so few opportunities for them in the British film industry, television receives the most benefit. We need an overall policy for the British film industry, because it could be hit by another crisis within a few months.

Video pirating is important. The Minister will no doubt say that a Private Member's Bill has just been passed under which it is an offence to handle pirated video copies of films by way of trade. That still does not overcome the problem of proving that the person knew that the copies were pirated. The Government must examine that problem carefully and bring forward legislation quickly, because it is a sore that affects film production. The seed corn of the industry—the investment for new films—is being eroded by the people committing the criminal offence of pirating the films into which so much care, effort and risk-finance has gone.

A multiplicity of Government Departments deal with the film industry. The hon. Member for Leyton (Mr. Magee), who spoke on behalf of his new party, the SDP, suggested that it was nonsense, the drab hand of the State, and so on, to have a British Film Authority. He called it an association. He could not even get the title right, so it is difficult to see how he could make a judgement on the nature and character of the organisation.

Mr. Magee

I was attempting not to name the Labour Party's proposed authority, but to describe it. In an essentially creative activity, what is desirable above all is pluralism and diversity, and not State monopoly or burearcracy.

Mr. Cryer

I am surprised that the hon. Gentleman raises the question of monopoly. In any case, the idea of having a British Film Authority is to help film producers. It would not control them; it would concentrate the various Government agencies into one authority which would make things easier.

I am surprised that the hon. Gentleman is worried about control. He did not mention the oligopoly that controls film production, distribution and exhibition. The major circuits, which produce 70 per cent. of cinema, are owned by two companies, Rank and EMI, as are the major film studios and distribution arms. The very diversity that we all want is limited by the industry's structure.

We want the diversity and richness that comes from a number of people making films that represent human virtues, and no doubt vices, and interpreting the human spirit of our nation. They will not be made unless there is the financial ability to make them. If we are not careful, the Eady levy will be diminished and the potiential will disappear. People like Bill Gregory, who started in a modest way, will not have the opportunity to diversify. We shall be swamped in a sea of mid-Atlantic productions. That is the anxiety over the regulations. Although the regulations have merit, they contain matters about which we have reservations. I have raised one such issue with the Minister.

Other regulations are to come. There has also been a Private Member's Bill. It is a piecemeal approach, and we need to take a comprehensive look at the industry. For one thing, that would give the industry a good deal more confidence. In a high-risk industry, when several million pounds can be spent on producing a major feature film, there must be confidence that there is a sympathetic framework within which the producer can make the investment.

I hope that the Minister will respond helpfully.

11.8 pm

Mr. Tom Clarke (Coatbridge and Airdrie)

I have found this one of the most interesting debates that I have heard in recent weeks. Although I do not now have a specific interest to declare, had the debate taken place four weeks ago I would have had to declare that I was employed with the Scottish Council for Educational Technology, embracing the Scottish Film Council. The electorate of Coatbridge and Airdrie put an end to the association, but they did not end my interest in films.

Although we are dealing with the practical matters that the Minister has put before the House—the obligations arising from the EEC regulations and so on—my hon. Friend the Member for Batley and Morley (Mr. Woolmer) was right to extend the argument and to give notice that we want a longer debate in which the House can consider the future of the British film industry.

Even in these difficult times, a number of plusses ought to be associated with those involved in British film. I do not entirely agree with the hon. Member for Gravesend (Mr. Brinton) who talked about a lack of excitement, although he was right to regard the debate as an interim attempt to deal with the problem.

Last summer, at the beginning of the Edinburgh film festival, I was present when the 1920s monochrome version of "Napoleon" was presented. A live orchestra was present, and the atmosphere was absolutely outstanding. There is no way in which that kind of presentation could come over on television or on video. It would be a great loss to film art and culture if the opportunity for presentations of that kind were decreased.

Mr. Brinton

I entirely appreciate the excitement felt by the hon. Gentleman on that occasion. My point was that in ordinary cinemas throughout the country there is an insufficient audience and a lack of excitement. I agree that special events such as the Edinburgh festival are totally different.

Mr. Clarke

I accept that, especially as I agreed with many of the hon. Gentleman's other points. We all have a responsibility to respond to the excitement and endeavours of the British film industry. We need only think of the films "Gregory's Girl" and "Chariots of Fire". Not so long ago, there was a great struggle to have the film "Kes" marketed and shown. People associated with such films are entitled to have their productions shown so that they can appeal to wider audiences than exist today.

Mr. Durant

The hon. Gentleman mentioned the film "Kes". At that time the distributors and exhibitors felt that the people in the south would not understand the film. That shows that they are not aware of what the public really understands.

Mr. Clarke

I accept that. Anything that brings the regions together, even if it happens to be films such as "Kes", is to be welcomed.

The amateur film movement, with which I have been associated, is also relevant to the debate. I have been secretary of the Scottish Association of Amateur Cinematographers. Were the cinema to wither—I do not envisage that prospect—those involved in amateur film groups and committed to the future of the amateur film movement would have great difficulty finding someone who was willing to respond to their activities.

I was happy to be associated with the international amateur film festival in Scotland. Some years ago it was presented in the Cosmo cinema in Glasgow, but more recently at the Glasgow film theatre and in London. That festival invited entries from throughout the world. If the cinema ceased to be important, the amateur film movement would suffer gravely. Consequently, people such as Ken Russell, who began his career as a contributor to amateur film making, would never be heard of. That would be a great tragedy, not just to the British film industry but to the international film scene.

I believe, too, that much encouragement should be given to schools and colleges to develop amateur film education, although it should be clear that film making and film production do not end there. To achieve that aim, we should be seen as a nation to support amateur film making which leads in later years to professional film making.

A rather surprising example to me of the way in which other countries have been more successful than we have is the amateur film festival at San Feliu in Spain, which I have attended for many years. That festival is entirely sponsored by the Spanish tourist authorities. They see it not just as a contribution to film making and presentation but as a useful spin-off for the tourist industry, and are right to consider it in that way.

There are tremendous opportunities for development of film in this country. That potential will be developed not just through debates such as today's discussion of the levy, however inevitable and right such debates may be, but through a commitment seriously to examine the resources available and their distributuion. There are so many people like the Bill Forsyths of this world who believe that we can remove the frustrations and give film a future that it is clearly worth while to make that commitment.

I believe that a British Film Authority should be set up. At present, a large number of organisations, groups and individuals are trying in an unco-ordinated way to put their case across. We should co-ordinate the activities of those involved in the industry at every stage because that level of sophistication can do nothing but good for the future of the British film industry.

11.17 pm

Dr. Vaughan

With the leave of the House, I shall try to answer some of the points that have been raised. We have had a short but extremely interesting and important debate. I assure the House that the Government fully appreciate the gravity of the situation. I sensed from the debate that, although there are serious problems, hon. Members believe that if they are handled properly there are great opportunities for the future. That message has come from all parts of the House. Hon. Members were also generally agreed in welcoming the regulations, although we all recognise that there are limitations, and my hon. Friend the Member for Gravesend (Mr. Brinton) was right to refer to them as interim regulations.

It is important that I endeavour to answer as many of the points as I can. In doing so, I shall be brief. If I miss any specific points, I shall be happy to write to hon. Members about them.

We all appreciated the way in which the hon. Members for Batley and Morley (Mr. Woolmer) and Leyton (Mr. Magee) spoke, and I was especially glad to have the support of my parliamentary neighbour, my hon. Friend the Member for Reading, North (Mr. Durant), in the constructive series of comments that he made in his short speech. Hon. Members in all parts of the House spoke with understanding and feeling for the industry.

This debate provided us with the first opportunity to hear the hon. Member for Coatbridge and Airdrie (Mr. Clarke). I recognise his depth of feeling on the matter.

We all agree about the importance of film production. My hon. Friend the Member for Reading, North will note that I carefully said "film production", not "film industry". We all want viable film production. My hon. Friend the Member for Reading, North and others pointed out that it provides great social benefits.

As the hon. Member for Coatbridge and Airdrie said, there is much excitement in making films. He did not consider fully, perhaps, the quantity of amateur film makers who become professionals. There is quite a steady flow of them. When we discuss the professional sphere, therefore, we must ensure that the doors are kept open so that enlightened amateurs can move on and establish themselves.

The hon. Member for Keighley (Mr. Cryer) especially reminded us that the Eady levy is an important part of our film production. He also pointed out how important films are to our social structure and to the nation. We all agree that there should be an overall view of what is going on. I shall return to that matter.

Although I recognise that there are differences in aesthetic approach, the artificial distinction between cinema and television films must be eliminated. The distinction is artificial. They are complementary aspects of the same type of activity. If anything is calculated to hinder our chances of making the best use of cable and satellite transmissions, it is the insistence that there must be a real, rigid and continued distinction between cinema and television films.

I agree with my hon. Friend the Member for Gravesend and the hon. Member for Keighley that television should accept more responsibility for the financial aspect of film production. Hon. Members are right to say that both ends of that aspect must be examined—how money is raised, who contributes, and who receives.

There is a decline in the Eady levy. The total was £7 million in 1980, whereas in 1981 it was only just over £6 million. We had hoped for £6 million in 1982 but, in the light of the current monthly returns, the revised estimate is probably £4.53 million. Moreover, it is estimated that it will be even less next year. One must be cautious when comparing short periods of time, but it is worth comparing the following three-month periods: April 1981, £410,000; April 1982, £300,000; May 1981, £720,000; May 1982, £200,000; June 1981, £150,000; June 1982, £150,000. The totals of £1,280,000 and £650,000 reveal that there is a major and apparently steady decline in the amount that is raised. Because the money is based on attendances, it reflects a decline in the number of people who attend cinemas. The hon. Member for Batley and Morley may know that my hon. Friend the Under-Secretary of State for Trade intends to institute a major review of the Government's policy on the film industry. We recognise the urgency. I assure my hon. Friend the Member for Reading, North that it will cover the film production, the video, cable and satellite transmission. There are opportunities, as hon. Members have said. We are determined to take an overall view and to take advantage of the opportunities.

Mr. Jack Dormand (Easington)

Is the Minister saying that the Government have decided to undertake a major review of the film industry?

Dr. Vaughan

That is correct. It is the intention of my hon. Friend the Under-Secretary to institute a major review.

Mr. Dormand

When?

Dr. Vaughan

We regard it as urgent. I cannot go further than that.

Mr. Woolmer

I welcome that statement, which is at odds with statements that I have heard and read in recent weeks and months. When will that important review be established? What will be the time scale? When will a report be made to Parliament? One of the Minister's predecessors, the right hon. Member for Chingford (Mr. Tebbit), as long ago as 1980 said that he intended to have a long-term review. There should be a review during this Parliament. I should be grateful if the Minister could give us that assurance.

Dr. Vaughan

The hon. Gentleman will not be surprised that I cannot commit my right hon. and hon. Friends further than to say that that is their intention. Hon. Members will appreciate that there is also consultation about the cable and satellite television aspects. There are many aspects.

Some hon. Members talked about diversion of funds from television work to the film production side. Our intention at the moment is not to divert funds from in-house television work, but to make it easier for television companies to invest in United Kingdom films rather than buy foreign films and at the same time to help film producers to raise finance by pre-sales to television.

It is relevant to note that the BBC's seed money is largely unused for lack of projects coming forward. The Federation of Film Unions was consulted. It felt that there was a danger of diversion of funds from television but other parts of the industry supported the removal of the ban. We shall look further at those matters.

With regard to the suspension of quotas, I refer hon. Members to the text of the answer given by my hon. Friend the Under-Secretary of State for Trade to a question from my hon. Friend the Member for Fife, East (Mr. Henderson). There will be an opportunity for a debate when the order for suspension of screen quotas is brought before the House. As hon. Members know, it has already been laid.

Mr. Woolmer

With regard to the contribution of the television industry to film production, or, as I prefer to say, the wider aspects of the film industry, the Minister does not appear to have met the feeling of hon. Members. Something much more substantial is involved. The Government have not addressed themselves to the matter in the appropriate way. Will the Minister give an assurance that he has not closed his mind to other ways of channelling money directly from the contribution of the television industry into films? He has misread the feelings of hon. Members. That issue is exceptionally important. It is probably the nub of the matter. If the Minister cannot give that assurance, I shall be extremely unhappy at that unsatisfactory outcome to an excellent all-party debate.

Dr. Vaughan

The hon. Gentleman does the Government less than justice. We are mindful of the problems. We regard them as urgent. We recognise the need to have adequate financial resources. The hon. Gentleman need not chide us and take a gloomy view. There are difficulties, as the hon. Gentleman realises. My hon. Friend the Under-Secretary will be glad to come back to him on those points.

The hon. Gentleman asked what would happen about other member States of the Community. He will know that the Commission has initiated proceedings against four member States—France, Italy, West Germany and Denmark. France is believed to have agreed to amend its legislation but, in common with Germany, it has not yet taken action. Denmark's position is not known.

The hon. Member for Keighley talked about market domination. The Monopolies and Mergers Commission's report on the supply of films for exhibition in cinemas has unfortunately been delayed and is not expected until December. I am aware of what some see as the effect of market domination. I have read the fifth report of the interim action committee and studied its recommendations. I cannot usefully comment further until I have had a chance to study the Monopolies and Mergers Commission's report.

Mr. Cryer

The Minister said that there is to be an urgent review of the industry. It is clear that account will have to be taken of the Monopolies and Mergers Commission's examination of the major producers, exhibitors and distributors in the industry. Is the review not to be completed until after December?

Dr. Vaughan

I do not think that hon. Members would want to try to commit the Government to an unrealistic expectation. The review will be embarked upon with urgency, but there are complications. It is important that we take an overall view. The commission's report will be extremely relevant.

I agree that films that reflect British life and manners have considerable value. The Eady levy contributes substantially to such films through the NFFCO. The future of many film organisations is thrown into relief by the decline of the levy. I accept that the National Film School and television have training responsibilities.

Mr. Durant

It is recognised that the National Film School contributes considerably to the training of producers for television. My hon. Friend talks about allowing the television industry to become more involved in production, but if it does it will do so only for itself. If it makes more movies, it will use them primarily for itself. Very few television films will appear on the cinema circuits. In that respect, the result will be rather like that of the National Film School.

Dr. Vaughan

I take my hon. Friend's point and I shall keep it in mind.

Mention has been made of a British Film Authority. We have doubts about whether it is a viable proposition. That being so, I do not think that there can be any question of additional Government funds being made available to establish such an authority.

Mr. Cryer

The hon. Gentleman referred to the importance of the National Film Finance Corporation and acknowledged that the industry is facing difficulties. Pending the completion of the review, which will not be before 1983, are the Government prepared to consider the possibility of additional funds to the NFFC, bearing in mind the decline in revenue from the Eady levy?

Dr. Vaughan

It is important to take note of that factor. I should like to consider the implications.

This is a time for less rather than more interference. There will be an urgent review of the Government's relations with the industry. The quicker that we get on with that, the better.

On the question of piracy, I am pleased that the Bill introduced in another place by Lord Fletcher, and skilfully piloted through this House by my hon. Friend the Member for Uxbridge (Mr. Shersby), has received Royal Assent. There is great concern about the level of penalties, and further consideration of that matter was promised by my hon. Friend the Under-Secretary of State for Trade on the Third Reading of the Bill in the context of the new penalties imposed in the United States.

The figure of 78 per cent. mentioned by the hon. Member for Keighley is correct. Piracy is a £100 million a year business. We must do all that we can to eliminate that criminal activity. There is agreement on both sides of the House on that.

I have endeavoured to cover as many points as I can. As I said earlier, if I have inadvertently missed any points, I shall be glad to take them up directly with the hon. Members concerned.

Mr. Dormand

The Minister has been generous in giving way, but I see a contradiction in two statements that he has made in the past few minutes. He said that the Government could not afford to make more money available for the indigenous industry, but when my hon. Friend the Member for Keighley (Mr. Cryer) suggested that more money should be made available to the NFFC, the Minister said that the Government ought seriously to consider that suggestion. That is a contradiction. We know that "Gregory's Girl" was made with NFFC money. Do not the Government and the Minister realise that the NFFC could be a profit-making concern?

Dr. Vaughan

Either I did not make myself clear or the hon. Gentleman misheard me. I said that we doubted the viability of what what proposed and that it would not be appropriate at this moment for the Government to consider making funds available. We should not deal with matters in a piecemeal fashion, and we should certainly not make funds available for something that might not be a satisfactory organisation. We shall want to look at that matter.

It is encouraging that both sides of the House welcome the regulations, although some hon. Members would like to see them extended. I take it that there is universal agreement that we must review and debate the subject in the House as soon as possible.

Question put and agreed to.

Resolved, That the draft Films (Distribution of Levy) Regulations 1982, which were laid before this House on 8th June, be approved.