HC Deb 19 July 1984 vol 64 cc523-30 4.10 pm
The Minister for Information Technology (Mr. Kenneth Baker)

With permission, Mr. Speaker, I should like to make a statement about the British film industry.

The British film industry is undergoing a renaissance. We are fortunate to have so many talented producers, writers, directors, actors and outstanding technical skills in film-making. Several companies in Britain have achieved commercial success in quality films. Channel 4 has effectively encouraged the thriving independent production sector.

However, cinema attendances have continued to decline dramatically. From an annual average of 338 million in the 1960s they have dropped to 66 million in 1983. In the same period the number of screens declined from some 3,000 to 1,300. Against that background we have drawn up the following proposals which are contained in the White Paper published today.

Our first and most important conclusion is that the outdated Eady levy on cinema receipts must be ended. Introduced to recycle money from the cinemas to the producing companies it has become an extra tax on seats which cinemas cannot afford. Its revenue in real terms has fallen by six sevenths. It is an elaborate and unfair burden on the industry's weakest sector. The Government propose to bring in legislation to end this in 1985, and at the same time to wind up the British Film Fund Agency, the Cinematograph Films Council, and the National Film Finance Corporation. The legislation will also repeal eight Acts of Parliament and 25 statutory instruments relating to films.

I have considered carefully the case for extending an Eady-type levy to television or to videos. I am, however, convinced that no sort of recycling mechanism is sensible. A levy on TV could lead to an increase in the BBC licence fee and ITV companies are already paying a subscription to Channel 4 which will be financing film-making at a level of about £8 million a year. In their review of copyright the Government are still examining the question of a levy on blank video and audio tapes to protect copyright owners and we intend to invite further comments on this. I have been able to make satisfactory arrangements to replace the money which the Eady levy raised.

Revenue from the Eady levy has in the past provided finance for the NFFC, which has done valuable work to encourage emerging young talent in the British film industry. It has contributed to many notable films including "Gregory's Girl" and "Another Country" and fostered talent which has come to the fore in such international successes as "Chariots of Fire" and "Local Hero". The valuable contribution made with Eady levy finance will in future be secured by a new company in the private sector whose shareholders will initially provide contributions of over £1 million annually. The Government, in addition, will make £1.5 million a year available for five years to co-finance low and medium-budget films to be made in Britain. A further £500,000 a year for five years is to be made available to help in the early stages of the development of film projects. The new company will therefore be able to deploy more than double the resources that NFFC has had in recent years. It is an important new deal for the British film industry.

The National Film and Television School is well respected, and enjoys an international reputation. We have secured independent funding for five years which will more than replace the current level of the Eady contribution. Lord Wilson of Rievaulx and the interim action committee on the film industry recommended updating the equipment at the school and the Government will provide £250,000 for this purpose in 1985–86.

The British Film Institute Production Board also receives a small Eady contribution and I propose, in consultation with the Cinematograph Films Council, to see whether a final payment out of the Eady levy can be made.

During the passage of the Finance Bill through Parliament, my right hon. Friend the Chancellor of the Exchequer made two amendments specifically to help the film industry. First, qualifying investment in film projects will now come within the scope of the business expansion scheme. This will be a valuable incentive to equity investment in film and will help the small producers who have lately gained the confidence of the City.

Secondly, in addition to the measures announced in the Budget, my right hon. Friend has announced that films will have a further option to write off expenditure on a cost recovery basis against income as it arises, instead of spreading it over the income-producing life of the film. The industry will therefore not normally pay tax on its profits until all expenditure has been written off. This will give greater certainty for those investing in films.

I am very pleased that the industry is pressing ahead strongly with plans for British film year in 1985. This will focus attention on film in education and industry as well as in entertainment. In particular it will aggressively promote the sales of British films overseas.

Our policy is to free the film industry from Government intervention and from an intrusive regulatory regime dating from the days of the silent films. Our policy will clear the way for the industry to operate in a more confident framework and to consolidate upon its success.

Mr. Bryan Gould (Dagenham)

Is the Minister aware that this long-delayed statement marks a black day for the British film industry? His failure to take the opportunity offered him by his review to place the industry's finances on a sound basis comes as a further body blow to an industry already sadly damaged by the Chancellor's withdrawal of capital allowances.

Does the Minister recognise that his refusal to extend the principle of the Eady levy to television and video, which are of course the modern equivalent of the cinema box office, means that he has failed to provide a reliable source of finance upon which expansion can be based? The money that is to be contributed by television and video is pitifully inadequate, conditional and guaranteed for three years only. It would be helpful if the Minister would confirm that latter point. It in no way meets the debt that those industries owe the film industry. It will, in any case, largely be money that they would have spent for their own purposes.

Will the Minister give an assurance that his failure to implement a levy on video cassettes does not mean that he has closed his mind to the introduction of some levy as a solution to the problems of the music industry? Will he guarantee that that industry will not have to suffer the same damaging delay as has caused such confusion and uncertainty in the film industry?

Does the Minister accept that the demise of the National Film Finance Corporation, which has done such good work with such limited resources, will be bitterly regretted by all those who care about the future of the British film industry?

This privatisation, like so many other privatisation measures, surely cannot be explained, even at a time of financial crisis, by the need to save the small amount of public money involved. It clearly arises from misplaced ideological zeal for turning the future of the industry over to market forces despite the fact that, as the Monopolies and Mergers Commission found, nothing remotely resembling a free market exists in this area.

Finally, does the Minister understand that he cannot, in good faith, express pride in real achievements such as "Chariots of Fire" and "Gregory's Girl" while at the same time announcing a policy that will inevitably bring much closer commercial and cultural surrender to the Americans, which will threaten the whole future of a valuable British industry?

Mr. Baker

The hon. Gentleman did not pay much attention to what I said, and his speech must have depended upon the rather inaccurate leaks that have occurred during the past few days. He should have appreciated that the amount of money that the National Film Finance Corporation has had available to it over the past few years is between £1 million and £1.3 million. The proposals that I have put before the House will increase that to about £3 million a year over the next five years. That is a combination of public and private sector money.

I am not persuaded that a levy on video cassettes and blank tapes which will be recycled from one end of the industry to another is appropriate for this or any other industry. I have said in the White Paper and in my statement that the Government are still examining the question of a levy on blank video and audio tapes.

In the copyright Green Paper published in 1981, the Government came down against such a levy, but since then we have received many representations and it is clearly a matter of great interest. We are saying that we will have a further consultative period. It is an issue that evokes strong feelings both ways. There is a lobby that is completely opposed to a levy on blank tapes—roughly the consumer interest; there is a lobby that wants a levy on blank tapes—the copyright owners, the record and film companies. It is a complicated matter and the issue must be put in the public arena for debate. We are preparing to do that later this year and early next year. At the same time, the Common Market will be producing a Green Paper.

I emphasis that our consultations about a blank tape levy will be for copyright purposes—that is, to protect copyright owners, not to recycle funds, as I believe that the system of recycling money from one end of the economic process to the other is entirely inappropriate.

Mr. Roger Gale (Thanet, North)

Is my right hon. Friend aware that the abolition of the Eady levy is likely to be the kiss of life for many small cinemas and will be especially welcome to a constituent of mine who runs an excellent establishment at Westgate-on-Sea? Is he further aware that the injection of Government and other money into a new company is likely to be extremely attractive to the independent production industry? On my reckoning, about £3 million a year is to be made available. May we have an assurance that that money will not have to be used exclusively for film finance but can be used to service loans, which can provide far greater sums for small independent cinema and television production?

Mr. Baker

Grants will be made available to the successor to the NFFC and must be used to promote and develop low and medium budget films. How that is done will be up to the management of the company, but I emphasis that funds will be available on a greater scale than the NFFC has enjoyed for many years. The new company will take over from the NFFC and we imagine that the date of transfer will be some time in the late summer or autumn of next year.

Mr. Clement Freud (Cambridgeshire, North-East)

The film industry will welcome the Minister's announcement of business expansion scheme contributions for that industry, but is he aware that the White Paper still causes considerable fear in the industry and that he should not take too much pride in creating a pigmy to replace a dwarf? How will artistic film-makers be encouraged to contribute in an industry ever more geared towards the commercial and the pornographic? Will the Minister promise to use his best efforts to allow the House to debate this important subject?

Mr. Baker

As the hon. Gentleman knows, the latter point is a matter for my right hon. Friend the Leader of the House, but I should be very happy for a debate to take place.

On the artistic and cultural element, we have specifically provided a fund of £500,000 per year for film project development.

Mr. Freud

That is peanuts.

Mr. Baker

It is about twice what is now available. That money will be available for teams of young script writers, producers and directors to work out ideas. The British Film Institute Production Board also makes films of particular cultural interest and the White Paper package provides funds for that work to continue.

Mr. Tim Brinton (Gravesham)

I welcome much of the White Paper, but I feel that it does not go far enough. Did my right hon. Friend consult the report of the Select Committee on Education, Science and the Arts, on which I served in the last Parliament, which dealt with the film industry in some detail? Did he also consider the enormous importance of uniting Government responsibility for film, television and most of the performing media in one Department and removing the present muddles?

Does my right hon. Friend agree that the main problem for the feature film industry in this country is its lack of attractiveness to high-risk capital from British investors? Does he further agree that the White Paper proposals do not go far enough towards creating a fund? My right hon. Friend has given reasons for rejecting the idea of an Eady levy on television programmes, but did he fully consider that simply collecting ½p per estimated viewer of each feature film shown on television could produce a fund of £20 million to protect and attract investors?

Mr. Baker

There has been a substantial increase in investment in films—a trend which continues strongly this year. Since the terms of the Budget became known, Goldcrest has been able to go to the market to raise more than £12 million for investment in films and Thorn EMI is investing between £20 million and £25 million in new films this year. There is a flow of money back into films as an investment, but we do not want a return to the days when many people invested in films through what can only be described as highly imaginative financial dealings—the main interest was tax avoidance rather than investment in film—because one cannot build a strong, vibrant and confident industry on that basis.

As for a television levy, I believe that my hon. Friend underestimates the extent to which television is going into feature film-making. Channel 4 has spent £8 million this year in the independent production sector and several of the large independent companies are making feature films for the first time. I hope that my hon. Friend will appreciate that that is a significant increase in British feature film-making in the television sector.

Mr. Tom Clarke (Monklands, West)

Is the right hon. Gentleman aware that Members of Parliament who have waited two years for his statement will be as disappointed with it as the film industry, because it is utterly inadequate to produce the investment that the industry needs? Is he aware that he has taken away the Eady levy without putting anything substantial in its place and that the Government's attitude is reflected in the very small amount of money being given to the British film year? Will the Minister give us the figures?

The Minister suggested that my hon. Friend the Member for Dagenham (Mr. Gould) had relied on leaks for his information. Does he think that Mr. Hassan depended on the same leaks when he resigned from the NFFC, given that most of his predictions proved to be entirely correct?

Mr. Baker

His predictions did not prove to be correct. Mr. Hassan resigned from the NFFC because he wanted to go into private film production, which is an expression of great confidence on his part. I have spoken to Mr. Hassan, for whom I have a high regard, and I am sure that he will be very successful in his career in promoting and developing the private film industry. He announced his intention to go into private film production two or three months ago. At that time he said that he regarded the £1.5 million then available to the NFFC as too small. It has now been doubled. The hon. Gentleman suggests that the industry will be disappointed with the proposals, but to me all the signs have been that it is far from disappointed with them.

Mr. Jeremy Hanley (Richmond and Barnes)

Is my right hon. Friend aware that I welcome his statement and his confidence—in my view well placed—in the British film industry and in the role of the local cinema, which has had a tough time of late? May I urge him, however, to give the earliest possible consideration to the case for a levy on blank audio and video tapes to protect those who suffer regular institutionalised theft of intellectual property?

Mr. Baker

My hon. Friend puts the case well. It is essentially a copyright case, but there are arguments on the other side. We have had many representations from consumer interests who object to having to pay extra for blank tapes just as they would object to paying a television levy of ½p or 1p per viewer for the screening of films. We must balance the differing points of view. We shall be setting out the case for and against and also the complexity of the scheme. It is relatively easy to collect a great deal of money from a levy on blank tapes. It is infinitely more difficult to distribute it and to find a fair way of determining how many times a tape has been listened to at home or how many times a film has been copied. There are genuine administrative problems of fairness and equity in such a system.

Mr. John Fraser (Norwood)

Why are the Government allowing the video industry to export millions of pounds of profit to Japanese manufacturers without recycling some of the profits on video hire to the film industry? Is he aware that video hire is emptying the cinemas and involves a great deal of counterfeiting without recycling much money back into film-making?

Mr. Baker

It is a curious concept that one should impose a levy on the hardware of an industry and recycle the proceeds to another part of the industry — production. The development of the video industry, the cable industry and DBS will provide new opportunities for the producing side of the film industry. About 150 quality films are made in the English language each year and there is a demand for at least double that number. The demand is the result not just of the cinema but of television, video and DBS. I am sure that the British film industry—with the talents at its disposal and the support that I have given it today—will be able to make use of that opportunity and make many more films to meet the demand.

Mr. Tim Smith (Beaconsfield)

My right hon. Friend's commitment to the National Film and Television School in Beaconsfield will be very welcome, but could he expand on his statement that there will be independent funding for five years? What form will the funding take, how much money will there be and what will happen after the five-year period?

Mr. Baker

The National Film and Television School at Beaconsfield has an international reputation for excellence, and we should be proud of it. I realise that it is in my hon. Friend's constituency. The school receives just over £500,000 a year from Eady. I have secured undertakings for £600,000 for the next five years. In addition, I will provide a grant of £250,000 next year to re-equip the school for the production of films.

Mr. Chris Smith (Islington, South and Finsbury)

The Minister has not referred to the need to save and preserve the archives of historic film held by the institutions that he intends to abolish or privatise. Much of that material is rapidly and dangerously deteriorating. Will the Minister assure the House that he will consider this major problem and that, when he brings forward the legislation, he will take steps to tackle the issue?

Mr. Baker

That is an important point. The role that the hon. Gentleman urges me to take on is very well fulfilled by the British Film Institute, which, in the course of the past 18 months, has raised substantial sums of money to preserve film. One of our oil companies is also providing substantial funds for the re-recording of the black and white films of the '20s and '30s.

Sir Kenneth Lewis (Stamford and Spalding)

As one who occasionally goes to see a film, and who spends much more time switching off American rubbish on the television—there is far too much of it—I am glad that my right hon. Friend has done something about the industry. He is the first Minister to do so. The Opposition have been somewhat churlish in their response to his statement. I have the impression that many talented British producers and directors have difficulty in finding support and money, and have to turn to other countries such as America. I believe that "Chariots of Fire" faced that problem. How will the Minister's proposals help the independent producer, who is not helped by the big distributors, by giving him the support that has been lacking in the past few years?

Mr. Baker

I thank my hon. Friend for his kind words. He is quite right. The independent producer is one of the most important elements in British film-making. Independent producers have been very creative, and there is much talent in our country at the moment. My proposals will help the independent producers in several ways. First, they will enable films to benefit from the business expansion scheme. Investors will be able to invest up to £40,000 a year in film projects and receive the tax benefits individually. The industry has pressed me for that innovation again and again, and I am glad that the Chancellor, in the Budget, extended the business expansion scheme to that area.

The successor to the NFFC, on which the Opposition have poured scorn, will have available at least £3 million a year, or possibly more, for low-budget and medium-budget films. Traditionally, those films are the most difficult to finance. It is relatively easy to raise large sums of money to make a new James Bond or Walt Disney film, but much more difficult to raise money for "Local Hero", or a film about two people running in the 1924 Olympics. My proposals will make it easier for young producers—in particular the producers of short films, as making short films provides useful experience — to get into the business.

Dr. Norman A. Godman (Greenock and Port Glasgow)

Anyone who has seen "Gregory's Girl" and "Local Hero" will acknowledge that there is much film-making talent in Scotland. How will these proposals encourage such talent in Scotland and in other communities physically far removed from London? Will such talent and potential talent have equality of opportunity?

Mr. Baker

Creative talent in Scotland is not limited to the film industry, but some strikingly successful young producers and directors happen to have come from Scotland. They have been helped through the NFFC and will continue to be helped by its successor. I am sure that there are many more talented people where they came from.

Mr. Mark Fisher (Stoke-on-Trent, Central)

How can the Minister of State, with a straight face, talk about freeing the industry from Government interference, when he knows that the industry has suffered from terminal neglect by Governments of both parties for most of the past 30 years? The financial package that he has announced and the changes in the Budget do not provide a secure financial base for profitable and innovative industry for which the Financial Secretary promised support during discussion of the Finance Bill. Does not that mean that the Government will be virtually the only Government in Europe—either East or West — who do not support a national film industry or recognise that the national Government have a responsibility to do so? The Minister's statement does not announce the renaissance of the industry. The right hon. Gentleman is sounding the death knell for everything other than the purely commercial side of the industry. He has done nothing to help a film industry which reflects the culture of this country. The statement is a disgrace.

Mr. Baker

The hon. Gentleman cannot have heard what I have just said. We are abolishing the fiddly and intrusive regulatory regime. We are abolishing three quangos, and repealing eight Acts of Parliament and 25 statutory instruments. At the same time we are providing a framework within which more money can flow from the private and the public sector into the creative side of the film industry, about which the hon. Gentleman is so concerned. I believe that all areas of the industry will be grateful for the proposals.

I am also relieving the cinemas of a tax on cinema seats which amounts to some £4.5 million a year. I hope that that change will make cinemas more attractive. I hope that they will become places where one can take the family.