§ Amendments made: No. 16, in page 4, line 33, after first 'company', insert 'or partnership'.
§ No. 17, in page 4, line 33, after second 'company', insert 'or partnership.—[Mr. Norman Lamont.]
§ Mr. Norman Lamont
I beg to move amendment No. 18, in page 4, line 37, after 'person' insert—'(i)'.
Mr. Deputy Speaker
With which it will be convenient to consider Government amendments Nos. 19 and 21.
§ Mr. Lamont
The amendments relate to the point that I made earlier on the heads of agreement about the £500,000 which is to be provided for pre-production work. It will enable a proportion of those funds to be used to part finance short films—films lasting less than 35 minutes.
For the reasons that I have given, I concluded that it would be right for part of that £500,000 that has been set aside to be made available for that purpose. The Government envisaged that about £150,000 a year would be used for that purpose. Using those funds for shorts is not thought likely to be to the disadvantage of any pre-production projects.
I understand that in recent years the National Film Development Fund has spent no more than £200,000 on such projects. I hope that that activity will expand in the future, but I do not believe that there will be problems in keeping within the total budget of £500,000. I do not believe that it is necessary for me to give the House any great detail. The hon. Member for Islington, South and Finsbury (Mr. Smith) has a point, but I believe that this decision will be widely welcomed.
§ Mr. Chris Smith
I rise simply and briefly to give a warm welcome to the amendment and to the Government's commitment to this sector of film making. The making of short films, in particular those made by the workshop sector, is one of the most important and growing parts of the industry, in which a great deal of innovation and talent is at present constituted. Therefore, I congratulate the Government on picking up that point and welcome the amendment.
§ Amendment agreed to.
§ Amendments made: No. 19, in page 4, line 40, at end insert
(ii) for any purpose connected with the production of short films.'.
§ No. 20, in page 4, line 41, after 'company"' insert', "British partnership"'.
No. 21, in page 4, line 42, at end insert
'and "short film" means a relevant film with a total playing time of less than 35 minutes'.—[Mr. Norman Lamont.]
Mr. Deputy Speaker
With this it will be convenient to consider amendment No. 22, in page 5, line 3, at end add'and he shall lay before Parliament each year a report giving his reasons for providing or withholding financial assistance under this section'.
§ Mr. Gould
I shall be brief because much of the ground covered by the amendment has been canvassed in other debates this afternoon and in Committee.
I draw the Minister's attention to the statement issued by the six bodies representing the industry in which they make an interesting and valuable comment. They are worried that the money made available to the new consortium will not be adequate. They point out that it will be approximately £3 million per year and that the intention is that that will enable the consortium — as one understands it from its public statements—to finance up to 10 films per year.
I believe that the objective is to provide 25 or 33 per cent. for each project. That means that each project will 814 be able to attract on average about £300,000 a year. If that is to constitute between one quarter and one third of the total production costs, it means that we are talking about low-budget films — films with a budget of perhaps £1 million or less. In other words, they are films which are essentially meant for television.
The industry is anxious that that money may well be directed into an area which is already more than adequately catered for. We no longer have the benefit of the presence of the hon. Member for Wealden (Sir G. Johnson Smith). As he said earlier, Channel 4 and the television companies have done a great deal in that sector. It suggests that the money made available to the consortium will not go to that part of the film industry where it will be needed. It will not help, for example, films made for the cinema such as "Another Country", "The Dresser", the oft-cited "Chariots of Fire", "Gandhi", "The Killing Fields", and so on.
As my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) has said on many occasions, that sum will be utterly inadequate to attract into that part of the industry the private finance that is desperately needed. ACTT has instituted a number of inquiries in the City and has said that the answers that it invariably receives are to the effect that approximately £20 million would be required to make investment in films for the cinema viable.
In tabling an amendment which specifies the sum of £10 million only, the House can see that the Opposition's suggestions are modest. That modesty is perhaps not entirely appropriate, given that the financial context in which the industry is likely to operate has been severely turned against it. There is the phasing-out of capital allowances. There is the unhappy decision taken earlier today not to replace the Eady levy. The Parliamentary Under-Secretary has repeatedly reminded us of the business expansion scheme, but that, unfortunately, is simply not suited in many respects to the business of producing films. The hon. Gentleman has offered to talk to the industry about ways in which the scheme could be made more appropriate.
However, many of the financial underpinnings of the industry have been removed. The Government's direct subvention is to take the form of a loan rather than a grant, although we understand the reasons why that is so. Even the £3 million a year that is to be made available to the consortium is likely to be short term, since the obligation is to last only for three years. The assistance is certainly conditional, although, unhappily, that condition seems to have been met this evening. It is to some degree irrelevant in that it strikes at the wrong part of the industry. It is in no sense additional, because the partners in the consortium would spend the money for their own purposes anyway.
There is to be virtually no public money, no recycling mechanism, no tax incentive. No real help is to be provided. The position compares most unfavourably with that in almost every other country that has, or hopes to have, a film industry. As we said on Second Reading, in virtually all the countries where there is a film industry the Government provide the full panoply of aids, incentives, grants and loans. We are simply not doing enough. Indeed, we are hardly doing anything.
I do not hope to evoke any response from the Minister. He is very familiar with the arguments and has not made any suggestion that I regard as adequate. I wish only to 815 ensure that the industry is aware that the Opposition understand its continuing need for such financial assistance.
Grouped with amendment No. 34 is amendment No. 22 in the name of the hon. Member for Hendon, North (Mr. Gorst). Judging from some of his earlier remarks, I believe that the Minister may be able to offer slightly more comfort to the hon. Gentleman than to us.
§ Mr. Gorst
I endorse the sentiments expressed by the hon. Member for Dagenham (Mr. Gould). At the heart of our discussions on the Bill, both upstairs and downstairs, is a question. Given that the film industry needs money, where is that money to come from? Will the private sector provide enough? Should the public sector also be involved? The hon. Member for Dagenham was right to argue yet again that the Government should invest more in the industry than they have so far offered to do.
The purpose of my amendment is, in a way, to provide a halfway house between what the hon. Member for Dagenham proposes and the current position of the Government. If accepted in the present or in some similar wording, it would enable Parliament to question the Government of the day about the level of the financial support that they were providing for the film industry. I hope that the Government will accept that we should be given that information annually. They have frequently told us that everything looks rosy. They say that they have done enough. They say that private capital can now take over and that the showing of films on cable and satellite television, the BBC and ITV will provide all that the film industry could reasonably expect. I believe that Parliament will need running proof that that optimistic prediction—which we all hope will be fulfilled — was correct. The amendment will give Parliament a chance to check and assess whether the Government's optimism was justified.
Under the Bill there will, I believe, be no official reports from the film industry to Parliament such as the Cinematograph Films Council's annual report. It would not be unreasonable to ask that we should have some means of receiving information about the progress of the industry.
What do the Government have to fear? If their assessment is correct, and if they have nothing to hide, they have nothing to fear. They should welcome the chance to emphasise the correctness of their predictions. If, on the other hand, those predictions were wrong, Parliament would have a timely opportunity to demand that the film industry should be saved before it is scuppered.
§ Mr. Ashdown
I shall not rehearse all the arguments that the Minister will have heard in Committee and which have been referred to again by the hon. Member for Dagenham (Mr. Gould) and the hon. Member for Hendon, North (Mr. Gorst). In our view, the Government's current proposal of a loan of £1.5 million over three years is wholly inadequate to meet the needs of the industry as they have been clearly expressed not only by the industry but by other outside bodies. By itself, that sum of money might fund perhaps one medium-budget film. A flourishing industry such as exists at present and such as we should be aiming to retain should make perhaps 12 features and six shorts a year. Of course the Government should not provide all the money, or even the substantial 816 part of it. However, they should provide enough money to ensure stability in the industry. It is our view that, unless such a sum is dedicated to providing a stable base, there is a real danger that the industry will collapse or that, in its present form, will vanish.
A sum of the order of £10 million would be, as the hon. Member for Dagenham said, fairly modest in comparison with what are believed to be the real needs of the industry, but it would provide an element of predictability on which success could be built.
The Government have nothing to lose. Their predictions may be proved to be right. If they are proved to be wrong, we shall have the chance to put things right before it is too late. If there is a vote, therefore, we shall vote in favour of the amendment.
Bearing in mind the comments of the hon. Member for Hendon, North, I wonder why the Minister has decided not to go ahead. The weight of evidence shows that all other countries do much more to foster their film industries than the hon. Gentleman proposes that we should do. Why does the hon. Gentleman believe that he is right when the body of experience suggests otherwise? I hope that he will address himself to that question.
§ Mr. Chris Smith
I do not want to repeat the arguments that have been made by my hon. Friend the Member for Dagenham (Mr. Gould) and others, but I fully endorse their views about the inadequacy of the funding arrangements that the Government are making through the new company that is to replace the NFFC. I should like to concentrate on an issue that is marginal to the amendment but which concerns the Government's financial arrangements for the future of the industry—the future funding of the National Film and Television School.
I hope that the Minister can give us some assurances about the funding of the school. He will recall that, in Committee, I asked several questions about the funding arrangements of the school. The matter was followed up by the director of the school in a long and detailed letter to the Minister of 11 January 1985. In that letter, the director concentrated on one crucial issue. In the arrangements that the Minister envisages, there is a gap between the £600,000 from the cinemas and the two television companies and what is presently provided by the television companies.
The director has asked whether the £200,000 which the BBC and ITV give the school is a replacement for their existing contribution or whether it is additional money. If it is only a replacement, the school will be about £250,000 short on what it needs to run its existing educational work when the Government's proposed financial arrangements come into effect. That is an extremely important issue for the school, which everyone agrees does valuable work. I hope that the Minister will be able to give us some comfort on that count. If he cannot, we must take a dim view of the Government's financial proposals.
§ Mr. Norman Lamont
I do not believe that the House wants me to go over all of the arguments that we have had at great length about the funding of the film industry. The money that we are making available for the new consortium will be twice that which was available to the NFFC. It is all very well for the hon. Member for Yeovil (Mr. Ashdown) to say that that is not enough, but it is twice what was previously available.
817 I remind the hon. Member for Yeovil, as he was not a member of the Committee, that the Government are providing £1.5 million for five years and an additional £500,000 for five years for project development work. Another £600,000 will come through the portfolio of rights and interests in about 800 films, and the private sector is putting up about £1.1 million annually for three years. The hon. Member for Yeovil says that the money will partly finance only a limited number of films, but the consortium will have twice the resources of the NFFC and it will operate as the NFFC did.
§ Mr. Lamont
The hon. Gentleman has asked one question and been given an answer. It is no use his altering the question just because he does not like the answer to the first question.
§ Mr. Lamont
I am very good at giving way, but the hon. Gentleman ought to listen. The Government are supporting the film industry in other ways, such as by giving £7.5 million annually to the British Film Institute and other money to the British Film Year.
The hon. Member for Islington, South and Finsbury (Mr. Smith) mentioned the National Film and Television School. I agree with him about the excellence of that school and its reputation for producing highly skilled film and television programme makers. He will know that it is supported principally by my noble Friend Lord Gowrie, through the Office of Arts and Libraries. The school's budget of about £1.5 million a year is funded only partly by the Eady levy. In the levy year 1983–84, Eady provided only £500,000 and it will provide £600,000 in the current levy year. I hope that the hon. Member for Yeovil is noting this. The balance came from the Office of Arts and Libraries, which provided £850,000 in 1983–84 and £990,000 in 1984–85—a rise of 13 per cent. this year. The grant will be £1.12 million in 1985–86. That is evidence of the Government's commitment to provide as much support to the school as is possible within the constraints of public expenditure.
The arrangements with the BBC, the independent television association and the Cinematograph Exhibitors Association of Great Britain are only in respect of a replacement for the funding that will be lost on the abolition of the Eady levy. However, the arrangements that have been worked out are more than adequate, as they provide sure funding of £600,000 a year for five years. That gives the school greater advance information about its income than was ever possible when it had to go cap in hand seeking funds from the rapidly declining Eady levy. The hon. Member for Islington, South and Finsbury asked whether the ICTA and BBC contribution would be additional to their existing one of £100,000 a year. The answer is "Yes". I hope that the hon. Gentleman will be assured by that.
The British Screen Finance Consortium, as the successor body to the NFFC, is not the whole story of what is happening in the British film industry. There is also the private market. The hon. Member for Dagenham professes to have grown weary of my reminding him of the £36 million that Goldcrest raised for film making. I need not bore him with that information this time, because I noticed in the newspapers recently that Thorn-EMI is talking of a 818 financial vehicle of some £100 million for film making. It is possible within the tax regime to raise money for film making. I believe that the markets are becoming more responsive and interested in film making. There is also greater awareness in the City. Companies that have a spread of risk and a portfolio of films are finding it possible to raise money.
§ Mr. Ashdown
The Minister mentioned Goldcrest. We all know that one third of the money that it raised to make "Chariots of Fire" came from tax allowances, which the Government have now abolished. In 1983, the Government also abolished the exhibitors' quota. We are not considering the £10 million in isolation. What the Government are proposing is in line with their abolition of tax allowances and the exhibitors' quota. As to the question that the Minister pretended that he answered earlier, he is now substituting a temporary system for a permanent one.
§ Mr. Lamont
I have met the managing director of Goldcrest. It would be improper for me to say what happened in our discussions, but I do not believe that the change in the capital allowances regime will make life very difficult for companies such as Goldcrest and Thorn-EMI which are raising larger amounts of money and spreading their risk over a series of films. The evidence shows that they will still be able to raise the money. In privacy many people have said to me that the changes in capital allowances will not have the much-vaunted damage that some people believe. I accept that there is a legitimate concern by independent producers who may have benefited from other people's capital allowances, but these large companies will still be able to thrive and the extra money that we are making available to the son of NFFC will do a lot to encourage British film makers.
§ Mr. Ashdown
Will the Minister answer "Yes" or "No" to the question whether a third of the money that Goldcrest put into "Chariots of Fire" came from tax allowances which are now abolished?
§ Mr. Lamont
It is not for me to answer for the internal financial arrangements of Goldcrest. I have told the hon. Gentleman what I believe to be its view about the current regime in which it will operate.
My hon. Friend the Member for Hendon, North tabled amendment No. 22, and I appreciate and understand what led him to do so. However, I cannot accept it in its present form because I am advised that it would require the Secretary of State to lay annual reports before Parliament, which listed all payments made to the British Screen Finance Consortium and also every application received for assistance towards the development of film projects. Because I recognise that there is a case for a statement to Parliament — it would probably be the general wish of the House that information should be made available about the sums advanced by the Government to the consortium, and the operation of the project development scheme—I am prepared to agree that there should be a brief report of these each year. I would certainly arrange for that.
For the reasons that I have given, I should not like to accept the wording of my hon. Friend's amendment.
§ Mr. Lamont
It is just my undertaking to the House that we would give a report each year on the operation of the consortium and the development fund.
§ Mr. Gould
I am disappointed, though not surprised, that the Minister has not moved on this point. He has heard the arguments on many previous occasions, and has been equally difficult. Since I see little chance of persuading either the Minister or his absent colleagues to accept what I believe is an overwhelming case, I have little option but to accept the small crumbs of comfort offered regarding amendment No. 22 and, to a limited degree, to my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) in respect of the National Film and Television School. I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.