PROVISIONS RELATING TO TERMINATION OF LEVY ON FILM EXHIBITORS

HC Deb 05 February 1985 vol 72 cc756-800

Mr. Norman Lamont

I beg to move amendment No. 1, in page 2, line 5, at end insert— '(1A) In relation to the final levy period section 2(3) of the 1981 Act (minimum and maximum amounts to be yielded by way of levy in respect of each levy period) shall have effect as if for "neither less than £2 million nor more than £12 million" there were substituted "not more than £12 million".'.

Mr. Deputy Speaker (Mr. Ernest Armstrong)

With this it will be convenient to take Government amendment No. 2.

Mr. Lamont

The amendment removes the requirement in section 2(3) of the Film Levy Finance Act 1981 that the Eady levy must not be less than £2 million annually. The purpose of the amendment is to enable us to fulfil the commitment that we gave in Committee that the Eady levy would cease at the earliest possible opportunity, consistent with commitments made to Eady beneficiaries. I remind hon. Members that current recipients of Eady levy funds include the National Film and Television School and the British Film Institute Production Board. There is also a statutory obligation for a pro-rata payment to be made to the National Film Finance Corporation.

As I said on Second Reading and in Committee, we consider that the Eady levy is an increasing burden on cinemas, and it is our intention to end it as soon as possible. However, the commitments that I have outlined must be met. While on the basis of past experience we cannot forecast with precision the rate of build-up of levy receipts, nor therefore the date when sufficient sums will be available to meet those commitments, we see no advantage in requiring the yield in the final levy period to be higher than absolutely necessary.

4 pm

There is widespread sympathy for the plight of the cinema sector and general agreement that the Eady levy should be ended quickly. The amendment will facilitate that process. It will enable us to end the levy more quickly while honouring our commitments. Therefore, I commend it to the House.

Mr. Jeremy Hanley (Richmond and Barnes)

I am grateful to my hon. Friend for his statement. When I tabled amendments to persuade the Secretary of State to scrap the Eady levy as early as possible, he promised that that would be achieved and that the amendments were unnecessary. We have now a happy compromise, as long as the commitment to scrap the Eady levy remains. The period set down in the Bill is still too long. I would have preferred a shorter period. I hope that the Secretary of State will exercise his option at the earliest convenience.

We should not leave this part of the Bill without saying that the Eady levy has been destructive to the cinema industry in taking away much needed finance for the improvement of cinemas. Great tribute should be paid to cinema owners for trying greatly to improve the facilities, to make the public feel that the cinema is more attractive than it has been for 30 years, and to bring them back to the places where films should be seen. No one who has seen films on television can say other than that when a film is shown in a cinema, its scope, sound, vision and colour is improved, as is the experience of seeing it.

I should be grateful if the Secretary of State will exercise his option as soon as possible to ensure that more people are encouraged back to the cinema to see films as they should be shown.

Mr. Gould

I cannot fully endorse the strictures of the hon. Member for Richmond and Barnes (Mr. Hanley) on the effects of the Eady levy on the cinema industry. I would have more sympathy for his point if there were genuine evidence that the money that the cinema exhibitors were going to save through not having to pay the levy would be channelled back into the refurbishment of cinemas. He may be able to assure me that he believes that to be the case. Unfortunately, I see little evidence that we can be as sanguine as that.

On the other hand, I entirely accept his point that the attraction back of cinema audiences is by no means a lost cause, as the experience of French cinema proprietors has shown recently. Therefore, I hope that, whether or not they are exempt from the levy, cinema exhibitors will try their utmost through the refurbishing of cinemas and perhaps lower prices to attract audiences back to cinemas.

I accept the Minister's statement that these are essentially technical amendments to overcome some of the transitional problems. Given that we see no issue of principle in the abolition of the Eady levy at present, at least in terms of the simple disappearance of the levy, we are content to accept the amendment.

Mr. Norman Lamont

I am grateful to my hon. Friend the Member for Richmond and Barnes (Mr. Hanley) for what he said. I agree with what he said. It is our intention that the levy should be ended as soon as possible, because it has been a great burden on cinemas. During our proceedings we have sometimes concentrated too much on the problems of the film industry, without considering how they relate to the cinema industry. Without a flourishing theatrical exhibition industry, there is a great problem for the film industry. The rate at which cinemas are closing is truly alarming. That is a problem not just in itself, but in maintaining a British film industry, which is extremely important.

I understand the reservations of the hon. Member for Dagenham (Mr. Gould). However, when he says that he hopes that seat prices will be reduced as a result of the removal of the Eady levy, I hope that he is not under any illusion about the state of the finances of the cinema industry. That is the problem. We hear a lot about the domination of Thorn-EMI and Rank, but even Rank cinemas are hardly a gold mine. To be honest with the House, I must say that it will be a struggle to maintain the cinema industry in the United Kingdom. We want to maintain it. The Government are doing everything that they can, but we should not be other than hard-headed and realistic about the problems that it faces.

Mr. Gould

I do not doubt for a moment the financial precariousness of cinema exhibition. I hoped to show that the way forward did not necessarily lie in constantly increasing prices while failing to invest in cinemas. I hope that cinema proprietors may take to heart the lessons learnt in France, the United States and elsewhere—that better cinemas and lower admission prices can substantially increase audiences.

Mr. Lamont

I agree with that; but to reinvest in cinemas one must be either earning or have a good prospect of earning profits. The hon. Gentleman referred to what has happened in France. However, cinema attendances are different in different countries. It is not easy to explain why the pattern of decline is different in the United States or in France from the United Kingdom. Given the precariousness of the finances of the cinema industry in the United Kingdom, we should be extremely careful before we are too critical of it.

Mr. Tom Pendry (Stalybridge and Hyde)

First, congratulations are in order. The Government have been forthcoming. We urged them to adopt the report of the Monopolies and Mergers Commission on the barring question. It is a good thing that independent cinemas, such as those in Glasgow and Manchester, will now have the opportunity to have films earlier than they would normally have them. I should have thought that the Government might say to cinemas in those areas that, because they are to have pictures earlier than normal and because the Eady levy is being removed, they should adopt a policy of reducing admission prices and do more than they are doing at present. They could refurbish their cinemas and attract more people to them, and see, during the experimental perod of 12 months, whether that works. If they do that during the experimental period, we may be able to judge whether it is a good thing for the industry. It would be worth while if the Minister applied his mind to that aspect, given the Government's response to the pressure from both sides of the House to adopt the MMC's report.

Mr. Hanley

I wonder whether the House is aware that throughout British Film Year the ABC, Odeon and Cannon Classic chains are spending £1 million a month on refurbishing British cinemas, irrespective of falling attendances and even before the Eady levy is finally dead and buried. Therefore, the commitment to the cinema industry by organisations which must satisfy shareholders is great. That commitment can only increase if the Eady levy is scrapped as soon as possible.

Mr. Lamont

I am grateful to my hon. Friend the Member for Richmond and Barnes (Mr. Hanley) for drawing attention to that fact. In recognition of British Film Year, companies such as Thorn-EMI are investing in their cinemas. As everyone has agreed, a circular problem with the cinema industry is that declining attendances have been accompanied by poor facilities, and poor facilities have led to a further decline in attendances. It is welcome news that Thorn-EMI believes that the present position of that section of the industry is not irreversible.

I am grateful to the hon. Member for Stalybridge and Hyde (Mr. Pendry) for what he said about our response to the Monopolies and Mergers Commission's report and the experiment that will be carried out in two cities. We are going rather wide of the amendment — I imagine that this matter will be discussed on Third Reading — but I agree with what Opposition Members said about competition in the exhibition sector. The hon. Member for Dagenham (Mr. Gould) is right. Had there been more competition in the exhibition sector during the past 20 or 30 years, the state of the cinema industry might be different today. If it had been easier in the past for entrepreneurs and independent cinema operators to enter that sector, the present position of the industry may have been very different.

However, as the Minister responsible for such matters, I must deal with the present position. If any hon. Member were tempted to ask, "Why only an experiment?", I would have to reply, "Because even with Thorn-EMI and Rank I must consider the finances of their cinemas, and an experiment is the most sensible way of proceeding in the present state of finances." On the basis of what has happened in those two areas, we shall see the effect on independent cinemas and make decisions of value to the exhibition sector as a whole. However, the MMC report and our experiment are important points.

Amendment agreed to.

Amendments made: No. 2 in page 2, line 6, leave out 'the final levy period section 4 of the 1981' and insert 'that period section 4 of that'.

No. 3, in page 2, line 16, leave out subsection (3).

No. 4, in page 2, line 32, leave out 'this section' and insert 'section (Final Payments by British Film Fund Agency)'. — [Mr. Norman Lamont.]

Mr. Norman Lamont

I beg to move amendment No. 5, in page 2, line 39, leave out from 'order' to end of line 44.

Hon. Members will not be surprised to learn that the Government consider it necessary to remove the provision, which was inserted in Committee, that the ITV companies and the BBC should be levied on the basis of audience figures for the films that they broadcast. The Government's position on this important matter was made clear in the lengthy debate in Committee, but I wish to go over some of the points again and to explain why we believe it right to remove this provision.

I shall deal later with the practical arguments against imposing a levy on television, but first I shall deal with the principle. When the provision was inserted by the Committee, against the Government's advice, it was one of several amendments embodying in one form or another the principle of a levy. Some were directed at a levy on video tapes, whether blank or pre-recorded, some were based on the principle of compensating the copyright owner, and others were concerned with replacing the Eady levy as a mechanism for filling a production fund to finance new films or even to support the National Film and Television School. The amendment that attracted most support, or least opposition, was the provision now incorporated in clause 2(5). It proposes that a levy should be imposed on the BBC and ITV companies to recompense film makers whose films are shown on television on a basis that is related to the number of viewers who watch those films.

Underlying the proposition is an assumption, or perhaps an assertion, that the BBC and ITV pay too little for the films that they show. The argument is that if millions of people watch a film on television the price paid by the broadcaster should reflect the size of that audience, at a level closer to the film industry's assessment of what the film is worth — in other words, the seller's valuation should prevail. The advocates of the proposition argue that the prices paid for films are too low because of the so-called duopoly of the BBC and ITV.

The recent publicity about the purchase of "Dallas" by Thames Television has, it is claimed, revealed the existence of a gentleman's agreement between the BBC and ITV, and that is said to support the view that the broadcasters, through their duopoly, can depress the cost of the programmes that they buy. Whatever may be the case with a television series, whether a new one or one that has already been shown in Britain, I do not believe that the "Dallas" episode is relevant to our discussion, which is concerned with the purchase of feature films.

4.15 pm

The BBC and ITV have represented a duopoly, in that, until recently, they were the only television channels available. But that is changing, with Channel 4 and its impact on film making, and the introduction of DBS and cable television. I have yet to be convinced that those negotiating with the BBC and ITV companies cannot fight their own corners effectively without the state lumbering to the rescue, brandishing a cumbersome and unwieldy levy as a blunt instrument. We must accept that some films will, in their nature, be more attractive to one channel than to the other, and in such cases there will be only one effective buyer. Some films will be regarded as unacceptable for showing on television, but the majority are films that both channels would be happy to broadcast and, therefore, there is competition for them. With the advent of cable television and satellite broadcasting, the duopoly argument, flimsy though it was, begins to diminish. I am not persuaded that we need an artificial statutory recycling mechanism in a market which, whatever its limitations, is capable of operating without the distortion that would be introduced by a levy.

Leaving aside the question of principle, this provision raises several practical problems. One of the first questions is, how should we fix the amount of the levy? Presumably we must start at the other end and ask, "How much do we want to raise," and then spread it over the number of viewings. But viewings of what? The clause refers to feature films, but should we include films whose producers have retired from the industry or who are no longer alive? If so, it is difficult to see what benefit the provision would produce in terms of film production. Indeed, we must face the fact that the vast majority of films shown on television are foreign films, mainly American.

Mr. Gorst

Is my hon. Friend aware that if the considerations that he is now enumerating had been discussed when the Eady levy was introduced any competent civil servant would have disposed of them almost as quickly as the Minister is enumerating them now?

Mr. Lamont

I am not sure that the Eady levy was such an outstanding success. Indeed, the Bill is removing the Eady levy because of its effect on the cinema. I have not yet deployed the important argument that a levy would have a significant impact on the amount of money that the BBC and ITV companies could devote to film production.

Mr. Gorst

May I help my hon. Friend on his point about the success or failure of the Eady levy? It is extraordinary that the levy has lasted through one Government after another for decades, if what I infer from my hon. Friend's comments about its failure is true. It is going now because cinema attendances have fallen and it has outlived its purpose.

Mr. Lamont

Many would think that it would have been better to have removed the Eady levy some time ago. I cannot see that it has done anything but harm to the cinema in recent years.

My hon. Friend, in his two interventions, has slightly shifted his ground because he started our interchange by discussing the practical problems rather than the principle. I was about to say that, in addition to the principle, I think that there are these practical problems. One of them—and this is again a parallel with the Eady provisions—is that many, if not most, film makers, if by that is meant the producers, have often signed away their television rights to distributors. My hon. Friend, who is expert in these matters, will know that that is what happened in many cases with the Eady levy. Film producers signed away their rights and the Eady levy proceeds in some cases did not go to the people for whom they were intended by legislation. Thus the proceeds of the levy might not be payable in most cases if the producers have not retained their television rights.

Should we assume that we are meant to consider only films originally intended for theatrical release? If so, that would exempt made-for-television films, notwithstanding that their mode of manufacture is not easily distinguished from cinema film making. How would we treat films such as those financed by Channel 4 with cinema and television exhibition in mind? A film like "The Draughtsman's Contract" comes to mind immediately.

Even if it is possible to devise some definition of film that suits everybody, that still leaves the problem of assessing how much should be levied on the films in question. The provision proposes that the levy should be based on the numbers of viewers watching the film, but this is by no means as simple as it sounds. For one thing, there is no reason that a film shown in the afternoon should be given the same value per audience number as something shown at peak time. If we are to take account of this, not only must we introduce a system requiring extensive calculations relating to the levy on each film to the audience that watched it, having further identified which films are levyable, but we must weight the audience numbers according to the time of day when the film was shown, and this is surely not sensible.

Mr. Tim Brinton (Gravesham)

On the narrow point in which my hon. Friend asserted that there was no reason that a film shown in the afternoon should have the same levy put on it as one shown in the evening at peak time, surely this is right because the afternoon audience is smaller than the evening audience. It is therefore perfectly equitable.

Mr. Lamont

I merely said that this is a point that can be argued. There are people who agree with my hon. Friend, and obviously this is the basis on which advertising fees are negotiated. If it is to be weighted in this way, some people think that it raises considerable complications. That is my only point. I do not wish to come down on either side of the argument because I am not in favour of the levy anyway. This question has to be resolved and, if it is resolved in a particular way, it raises considerable complications.

Mr. Roger Gale (Thanet, North)

My hon. Friend deploys the argument beautifully, but he must be aware that the muliplicity of calculations is no argument at all. It is a calculation that is made every time a television commercial is shown for repeat fee purposes. There are infinitely more commercials shown on television than even the number of feature films.

Mr. Lamont

My objection, as I have made crystal clear, is based upon principle as well as on what might be thought of as practical difficulties.

Mr. Hanley

My hon. Friend said that another difficulty is the definition of a film—what exactly is a film in this context? I submit that it is surely anything that must receive a British Board of Film Censors certificate.

Mr. Lamont

My hon. Friend is obviously able to solve this problem just like that. If there were to be a levy, my hon. Friend would be an admirable person to implement it. These questions have to be addressed. As I have said, my main objection concerns not the practicality but the principle of the matter. I wish to outline some of the questions that have to be addressed.

Would it not be simpler then, if some of my hon. Friends' arguments are to be followed, to charge the BBC and the independent television companies a sum related to the number of films shown, or should we not cut through all the complication, make it simpler still and ask them all for a compulsory contribution to a film production fund, perhaps £5 million each? After all, it seems to me that it does not matter how crude or sophisticated we make the basis of the levy if the end in sight is the same — to squeeze money out of television to finance a film production fund. That is what it is all about. At least it would have the twin merits of administrative simplicity to collect and of concentrating the proceeds on the British film industry. But there remains the interesting question of how and by whom the spoils should be divided.

The results of any levy scheme—and I think that this is an important and central point—must be to reduce the funds available from the BBC and ITV. The BBC's income is finite, limited for the most part to the income from the licence fee. A surcharge on the cost of films must therefore mean reductions elsewhere. This would probably be true also of the ITV companies. The most likely result is a reduction of what the channels would be prepared to pay to buy levyable films; otherwise the cuts would probably fall upon the most expensive television programmes — drama programmes. Thus, helping the film producers might be at the expense of those — directors, technicians and actors—working in television.

Any cuts would also be likely to fall on work commissioned from independent producers, which none of us would want. Instead of promoting an outward-looking approach to film and cinema by television, a levy seems likely to have the opposite effect.

Alan Howden, who is the BBC's general manager for programme acquisition, offered some interesting and relevant observations in a recent article in the journal Broadcast. He accepted that, as has been alleged, many films are purchased cheaply, but pointed out that they are often old material for use during the day and late at night. He said: They are there because they are cheap; if they were subject to levy we would have to replace them with other cheap imported material". On the other hand, even routine feature films are bought at high prices when compared with other purchased material such as American series, despite the fact that films rarely command the huge audiences that they once did, and are nearly always beaten in the audience ratings figures by programmes like "Coronation Street".

Mr. Howden gives a gloomy but I think realistic forecast of what would happen if a levy were introduced. He said that films would be swept away in favour of old American television and other imports; purchases of new films would be cut back; prices would be pushed down to offset the levy wherever possible and the net return to the film industry would almost certainly be reduced". I cannot believe that that is what hon. Members want. In my view, it is necessary for those who are in favour of the levy to demonstrate that imposing this extra impost on the companies or on BBC television will not result in a reduction in the resources devoted to film making by the companies or by the BBC or merely an increase in imported material. We hear constantly about the cheapness of American imported material. I recall that Sir Ian Trethowan and others who appeared before a Select Committee of the House referred to the cheapness of American material that they could use. If we are to have this levy, it is up to hon. Members who wish to support it to demonstrate the need for it. I have not heard any argument that has demonstrated to me that that would not be the inevitable consequence of imposing such a levy.

Mr. Gorst

I remind my hon. Friend that many films—the Bond films are an example—are shown time and again on television. I cannot think of the number of times that my children have watched "Towering Inferno", for example. I invite my hon. Friend to agree with me that the fact that they are shown so often is not necessarily because they are cheap but because there is a demand to see them time and again. I invite my hon. Friend to contrast that with the present situation in which the BBC and ITV are pouring money into certain programmes. These programmes are not repeated anything like a similar number of times. That must have something to do with popularity and with the fact that the BBC and ITV purchasers are unwilling to pay a fair price for something which is attractive to the audience.

4.30 pm

Mr. Lamont

That is true. My hon. Friend refers to the popularity of films, particularly the Bond films. However, unfortunately, the popularity of those films and the proportion of television time that they take is falling. We have been told again and again by the BBC and ITV companies that the proportion of television time for films is falling. I am a great watcher of the Bond films, which my hon. Friend mentioned, but sometimes I feel that I am rather old fashioned. However, I am told that the viewing figures that those films command today are less than they were some years ago, not just because they have been seen many times on television, but because they are taking up a smaller proportion of screen time than before. It is about 11 per cent. of screen time on Channel 4 and 8 per cent. for the ITV companies. We have been warned that that figure is likely to diminish further and that the imposition of the levy might mean that films would take up even less time.

Mr. Gould

I am always extremely suspicious about an argument that rests on a proportion. I am sure that the Minister will concede in this case that any such argument, would have to take account of the fact that the hours of television broadcasting have been very much extended by, for example, breakfast television when one does not normally watch feature films. Although I do not wish to contest in detail the statistics that the hon. Gentleman may wish to use, he should take account of the fact, as we do, that an argument of the sort that he has just addressed to us is not necessarily convincing.

Mr. Lamont

I would not rest the argument on the figures or proportions. I say this on the basis of what I am advised and told by people who know much more about these matters than I do. We are talking about the trends and viewing figures that feature films command on television. It has been clearly stated to us and the Select Committee that the feature film is not commanding the viewing figures that it did a few years ago. Therefore, if the levy were imposed, the temptation would be for the budgets on such films to be reduced.

Notwithstanding the arguments about a duopoly, this is the central point. I do not see why it is not open to the makers of films in this widening market, where there will be a voracious demand for film in future years, to set their price and argue with those who want and need to have more films. It seems that that is a better system and a more sensible way to do it than to introduce an artificial mechanism taxing the companies and recycling the money back to the industry.

Mr. Chris Smith (Islington, South and Finsbury)

If the Minister is arguing that the makers of film should effectively bid up the price of their product, will he comment on the argument advanced in an article in The Sunday Times in December, reporting a conversation with Mr. Halliwell, the man in charge of buying foreign films and series for ITV? The article states: The high-gloss peaktime series cost an average of $1m per hour to produce, but because of an unspoken agreement not to bid up the price, ITV and the BBC are able to buy them for around £25,000 an hour. That is an incredible difference in price. Perhaps the Minister will comment on that unspoken agreement, which depresses the price available to the fiim makers.

Mr. Lamont

I know of no such arrangements, though I am certainly prepared to look into that. However, the hon. Gentleman is talking about series rather than film features. In the newspapers, we have seen what has happened with the bidding over "Dallas". If there is some such arrangement, it seems to be creaking at the seams, but I entirely agree that the matter deserves some examination.

Nevertheless, we are talking about feature films for which the total cost and the cost per time is somewhat less. It may not be a perfect market, but there is an element of competition. There will be an expanding market and a voracious appetite by the media for more feature films. I cannot see how the imposition of the levy will other than put the squeeze further on a sector that is already under considerable pressure. Therefore, that is not the appropriate way to deal with the problem. I commend the Government amendment to the House.

Mr. Gould

I think it is fair to say that the Opposition gave a far from hostile welcome to the first two groups of Government amendments, but I am afraid that it is at this point that hostilities commence. The Minister opined that we would not be surprised that he had felt obliged to table the amendment. It is true that we are not surprised. Unfortunately, the decision has been trailed in several press reports, but we are disappointed because we believe that the Committee reached the right view and, by a majority, and after extensive discussions, hit upon a means whereby the future of the film industry could be made much brighter than it would be without any such source of revenue.

We are also a little perturbed that the campaign of the television companies seems to have succeeded, at least with the Government. We feel that that may be a worrying portent of things to come; a sign of the way in which some of the major battalions in the industry can organise and structure the industry to suit their own interests. In Committee the Parliamentary Under-Secretary of State for Trade and Industry conceded that the television companies had specified, when they offered to help the National Film and Television School, that that offer was conditional upon there being no levy upon the television companies. We are left with the grave suspicion that the further efforts which the television companies are said to be prepared to make to help the film industry have equally been made conditional upon receiving an undertaking from the Government that there will be no levy. It would be most unfortunate if an issue which had been fully debated and decided upon by a Committee of the House were, in a sense, to be taken away from us and made the subject of more or less secret negotiations between the Government and those who were to be subjected to the levy.

Mr. Gorst

Since there has been discussion about unspoken agreements and understandings, it is fairly remarkable that as one casts one eye around the Chamber today one sees, except for the tip of an iceberg on Conservative Benches, no spokesman who is identified with commercial or BBC television, and one has the suspicion that a back-door market arrangement has been made, so that discussion and argument about it in this forum are almost unnecessary. However, perhaps we shall see.

Mr. Gould

As so often, the hon. Gentleman is on the point. I have heard other descriptions of his hon. Friend the Member for Wealden (Sir G. Johnson Smith) than the tip of an iceberg.

It appears that the independent companies feel that they have accomplished their objective and reached an agreement with the Government which satisfies their needs. However, it is important to remind the House of the arguments that carried the day in Committee. As the Minister will recall, they were deployed over four or five hours in Committee, at great length. All the matters to which the Minister referred in his speech were also raised in Committee. After long deliberation, the Committee, by a substantial majority, decided that the levy was an appropriate mechanism to put into the Bill.

Our arguments began where the Government began their arguments, with the impracticability of the Eady levy. Everybody concedes that, whatever its merits, and whatever can be said for its principle, it has outlived its practical life. Therefore, we are left with the problem whether to replace it — in which case we have to look for some other redistributive mechanism—or simply to say that the film industry can manage without a levy. The Committee decided that we should try to replace it and that the British film industry was not so healthy and thriving as to be able to dispense with what is now an admittedly small sum of money, but which has historically been of considerable importance.

Both sides of the Committee set themselves to work out how to apply the principle of the Eady levy in modern circumstances. The cinema audiences which have melted away, largely because of television, are still watching feature films, but no longer go to the cinemas in large numbers. Instead, they are to be found sitting in front of their television screens. This is not the case of an industry whose product has become outmoded for technological or social reasons. There is still a substantial demand for films. In other words, the principle is still valid. What has gone wrong is that the mechanism whereby consumers of film contribute in a certain way by the payment of a levy on admission to a cinema is no longer practicable.

The problem is simple. If we are concerned about the future of the industry and wish to maintain its financial support, we have to find a way to levy all those who watch the products of the film industry, but this time seated in front of their television screen.

Sir Geoffrey Johnson Smith (Wealden)

Has not another method been found, and one that is working most successfully? That is the agency of Channel 4, which has committed £96 million to feature production. It is true, as the hon. Gentleman and many of my hon. Friends have said, that some of those productions are not films of the sort that would have the same impact on the wide screen as some of the more traditionally made films. Nevertheless, Channel 4 is catering for the needs of the film industry and the products are seen and enjoyed by those who watch films on television. Therefore, it is fulfilling an important obligation to the industry as a whole.

Mr. Gould

I understand the hon. Gentleman's point, and I shall come to that when I examine the case that has been deployed by the independent television companies.

I am surprised that the Minister and Conservative Members, to whom presumably the market mechanism is a matter of some importance and value, do not recognise that with this levy we are seeking to ensure that the market mechanism overcomes the artificial obstacle that has recently arisen. That market mechanism should operate to do what a market should do, which is to reward, through the desires and appetites of the consumer, those who produce the product. That is the simple principle that we are seeking to achieve.

The market mechanism does not work at present because television has intervened, but also because, as the Minister implied by referring to it often in his remarks, the market is not a free market. The purchase of feature films for television is in no sense a free market. The term "duopoly" has often been applied to it, and we are all familiar with the recent example of "Dallas". Most of us would see that episode as demonstrating that the unspoken gentleman's agreement had on this occasion, and perhaps on this occasion uniquely, broken down. This is truly a case of an exception proving the rule. The purchase by Thames Television of "Dallas" caused such a stir and commotion precisely because that unspoken agreement had not been complied with and was, presumably, threatened for the future. That is why Mr. Brian Walcroft was summoned to the IBA to account for his actions, and that is why various assurances have been given that this will not happen again.

4.45 pm

The consequence of this—and this has been accepted on both sides of the House, as it was in Committee—is that the price paid for films is abysmally low, as my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) has been instrumental in bringing to light. I understand that the average price is about £7,000 or £8,000 a film. I know that the hon. Member for Wealden will say that there are major exceptions, and I accept that. However, I am talking about a well-authenticated figure of the average price for films.

The independent television companies offer a rather engaging explanation as to why that should be, but such a pitiful price is of little value to those who make the films in the first place, and of still less value to those who will have to continue making films for an almost insatiable market.

Sir Geoffrey Johnson Smith

Will the hon. Gentleman clarify what he has just said, for the benefit of the House? Is he suggesting that the person who made a British movie last year, or not long ago, is, on average, to be paid only about £6,000 or £7,000? I do not understand that to be the situation. If one is making a new, big and important film, there is a great deal of competition to acquire it. The price of $2 million for "Chariots of Fire" has been quoted, as well as $4 million for another movie and $500,000 for "Champions". These are substantial sums.

I suggest that the average that the hon. Gentleman is quoting is for old films, many of which are foreign imports. If he can substantiate his claim that modern British films are fetching only this derisory rate he has made his case, although it does not follow that the levy is the correct way to deal with the matter.

Mr. Gould

The hon. Gentleman should bear in mind that the important factor is the replacement cost — the cost of making films now. The antiquity or otherwise of the films constantly being shown on television is hardly relevant to that simple, economic point.

The fact of the low prices is admitted, in a somewhat engaging way, by the independent television companies. The Minister referred to the remarks of the spokesman for the BBC, who made a similar point. The independent television companies say that the average prices are low because of old material, much of it American, at the bottom end of the market. Many television viewers will say, "Hear, hear" in response to that. Television companies may hope to disarm criticism by the frankness of that admission. However, even old feature films, as the hon. Member for Hendon, North (Mr. Gorst) pointed out, are shown time and again on television, particularly at peak viewing times.

Last Christmas, for the umpteenth time, I saw a film of which I have fond memories from my childhood, and which I thought had passed from public memory for ever until about 10 years ago. I enjoyed the "Wizard of Oz" all over again, but it must have been shown over a dozen times on television over the past few years, and the same can be said of films such as "Chitty Chitty Bang Bang". These films are shown at peak times to large audiences, and at virtually no cost to the television company. They are popular films, otherwise they would not be scheduled. Some 65 were shown on the four channels over the Christmas period, and in total about 1,500 feature films were shown on television throughout the year.

The argument that these are low-grade films which attract small audiences is very difficult to sustain. Television companies know when they are on to a good thing. Those who made these films, and to whom television and the country generally are now turning for the new generation of feature films, are not, through a distortion of the market mechanism, being paid the normal price for their product. It is to correct that distortion that we supported the amendment in Committee and now oppose the Government's attempt to remove it.

It is also worth making the point that the Committee was not alone in believing that a levy on the television companies was a useful device in this context. We had occasion in Committee to refer to a document which had been produced by six of the industry's leading organisations. They came from all sides of the industry and included the trade unions, the producers and the National Film and Television School. Those organisations do not normally find it easy to reach agreement on a common platform. Their document enabled the Committee to illuminate some of these difficult points. It has now been elaborated, and I am certain that all members of the Committee and many other hon. Members who are interested in the film industry will have seen a copy of it.

Those elements of the industry make it quite clear in their document that they support a levy on the television companies. They looked at some of the practical problems and believe that if they could be overcome a fund of major importance would be provided for revitalising the film industry. In the presence of the hon. Member for Gravesham (Mr. Brinton) it is also worth making the point, which he will no doubt wish to emphasise, that the Select Committee of which he was a member in 1982 also looked at this problem and reached the same conclusion. Therefore, we are not conjuring up some oddball remedy out of thin air. This matter has been looked at by many people with knowledge of the industry. They believe that this would provide a workable remedy for some of its problems.

The industry needs money. It is virtually bereft of any tax incentives as a result of last year's Budget. It receives very little public money. No doubt this matter will be debated when we reach a further group of amendments. The industry has now lost the Eady levy. Although it is now relatively small in value, at the time that the Eady levy was introduced it produced a very substantial sum. Rather than let the industry languish without any form of financial support from any of these sources, we believe that it is important to introduce a levy which we calculate should produce about £10 million per annum.

Practical problems are involved in introducing a levy and the amendment does not seek to resolve them, although it was very instructive that during the course of a few minutes the Minister found how easy it was for his hon. Friends to resolve some of the practical problems that he raised. It was also instructive that the Minister quickly moved off that ground and came back to the point of principle upon which he had taken a stand.

The fact is that the amendment suggests one possible basis upon which this money could be raised—the levy of a very small sum of money per estimated viewer of feature films on television. I could have understood it if the Minister had come to the House and said, "We have looked at the practical problems and we should prefer to achieve this objective in some other way." I am very disappointed that the Minister did not do so. He said that he wants to strike out the amendment altogether. But there are other possibilities. In an excellent, recently published monograph Robert Hutchinson looked at the problem and made the interesting recommendation that, to achieve a levy of £10 million per annum, a purchase price should be paid by the television companies for feature films. Perhaps that is a simpler calculation.

It may be that the Minister is right. I was tempted to get up and say that we accepted his suggestion of a simple contribution to a public film finance fund of some kind, but my guess is that the Minister did not pursue that idea and that he is unwilling to pursue any other idea for a levy because it would lead to some kind of public film finance body deciding how the money should be distributed. I suspect that ultimately it is an ideological objection: that if this money were raised in such a fashion he would have to provide a public sector mechanism to decide how the money should be distributed. What underlies and animates the Bill is what we believe to be the mistaken view that all these matters can be settled in the market place.

In conclusion, I deal with the defences that have been advanced by the independent television companies, which I assume have written to all those who are interested in these matters. The television companies rightly say—the hon. Member for Wealden has already made this point—that they are already supporting the film industry in a very substantial way, primarily through the mechanism of Channel 4. We agree with that, but it will come as no surprise to the hon. Member for Wealden to learn that in Committee I made a distinction which became very familiar to its members. There is a substantial difference between films made for television and films made for the cinema. I shall not weary the House by rehearsing all the arguments and distinctions that were widely accepted by the Committee. Although the Minister has not done so today, he and some of his hon. Friends were prone to boast of the success of "Gandhi" and "Chariots of Fire" as evidence of the strength and health of the British film industry.

Mr. Norman Lamont

rose—

Mr. Gould

Let me make this point and then the Minister can intervene. I say that he cannot make that boast without at least accepting that there is a distinction to be drawn between films of that character and films which are generally produced by the television companies and shown on Channel 4.

Mr. Lamont

This is a trivial point, but, as the hon. Gentleman has made it repeatedly, perhaps he will give me the opportunity to say that if he can find that I have ever made any reference to "Gandhi" I shall buy him a very good lunch.

Mr. Gould

I am tempted, in the longueurs that lie ahead, to peruse the proceedings of the Committee to find just such a reference. However, it is certainly true that frequent reference was made to it. I see that the Minister's Parliamentary Under-Secretary of State for Trade and Industry, the hon. Member for Rossendale and Darwen (Mr. Trippier), is immediately confessing to it, in case he is challenged to a similar wager.

The notion that money spent through Channel 4 can in some senses be attributed to film production reached its apotheosis in the remarks of the hon. Member for Rossendale and Darwen at the end of the Second Reading debate. In an attempt to boost artificially the amount of money which the Government and other sources were funnelling into the film industry, the hon. Gentleman cited the £45 million which the independent film companies were paying towards the cost of Channel 4. Even the hon. Gentleman will recognise that this was an overestimate. However, it warns us against not making a distinction between film and television.

The next point which the television companies made was that they already contribute to the National Film and Television School. Of course they do, and they have undertaken to continue to do so, although one is bound to record, as the Minister conceded, that their offer was conditional upon there being no levy. It is also true that in supporting the school the television companies are in many respects pursuing their own interests, since it is a television as well as a film school.

The television companies then argued — some what pathetically, I thought—that this would be very hard on them, since their profits are down. Although the days may have gone when the famous remark of Lord Thomson would be apposite, nevertheless the television companies remain one of the few really profitable aspects of our economy. While there is some evidence that advertising revenue has fallen recently, I believe that if one looks at the trend over a period of years it is very difficult to argue that the independent companies are still not flush with money. Indeed, as the Government themselves recognise, there is an excess profits levy to recognise that fact.

The hon. Member for Wealden and I had an exchange in Committee as to the relationship between the levy that we are discussing and the excess profits levy. I am not competent to go into detail, but the profits of the independent companies would be calculated after that levy had been subtracted. Therefore, their profits would not be in double jeopardy but, rather, one element of their excess profits would be directed not in the general levy to the Treasury but to a special fund to help the film industry on which they so much depend.

Mr. Norman Lamont

The hon. Gentleman is covering many points and posing many questions. I hope that he will answer some of them. The television companies are the master of what they spend on films. How will he ensure that, as they do not want to pay the levy, they will not spend less on films?

5 pm

Mr. Gould

Of course the companies do not want to pay a levy. Who would? But if they were to pause for a moment and think about their longer-term interests, they may see a more powerful case for doing so. They are, as we have constantly said, one of the major consumers of film and they have a long-term and obvious interest in ensuring that that supply continues. However, I take the Minister's point. In the short term it is difficult for the independent companies to say that they are so strapped for cash that if they are forced to pay this relatively small sum of money they will have to make major economies elsewhere, particularly in the realm of buying films. Otherwise, why are they having to pay an excess profits levy?

One may ask, what about the poor old BBC? Would it not be most unfortunate if it was forced to add 30p to its licence fee? I am relatively unmoved by that sort of argument as well. It could be addressed to almost anything that the BBC proposed. Those are matters which have to be decided by the broadcasting authorities. They are under statutory obligations of various sorts to maintain standards. It is up to the Government and other interested bodies to ensure that that is done. None of those arguments should enable them to get on the cheap the products of an industry that is in danger of dying as a result.

Mr. Norman Lamont

The question is not whether they would make major economies, but what is to stop them offsetting the effects of a levy by adjustments on what they spend on films? They know what they want. They know the number of films that they require. What is to stop them offsetting the effect of a levy by adjustments in their budgets?

Mr. Gould

Surely the Minister is not conceding the case that anything other than a free market operates. Surely competition will ensure that if there is a demand for the product the price will be bid up, irrespective of a levy or anything else, to a proper level.

Mr. Paddy Ashdown (Yeovil)

Is it not remarkable that the Minister manages to say that the companies would have such control of the market place that they could do that, but that they would not have such control of the market place that they could wind up the price that they would offer for films?

Mr. Gould

The hon. Gentleman is right. The Minister has great difficulty in riding those two horses at once.

Mr. Gorst

There is an extraordinary quirk and a contradiction here. I note from a letter which hon. Members have no doubt received from a man with the fascinating title of "Head of Briefing" that the IBA limits the number of cinema movies that can be included in schedules in the interests of stimulating the maximum amount of original television products. That gentleman with the fascinating title also claims that the levy would be seriously detrimental to the creative development of television. Rather than attempt to force the television industry to subsidise the film industry by law, he says that the future can be seen in terms of—a most extraordinary proposition—increasing creative cross-fertilisation.

Mr. Gould

I am sure that that phrase leaves the hon. Gentleman almost as puzzled as it leaves me.

The Minister has not so far mentioned, as I thought he might have done, that the forthcoming Green Paper on copyright — a well-trailed possibility — might provide a levy on blank tapes of various sorts. I fully understand why the Minister has not raised that point. I think we are all agreed that, for the moment at any rate, that is not relevant to our discussions. However, it is worth making the point that that is a copyright measure and we are talking about a redistributive mechanism. Therefore, as I understand the principle that we are advancing, it is not necessary to find the long-dead maker of a particular film in order to recompense him. Far from it. That would be true if some sort of copyright principle underlay the proposal, but we are suggesting that that redistributive mechanism should cycle money back to a general fund, which would then be made available generally, and not to particular film makers or producers of films shown on television.

That helps us to dispose of the independent companies' suggestion that this would be an unfair tax on them. It is preferable to regard it as simply a redistributive mechanism within the same industry—an industry which begins with the producers and ends with the consumer watching the film in front of his television set.

My hon. Friends, I believe with some support elsewhere, believe that it is immensely important that the British film industry is not left without a buoyant and reliable source of revenue which, in many respects, the industry itself produces. We are asking only that the Minister should recognise that the market operates so imperfectly as not to provide the producers with that revenue, and we are simply asking him to remedy that deficiency.

Mr. Gale

The amendment tabled in Committee was founded upon two fundamental Conservative principles, although it had the support of Opposition Members. One is that people should be prepared to pay a fair price for what they get—the television companies in this case—and the other is a move towards the ending of restrictive practices.

I have to declare an interest in a company called Shaw Cable, which hopes to take the lead in the cable television industry and the boon that we hope will come in that direction. Therefore, I might be expected to have an interest in the purchase of cheap television. Historically, films on television have been cheap. If I pursue my interest, I should be on the other side of the argument. I am not, because I believe that the future of the British broadcast television industry and the future of the British cable industry depends, at least in part, desirably, on the provision of an adequate supply of British material.

If we allow the British independent film production industry to go under, a major purveyor of British material—films—will have been lost to us. Therefore, it is in the interests of the broadcast television industry and the embryo cable industry to see that Britain's film industry is supported and survives.

Earlier I mentioned restrictive practices. There are two in this industry. There is the restrictive practice of the buying cartel, about which we have heard a certain amount. My hon. Friend the Minister has said that, were the levy to be introduced, the television companies would replace the material that we are discussing with cheap imported material. But, of course, many of the films that we are talking about are exactly that, and they are very cheap television indeed. The availability of such material enables British television companies—both the BBC and the independent companies — not to use home production.

My hon. Friend the Member for Wealden (Sir G. Johnson Smith) said that we are not talking about modern British television films, because they are not cheap. That is absolutely right. They are not cheap, and, in part at least, they are the films that people wish to see. When there is genuine competition for the material, on occasion a fair price is paid for it, but only when there is genuine competition. It is the joint buying cartel of the Independent Television Companies Association and of the BBC that is stifling that freedom of competition.

Sir Geoffrey Johnson Smith

I quoted the figures incorrectly. It is $500,000 for "Champions" and $2 million for "Chariots of Fire." I should be interested to know what good new British-made movies have been victimised by this so-called cartel, with the consequence that a derisory sum has been paid for them. Where is the evidence?

Mr. Gale

We have heard a great deal about what I would describe as the blockbuster independent, if there is such a thing. "Chariots of Fire" and "Gandhi" are, I think, the only two films in the blockbuster category which have been mentioned throughout this entire discussion.

Sir Geoffrey Johnson Smith

Three—"Champions."

Mr. Gale

If any hon. Member can name a fourth I shall happily give way. [AN HON. MEMBER: "Star Wars."] I believe that "Star Wars" falls into the category of the genuine blockbuster, like the James Bond films and others, and those are not the sort of films that we are discussing this afternoon. We are discussing the small, I hope British, independent productions, which will not fall into the award-winning "Gandhi" and "Chariots of Fire" category, but which can be and often are films of considerable merit. It is those films that the buying cartel has damaged.

There is another restrictive practice — craft union agreements within the independent television companies particularly, but also to some extent within the BBC. The hon. Member for Dagenham (Mr. Gould) and I were both employed—before he returned to this place and I came here for the first time — by Thames Television, which has its own subsidiary, Euston Films. Unlike the hon. Member for Dagenham, I do not discriminate between independent films made for television and independent films made for the cinema. I believe that there is a high degree of interchangeability between them and that the essential quality of a film as opposed to a television production is inherent in both. I therefore support both.

Thames Television has its own film production company. If every independent company and the BBC had their own film production companies, the argument that we are deploying this afternoon would be much weaker, but they have not. It is a fact that in many independent television companies there are closed shop agreements between the union and the management which prevent the commissioning of outside independent productions. If an independent producer or director wishes to make a film for an independent television company, he or she, or they, may he employed individually by that company, but the product will be made by the company, not by an independent producer. That, of course, does not stimulate the British independent film production industry that many hon. Members on both sides of the House seek to stimulate.

My hon. Friend the Minister referred to the element of competition. I suggest that the element of competition is sadly lacking. In seeking to remove, at least in part, the restrictive practices of the buying cartel and of the union closed shop agreements, we are seeking to stimulate the Conservative element of competition.

5.15 pm

The hon. Member for Dagenham said that he was suspicious of any argument which rests on proportion. I am suspicious of any argument which rests in the main on parliamentary drafting—and, with respect, much of the argument of my hon. Friend the Minister did just that. I dealt with the points that he made against the mode of calculation of fees. I must repeat that that mode of calculation is used for every commercial shown on television to calculate performance fees, repeat fees, the payment of the artists, and, in terms of time of viewing, it is applied to the price charged for the commercial itself. If that formula can be applied to a commercial every time it is shown, either locally or on the independent network, it can just as readily be applied to a feature film.

My hon. Friend the Member for Richmond and Barnes (Mr. Hanley)—who I know will be rejoining us shortly — dealt with the question of what is a film. His argument is unassailable. A film is a piece of material carrying a certificate from the British Board of Film Censors. It is as simple as that.

This clause was carried in Committee by a sizable majority — indeed, an overwhelming majority, when allowances are made for the normal parliamentary conventions. I ask my hon. Friend the Minister, who spoke of principle in his argument, to accept the principles that the Committee sought to insert into the Bill: first, that the television companies — the independent companies and the BBC, which is just as culpable in this respect — should be required to pay a fair price for what they get and show; and, secondly, that in doing so we and they should support the British film industry upon which, at least in part, the future of broadcast and cable television in this country will depend. I urge my hon. Friend to accept the amendment, with any drafting weaknesses in it that exist, and to use the opportunity in another place to correct them, but not to remove this provision from the Bill.

Mr. Ashdown

As hon. Members who served on the Committee will know, I did not have the privilege of serving on the Committee, but I am happy to be here today and to able to take part on Report.

My hon. Friend the Member for Cambridgeshire, North-East (Mr. Freud), who did serve on the Committee, has provided me with a very good background, and I have some ideas of my own. I should like particularly to comment on what the hon. Member for Thanet, North (Mr. Gale) said, because I think he hit the nail on the head. Certainly I believe that it is a shame that the Government should seek to throw out this amendment made in Committee, where it received a lot of support. I must say that, having read the Committee reports, it seemed to me that the Government not only had the voting against them, but, substantially, the arguments as well. It seems to me that this is the very heart of the Bill. It is the clause which is now being brought in that has countered the opposition to this Bill from a very broad section within the industry.

The removal of the Eady levy without an appropriate replacement is nothing less than the removal of the background stability that the industry has enjoyed. I think we can all accept that the Eady levy was an inappropriate mechanism to provide that background stability, but another method could be found. Without that background stability, without what might be called an infrastructure or something to provide a long-term stabilising force for the industry, it seems likely that we shall move towards a situation in which, as the hon. Member for Thanet, North has said, we shall see the demise of the British independent film maker and a shift away from a broad-based film industry which is capable and successful both in commercial terms and in artistic and rather less commercial terms. The country has a great artistic cinema heritage which has been preserved by the Eady levy and could be preserved in future more effectively by some substitute in a more appropriate form.

Some have suggested that we might have a levy other than the one proposed in the subsection, and the hon. Member for Dagenham (Mr. Gould) commented interestingly on that. For example, it has been suggested that we might have a levy on video tapes. For various reasons, not least those mentioned by the hon. Member for Dagenham, that would be an unwieldy alternative source of finance for the industry.

I also share — it was about the only part of the Minister's speech with which I agreed — the Minister's unhappiness about the unwieldy nature of what is proposed in the subsection. I agree that there are more elegant mechanisms for achieving the aim than to base it entirely on how many bottoms are on seats in front of TV sets. That is an inadequate and perhaps even inaccurate method.

If we are to have a levy, it might be better to impose one based on a percentage of the fee paid to distributors for the distribution of films. The industry would thereby have a real interest in getting the best price for its wares, and a television contribution paid by way of levy based on such a system might be more stable—because the facts would be known in advance—less fluctuating and less dependent on the caprice of the moment, such as the weather or what is showing on other channels.

In the absence of a more preferable system, the advantage of what the subsection proposes to delete—as the hon. Member for Thanet, North said, it could be amended in another place—is that at least it provides a basic structure for future stability. It establishes the idea that to have a good industry we must have a method of financing it. Thus, in the absence of a better system, I shall have to oppose what the Government are aiming to do.

I came to the debate with that view in mind, and my view was enormously reinforced when I heard the Minister's speech. The hon. Gentleman said that he accepted — it is clear from his rhetoric and from the terms of his remarks that he does — the important role that the television companies have to play in providing finance in future.

The Minister may reject the unspoken agreements about which we have heard — although there is enough evidence about them for us to take the matter seriously—but he is a member of a Government who believe in the basic ideology of a free market. He is thrusting the whole of the support mechanism for this important industry right into the hands not of a free market, because he admits that it is not a free market, but of a duopoly. The Government have taken a public monopoly and in the name of free enterprise turned it into a private monopoly. I refer to British Telecom. Here they are thrusting the dependency for a decent system of finance into a market place which is dominated by two parties.

The Minister told the hon. Member for Dagenham that mechanisms would no doubt be found for winding down prices to accommodate the levy which the hon. Member for Dagenham had suggested. Precisely the same, if it is not already happening, could happen in future. Is that the chosen method of the Minister in expressing a free market philosophy?

The Minister went further. He seemed to prefer — perhaps he was using the old debating trick of trying to destroy the argument by becoming ridiculous — a lump sum paid by television companies to the film industry. Would he really prefer that to a system by which the returns on a film are based on its acceptance by the public?

Mr. Gorst

The Minister is not considering much of a lump sum, either.

Mr. Ashdown

I am sure that he is not, but in seeking to destroy the chosen mechanism in the subsection he is, in effect, saying that he prefers the other way, which seems to be totally contrary—

Mr. Norman Lamont

But more logical.

Mr. Ashdown

More logical perhaps, but I thought that the Minister was a believer in the free market. What does he find difficult about having a levy system based on the number of people who want to watch a film—or a system based on the level of public demand?

Like the hon. Member for Dagenham, I suspect that the weaknesses in the Government's argument betray an ideological commitment against the National Film Finance Corporation. The Government know that if we were to set up a system based on the scheme in the subsection, or perhaps on a somewhat amended system, they would have to return to the NFFC.

At the heart of it all is the old ideological closed mind of the Government. They know that the film industry must be supported, and they recognise the important role that the television companies have to play. Yet they thrust it all into the so-called philosophy of the free market, which in this case is nothing of the sort. There are more effective ways of dealing with the matter.

The removal of the Eady levy without an effective replacement is, as many people in the industry say, a significant blow to the future of the British film industry. I do not say—as others, overstating the case, might say—that it is the end. However, it could be the beginning of the end of a sector of the British film industry. It could be the beginning of the end of a British film industry that is renowned not just for its popularity and commercial success, but for the range, the plurality, of its films and for their artistic merit.

For those reasons, and without necessarily agreeing with every detail of the subsection, I shall vote against the Government in this matter.

Mr. Brinton

The old style Eady levy, the passing of which the hon. Member for Yeovil (Mr. Ashdown) regrets, has received little support during the passage of the Bill. It was astonishing in Committee that the whole of the British film industry was united in saying that the old Eady levy should be updated and that changes were necessary.

Mr. Ashdown

I must have expressed myself more inadequately than I thought. I did not mean to suggest that the Eady levy should be continued. I said that it needed to be updated, but that the system of providing structural support for the industry was important, albeit that we should find other measures for providing that support.

Mr. Brinton

In that case, the hon. Gentleman and I are united in our objective.

I should at the outset mention my potential or actual interests in the subject. I am an adviser to a public relations company called Communications Strategy; I advise the British Videogram Association; I am a director of a company called Airtime (Publicity) News Flash Ltd; and I am a member of the ACTT, the technicians union, and of Actors Equity Association.

A difficulty in discussing the question of how we support the British film industry is that almost everybody speaks subjectively. When I say that the British Videogram Association, which I try to advise, is dead against putting a levy on the showing of films on television, whereas I am for a levy, hon. Members will see that possibly there are problems between us, albeit on a debating scale. One's view on this whole question depends on which side of the fence one sits, and possibly the only place where we can hope to look at the problem with any objectivity is in this House.

The Minister delighted me by admitting, contrary to beliefs in the BBC and ITV, that a great change to the duopoly was on the way. We would be having cable and satellites and so on, he seemed to say. When I was broadcasting with the chairman of the BBC last Sunday week, he told me that cable was a dead duck. If the Minister is right and the duopoly really is falling to bits, there is possibly less of a case for what has been proposed, though many — particularly those who are subjectively interested in retaining the duopoly — say that the duopoly is sticking. Therefore, the unfair competition in buying films will presumably continue in its present form.

5.30 pm

In supporting the idea of a levy for the showing of feature films on television I wish to see a continuing and, I hope, thriving British feature film production industry. The Bill is providing for the bottom end of the industry in creating the son of NFFC, which, given a helpful wind and a fair start, will do much good for smaller budget films. It will be able to contribute £200,000, for example, to stoke them up. That is the scale of the budget of Channel 4 films and that is why Channel 4, to its credit, has become involved, as has the British Videogram Association. That is the proposed scale of operation of the son of NFFC.

My difficulty is that that is only part of the British film industry. I look to some way of keeping a thriving industry that produces feature films with a budget of between £2 million and £7 million. I am not talking about the great blockbusters with considerably larger budgets. I often compare today's medium budget films with those which were produced in the 1950s with budgets of about £200,000 or £300,000. I am old enough to remember those films. There are those who tell me that films such as "The Blue Lamp"—

Mr. Hanley

Hear, hear.

Mr. Brinton

I agree entirely with my hon. Friend's backing.

It is said by some that such films do not portray acceptable techniques these days, but the issue is not one of technique. The same amount of care is lavished on producing that scale of cinema with modern techniques as opposed to film for television, plays for television which are produced on film and minifilms to be shown in arts cinemas. That is what the son of NFFC can and will do successfully, and all credit to it. However, that must be backed with some funding for medium-sized feature films.

There is an alternative to asking the television companies and the BBC to pay a levy, but it is one that the Treasury would dislike intensely. The alternative is to ask the BBC and ITV companies to make feature films, to fund them properly on the scale of which I am talking and to give them suitable fiscal relief for doing so. That would be a way of encouraging the industry. Such a system would let ITV companies off the big levy which is paid on television profits. Advantages of a commensurate nature could be found for the BBC. My conversations with those in the relevant organisations lead me to believe that there would be a keenness to produce the sort of feature films of which I am talking.

If nothing else, I hope that I am reasonably practical in my thoughts. I know that the alternative to the levy system would not be acceptable to the Government. That being so, I must look around to ascertain who best can finance the level of funding for British films that I have in mind.

I am driven to the conclusion that we must channel funds back to those who will produce the feature films from the consumer or customer as directly as we can. The hon. Member for Yeovil said that he did not like the idea of measuring the amount to be paid by the number of bottoms on seats. The virtue of the old Eady system was that the film fan paid for a ticket and, as he could be identified as a film fan, he made a contribution to the future of British films. That was the principle behind the levy. The nearest that we can get to that in terms of electronic transmission is to try to measure the size of the audience and to base the alternative funding system on the results obtained.

The amendment which was made in Committee set down a principle that can be altered easily. As my hon. Friend the Member for Thanet, North (Mr. Gale) said, mechanisms are available that could make the necessary calculations with great ease, or I am sure that a percentage could be calculated. It must be remembered that the audience for the sort of feature film that I am discussing is currently with television, not with the cinema. Even more threatening is the fact that in a few years television will run out of British films with budgets of between £2 million and £7 million if we do not do something now.

My hon. Friend the Minister of State, who has been constructive and helpful throughout our proceedings since Second Reading, asserted with great vehemence that he wanted to support the British film industry. If we do not get a commitment of the sort of which the amendment is a prime and constructive example, my hon. Friend will not be able to fulfil his commitment. That is why I shall vote against the amendment that seeks to remove the provision which was inserted in the Bill in Committee.

Mr. Chris Smith

I oppose the Government's attempt to remove from the Bill the principle that was inserted in it in Committee. As we are in the business of declaring our interests, I shall tell the House that throughout our discussions I have received considerable research assistance and support from the Association of Cinematograph, Television and Allied Technicians, of which the hon. Member for Gravesham (Mr. Brinton) is a member.

The Minister said that he wanted to base his argument primarily on points of principle rather than on practicality. The thinness of his practical arguments demonstrated the wisdom of that statement. I shall address myself to what seem to be the two major points of principle.

Mr. Norman Lamont

The hon. Gentleman talks of the thinness of my practical arguments. I do not want to sound too stunned by that accusation. I was merely saying that there are many unanswered questions which are not addressed, even remotely, by the amendment. Those questions can be addressed in various ways, but no one has tried even remotely to do so.

Mr. Smith

The Minister has elegantly extracted himself from the specific hole that I dug for him. However, there are unanswered questions on practicality and some of them have been mentioned by my hon. Friends. There should be no real difficulty in answering the remaining questions in practical terms.

I wish to address myself to what seem to be the two fundamental points of principle which led some of us to support the amendment which was agreed to in Committee and which cause me to defend it now.

The first point of principle is that the Government, in abolishing the Eady levy—they were right to do so as it was outdated — have not put in its place sufficient support and funding for the future development of the film industry. They have not created the necessary mechanism and they have not provided the funds to do so.

There were a number of discussions in Committee about the money that would be available under the new mechanism proposed by the Government to provide for the production of the sort of British films that the hon. Member for Gravesham has mentioned. We have read the Government's proposals in the White Paper and the Bill and discussed them on Second Reading and in Committee. The Minister has informed us of the proposed arrangements which have been drawn up for the body that will succeed the NFFC. Unfortunately, the money that will be made available will not be sufficient to do the job properly and ensure that British film making can continue.

We need look only at the contact made early in Committee by the ACTT with a series of financial institutions. The association discussed with financial institutions, film companies and banks what would be needed to encourage private commercial funding to go into new British film making. Each of those institutions replied that the types of funding that the Government outlined in the White Paper were insufficient to enable them to take the risks involved in setting up new film-making enterprises. That clear example shows why I believe the Government have been wrong in terms of the amount of funding they are prepared to put in as seed money for the promotion of commercial private film making.

Sir Geoffrey Johnson Smith

Although I expressed in Committee—I shall do so again if I catch Mr. Deputy Speaker's eye — a view not dissimilar to the hon. Gentleman's, I do not believe that his is the final answer. What figure does the hon. Gentleman have in mind? I am sure he has devoted a great deal of time to this aspect.

Mr. Smith

As a bare minimum, I would go for the £10 million mentioned on a number of occasions in Committee. If I were in charge of making the arrangements, however, I would probably wish to double that figure. Given the financial stringency that seems to operate in Government circles these days, I would say that £10 million is a basic minimum. We are nowhere near that figure in terms of what the Government are prepared to accept for any future funding provided by the son of NFFC.

There is another major difference in principle between the two sides of the House. I would like a national film authority to be established. That body would be in charge of distributing the money, and ensuring that it goes to the right places and creates the right initiatives. However, we shall have an organisation totally dominated by the people involved in the distributive industries. We have debated that point at great length, and it is not worth pursuing it further at this stage.

The amont of money that will be available is inadequate, and that is the first important point of principle. Establishing the levy—which we attempted to do in Committee and are attempting to preserve now—is one mechanism by which we ensure that money is available for injection into the future growth of British films.

The second important point of principle then comes into play. If one simply says that the amount of money is what is at stake, one could go for crude, rash donations from the television companies or for a levy on blank tapes. Both would be acceptable. The second important point of principle comes into play when we discuss a levy on films shown on television. I believe that there should be a return to the film makers for the artistry, talent and effort that go into making and producing films. At present, there is an insufficient return from films shown on television for the initiative, talent and effort that goes into making them.

Hon. Members have mentioned the low prices which, with some individual exceptions, are paid for the great majority of films shown on television. During 1983 television showed 1,500 films, and there were 4,000 million individual viewings of those films. That compares with 66 million cinema admissions. There is an enormous difference between the number of times a film is viewed by people watching television and the number of times it is viewed by people at the cinema. The price paid for those films when shown on television is, on average, extremely low. The return that goes to the people who put the imagination and talent into making the film in the first place is extremely low when the film is shown on television and far lower when it is shown in the cinema. Some tribute should be paid by television to the film industry for the provision of so much of this material in so many film viewings.

5.45 pm

Mr. Tom Clarke (Monklands, West)

I support my hon. Friend's argument. Does he agree that television and the wider public are responsible for training? Although we welcome the level of skill in the British film industry, there can be no guarantee that that will continue if we are not prepared to reinvest and make training a major priority.

Mr. Smith

As always, my hon. Friend is correct. The money raised by the levy could and should be used in support of the National Film and Television School. I hope that we shall discuss that aspect later.

As my hon. Friend the Member for Dagenham (Mr. Gould) pointed out, the replacement of films for viewing is extremely important, and the Government's proposals do not provide sufficiently for that aspect.

Because of the inadequate amount of money that is available and because tributes should be paid to the makers of films by television for using the products of the film industry, it is extremely important that we should reject the Government's attempt to remove this provision from the Bill.

Mr. Hanley

Many said on Second Reading and in Standing Committee that I should declare an interest in the Bill. If having a father, mother, sister and many of my family friends and constituents — perhaps more constituents than most hon. Members—totally absorbed in the film industry is a reason to declare an interest, I declare that interest. It is not a financial interest. If a deep commitment to the film industry throughout one's life is a reason to declare an interest, I declare that interest. I am interested not in helping the survival of the film industry—it will survive whatever the Bill or the future produce because of the gifts and imagination of those within the industry—but in helping to maximise the return that can be made through the talent within the film industry. That is my greatest interest, and it is in the national interest.

I have previously voted for the amendment on which the House will vote later today, because the Bill deals with the making and financing of films. Films can be made only if one has the money necessary to make them. With more money, one makes not necessarily better films but a range of films, and that will mean the production of the best films that the industry can make. If the film industry has just enough funds, it does not risk its money. It does not try out the exciting and the new—rather it tries out the old, tried and true. The "tried and true" did not create the best films in our British film history. Many of the films mentioned in Committee and on Second Reading were not expected to make a lot of money, but they did. Those films gripped the imagination not just of British audiences but of world audiences. They were not made to earn Oscars. They were made as a result of the integrity and skill of those who made them and their confidence in their integrity and skill. They had the financing, but only just.

To be fair, the Bill shows the Government's commitment to the film industry. It shows that the Government give their wholehearted approval to the industry and to the brilliant, cultural contribution that it has made not just to the whole range of entertainment but to the spreading of the name of Britain and the British way of life throughout the world for the past 50 years.

I am pleased with the interest that my hon. Friend the Minister has shown in the film industry. The Bill has been a learning experience for him and he is enriched by it. The trouble is that the Bill gives wholehearted approval to the film industry but it then says, "O.K. lads, it's up to you. We will give you a little start and now off you go." It is a waste of an opportunity and of the excellence of technicians, authors, producers and directors. I do not regard it as anything to be proud of. The trouble with the wholehearted approval that the Government have given by setting up the NFFC is that they have produced a firm foundation, but they have not delivered the plans and financing nor, as far as I can see, do they have any great confidence in the future of the film industry.

The Bill is a modest start to a new era. I should have preferred the Government to have found a more enriching start to that new era. I was not looking for more money from the Government. The Government have the opportunity within the Bill—the amendment created that opportunity — to help to redress some of the unfair balances in the film industry.

I pay tribute to the NFFC's four partners. The name of Rank is synonymous with film and film making over the years. The man with the gong is probably better known than any other symbol within the film industry. Channel 4 is a new type of film maker and with its tremendous vision, imagination — it is exciting and experimental — entrepreneurial skills and proven successes it has made a unique contribution. We should remember that that contribution is also a contribution by all the other ITV companies to which I pay tribute. The £100 million that goes to create Channel 4 comes straight out of the production budgets of the other ITV companies. There is a partnership within ITV to support the new "son of NFFC".

The Bill is about films and film making, but we must also consider viewing habits. That point has been made by many hon. Members today. If we are to provide the finance that I crave, we must provide it in the fairest way. That is the nub of the amendment and the reason why it was tabled. Films are watched in the cinema, on television, and on video by pre-recorded cassettes. Cassettes are used for recording and time-shifting existing television programmes. There will be cable and, no doubt, DBS.

The Bill, however, is not the films-made-for-television Bill; it is the films-made-for-cinema Bill. We must always remember that cinema films make an important contribution to television. There is also a little of the films-made-for-television-that-are-shown-in-the-cinema Bill about it. We must remember how films are priced when they are bought for television. They achieve their price because they are still popular in the cinema, and because there is a demand to see films as soon as possible. Thank goodness, the cinema is the only way to do that.

The Bill provides an opportunity to ensure that those who see the films pay for them. Those who watch and benefit from the films pay nothing like a fair price at the moment. The price paid by the BBC and ITV companies is not fair. As my hon. Friend the Minister said, the duopoly has been against the interests of the film industry. I do not go so far as to say that it has been exploitation, as some of my hon. Friends do.

Even my hon. Friends who are connected with the television industry will admit that they try to pay the lowest possible prices for the films that they put on television and that films shown on television are the cheapest possible television created today. There is no cheaper way of filling out TV schedules than to put on a feature film. There is no more expensive product to make than the feature film.

Sir Geoffrey Johnson Smith

There probably are cheaper ways—re-runs of "I Love Lucy", for example.

Mr. Hanley

Re-runs of former television programmes are cheaper, but it was not cheap to make those programmes in the first place. The point I am making is that it is not cheap to make films. There is a bigger difference between the cost of making a film and using it on television than anything I know.

The history of the world's economy over the past 200 years has shown that we have been taking away from those who create, make and dig and giving to those who exploit resources. We must make the world economy fairer.

Mr. Chris Smith

That is Socialism.

Mr. Hanley

That is not Socialism. Even Conservative Members recognise that a fair price must be paid for commodities. There is a level beyond which there is exploitation. I do not believe that one quarter of a penny per viewer per film is too great an expense. If that were the level of the levy, it would raise £10 million. It would still only increase a licence of £46 or £65 by 30p. It is difficult to split a levy as with, for example, lending rights to authors, but the principle is more important than the distribution. If the BBC had to pay 30p of its £65 to the film makers to help create films, it would be worth it.

A levy of £1 on each blank or pre-recorded cassette would raise £20 million. The Government are not trying to provide the money. They are trying to set a scene where a fair return for those who make the films can be constructed. The public would not carp at 30p of the licence fee going to help create a better, bigger and brighter future for the film industry. I am sure that we shall return to the argument about a levy on videotapes, but it is not germane to the Bill.

My hon. Friend the Minister said that we were not addressing ourselves to the point, which was whether the BBC and the ITV companies would buy fewer films. I do not believe that they would. They would merely have to pay for the pleasure that they are giving their audiences, and the business that they are giving to their advertisers. They would be giving a fair return to those who produce the films. They might be more selective about the films that they buy. Many films are, with respect, rubbish. I do not believe that every film made, even by the British film industry, is good. If television companies had to be more selective, the talented people who make films would benefit.

The amendment is the fairest way to create a satisfactory financial framework for the film producer and the industry. The BBC could do a great deal. It could sell its dead time between 2 o'clock and 6 o'clock in the morning to independent film producers. They would leap at the chance of showing their films and having a shop window at that time. That would raise revenue. In return, I believe that the television companies should produce the funding to keep a great industry going.

6 pm

Four Conservative hon. Members initially supported the amendment. We have worked very hard on the Bill. There was total attendance from the four of us and, indeed, from the vast majority of members of the Standing Committee. We have devoted to the Bill much more time than I believe any hon. Member can afford to give, in these days of difficult modern politics when we are subject to so many disparate pressures. I do not believe that any of the four of us has in any way moved his position. Indeed, after the discussions I believe that we have been entrenched in our positions.

I am not attacking television or the television companies. We are all grateful for their support for the industry. We merely believe that that support must be paid for fairly. We hoped that the Bill would provide a medium through which that could be done.

Mr. Frank Haynes (Ashfield)

It was a great disappointment to me not to be asked to serve on the Committee on the Bill. I had participated in the Second Reading debate. However, it was one of those things. I was appointed to the Committee that was considering the fluoridation of the water supply. They tell me that fluoridation will improve the teeth and therefore the looks not only of children but of all of us. People will have a good set of choppers when they go before the film cameras.

It is a tragedy that we are debating a Films Bill that is worded in this way and doing what it is supposed to do for the British film industry. Many hon. Members are interested in the film industry. I know that on the Government Benches, in particular, there are a number of hon. Members who have had a fair amount to do with the industry.

On Second Reading I commented on the debonair manner of Ministers. The hon. Member for Richmond and Barnes (Mr. Hanley) suggested that the Ministers found the Committee stage of the Bill a real education. If education—at least about film making—is added to the Ministers' debonair manner, we may see some different faces at the Department of Trade and Industry. The present Ministers may go on to better things. One never knows.

I must admit that I have not agreed with the arguments put forward by either side of the House. The Government are wallowing about all over the place. They do not know where they are going—and not only with the Films Bill. The nation, like the British film industry, is going down and down. It is high time that the Government woke up. They were told on Second Reading, they were probably told in Committee and I am telling them now that they are not improving the situation at all. I am suspicious of the easy way out that is being taken by the Government.

I agreed with one of the points made by the hon. Member for Gravesham (Mr. Brinton). If the Government intended to live up to their responsibilities, not only to industry in general but to the film industry in particular, they should have picked up the idea of some sort of relief to be offered by the Treasury. On Second Reading, the Minister wept buckets of tears over the situation of the film industry and said that the Government wanted to help. One way in which they could help would be by arranging some Treasury relief.

On the question of the television companies and the levy, I can assure my hon. Friend the Member for Dagenham (Mr. Gould) that he need have no fears about me. He will find me in the right place. However, I do not agree with either of the suggestions that have been made. We have heard that the television companies may buy older films in order to keep costs down. Although I do not agree with the Minister in general, I agreed with one point that he made. If there is a levy on a film made only two or three years ago, it will be much cheaper for the television company to choose an older film. I am afraid that the levy will drive the television companies away. We all know the saying about biting the hand that feeds. I believe that that saying is applicable here. The television companies will be driven away from buying new films.

There are about 10 million pensioners in our nation. I am not one of them.

Mr. Robert Key (Salisbury)

Go on.

Mr. Haynes

Perhaps the hon. Gentleman is unaware that there are nearly 10 million pensioners in our country. His comment shows that he is in the dark.

I remember the time when the hon. Member for Gravesham used to read the news. I remember the period when films were made more cheaply than they are now. Today, costs are massive. I must declare my interest. No, I am not a member of Equity. I have not been to Hollywood. I am certainly ugly enough for a horror film—but let that pass. I am a member of the films group in the House, and I am proud to be a member. I try to carry out my responsibilities in that connection. I am sorry that I am not wearing my studio tie today. I have visited a number of British film studios. When one talks to people who work in the industry, one really gets the message about how the industry has gone down and down. Many studios have had to close.

The country's 10 million pensioners look forward to films such as the beautiful film that I saw on television on Sunday night. It was a Warner Brothers film starring Bogart and Cagney. On the previous Sunday there was a real masterpiece — "Show Boat". I listened to Paul Robeson singing "O1' Man River" in his rich bass voice. That film was made in 1936. I am old enough to remember it but I wanted to see it again. Such films are catching on on television. The hon. Member for Hendon, North (Mr. Gorst) mentioned the Bond films and others like them. There is no doubt that many youngsters are interested in such films, but those who are retired or approaching retirement are more interested in older films.

Television companies will be encouraged to show such films if we do what the Government suggest. Well, they are not suggesting a great deal — they are wallowing about and trying to get someone to dig them out, as per usual. I do not favour either of the suggestions that have been made, but would prefer the Treasury to make a contribution if the Government are genuinely interested in the British film industry.

Sir Geoffrey Johnson Smith

I agree with the hon. Member for Ashfield (Mr. Haynes) that nostalgia for first-class movies made in the 1930s, 1940s and 1950s is growing. They are quite cheap and the hon. Gentleman might be right in saying that television companies will find them more attractive if a levy is imposed.

I should like to outline why the Government should be supported—they have not enjoyed much support today. No hon. Member has proved by using facts and figures that the proposed levy on television companies is fair to those companies. Nor has anyone shown that the price that television companies pay to show British films is unfair. I have quoted the prices that have been paid for contemporary British productions of quality, and nobody has shouted me down.

Mr. Hanley

When television companies bid for films that they want to show, is there a straightforward auction between the two companies or do they agree in advance which shall make a bid?

Sir Geoffrey Johnson Smith

Hon. Members have suggested that there is not a fair competitive process but that there is a cartel. It is some cartel that fetches up $4 million for "Star Wars", $2 million for "Chariots of Fire" and $500,000 for "Champions". People in the business suggest that competition works, and I have no evidence to show that it does not. My hon. Friend the Member for Thanet, North (Mr. Gale) said that the price paid for small budget productions is too low in relation to the talents and costs of such productions. I wonder which films he was referring to. Are they the types of film that some hon. Members suggest are produced for the real cinema, or are they those which are produced for television and which are criticised by my hon. Friends who support the levy? If we are considering films that will be seen by most people on television, the Government have made a case, as has the industry. As a result of the establishment of Channel 4, there has been a massive increase in financial support for the British film industry.

6.15 pm

Mr. Gorst

Does my hon. Friend agree that he is arguing that when television companies go shopping at Fortnum and Mason they pay a high price but that they never pay a high price when they go to the real market, which is the high street? Does he agree that most of what they buy is bought at ridiculous prices and that they only occasionally shop at Fortnum and Mason?

Sir Geoffrey Johnson Smith

Such charges are made, but they have not been substantiated. It is argued that television companies pay a high price at Fortnum and Mason, but do not in the high street. What sort of argument is that? That is one reason why television companies go to the market. There is competition there for many low budget movies. There are so many of them around that they do not fetch as high a price as others such as "Gandhi".

Mr. Gale

May I suggest that the difference is not between Fortnum and Mason and the high street but between the high street and the pawn shop? Does my hon. Friend agree that it is the desperation of the pawn shop that forces producers to sell at pawn shop prices to the ITCA and the BBC? My hon. Friend said that he had heard no argument that controverted his. The reason for that is that, until fairly recently, right hon. and hon. Members were in Committee upstairs, where such arguments were spelt out clearly. Perhaps I might put it on the record here that films shown on television costing £60,000 or £120,000 an hour represent cheap television.

Sir Geoffrey Johnson Smith

Many television productions are very cheap and many people who want to get into the cable television business will want to show many old television productions which are probably even cheaper than old films. That is how the market works. Hon. Members are trying to work against the market. They are pleading that people who have worked in the movies in Britain or the United States — most of the cheaper movies are American — are somehow being exploited when, 20 years later, their film is seen by millions of people on television. People involved in films cannot expect the high prices that were paid when the film was made to be repeated 20 years later. That does not apply to the products of any other business.

Mr. Gould

As I understand it, the hon. Gentleman's bald point is that we are wrong to say that television companies are paying low prices for films. Does he agree that the examples of high prices that he gave do not relate to the majority of the 1,500 films that are shown on television each year? Does he agree that those low prices militate against the very in-house film production of which he is so proud?

Sir Geoffrey Johnson Smith

I do not agree that the low prices militate against film production. Old movies are bound to command a low price because there are many of them and there is no reason why television companies should pay a high price any more than someone should pay a high price for a pair of second-hand shoes. Films go downmarket and even classic films cannot be expected to command a premium price year in, year out. To do that would be to exploit the consumer. Television companies — the consumers — are not prepared to go along with that. There are plenty of opportunities for the film industry to recoup its investment if it goes about distribution correctly. Sensible distribution involves doing away with the ridiculous restictive practices of the past, such as the barring of movies from second-run cinemas and from television until they are tired out and a lot of interest has been lost. There are certain modifications belatedly being made to improve the system so that the revenue for film producers can be increased. Obviously there are bargains to be had, but they do not arise from cartels. Anyone in the British film industry can get a high price for a new prestigious production, commensurate with the talents that went into such a movie.

The film industry has had to come to terms with the fact that the cinema has been in decline. If we think that the answer to the cinema in decline is to pump more money into the production end, we shall not solve the problem. We shall merely create some jobs for people to make more expensive movies, which will be seen by decreasing numbers of people in the cinema. I do not know of any other countries that are dealing with the problem of a decline in film production, which are seriously contemplating following the road that the Government have been invited to take. On the contrary — I do not wish to be drawn too far into this because it is a point for Third Reading — they realise the growing interconnection between distribution, different forms of production, exhibition and what the film industry is there for. France, for example, recognises that there is no dichotomy between the film industry that makes commercial films and the film industry that makes arts films. It recognises that this is also an art industry. France has a much more mature, more sensible and, in the end, more viable route to restore the strength of the French movie industry.

Mr. Gould

Since the hon. Gentleman cites the French example, he will wish to concede that the French recognise the principle of redistribution. It just so happens that their cinema attendances have held up better than ours.

Sir Geoffrey Johnson Smith

French audiences have held up for other reasons. [HON. MEMBERS: "Television."] It is not because of payment by television at all. In so far as television supports French movies, I agree. It is not through financial efforts that it is because it is appallingly bad compared with our own industry.

All hon. Members agree that the film industry needs an injection of investment, not just for production but to cover the whole spectrum that I have mentioned. It is totally unfair to suggest as a short-term measure because we do not think that the Government have it right—they have not got it completely right and I do not know what other proposals they intend to make if the film industry is to be put in a more viable state—that we should impose the burden on the television industry. The distinction between film making and television making is gradually becoming blurred. To boot, the television industry contributes an ever-growing proportion of its revenue to the film industry. It is a generous contribution. Some hon. Members present served on the Committee which helped to create Channel 4. We hoped that it would be a success and that it would not cater purely for minorities but would have a strong sense of commercial responsibility. That is shown by its contribution, talent, inventiveness and cash in support of the British film industry.

It is not worthy of the House to suggest that an industry that is contributing nearly £100 million to the British movie industry should be condemned because about 50 per cent. of the productions are more suitable for television. People want to view films on television. It is no use suggesting that they should not be allowed to because they should see them in the cinema, unless something is done about their exhibition.

On those grounds, the support that the television industry has given to the movie industry should lead us to believe that it would be wrong to impose additional burdens on it, which might have the reverse effect from that which we expect.

Hon. Members must recognise that, whatever the profitability of television companies, they face difficult problems. The audience is to be fragmented through the development of cable and direct broadcasting by satellite. The BBC, public and private sector television are being asked to finance the satellite, which we all hope will be a British satellite, in the latter half of this decade. That is a formidable bill to face. It will give even greater opportunities for distribution of British films, which is what they want.

I could pump £100 million into the British film industry, as has been suggested, but to some extent it would go down the drain commercially. No British film industry has proved viable on its own because the home market is not large enough. It was thought that Alex Korda, the brilliant producer of "The Private Lives of Henry VIII", had found the key to that. We still persist in believing the myth that if we produce a good British movie we can make the British movie industry viable, but we cannot because it depends on American distribution. That is one reason why the British movie industry often comes a cropper or has false dawns because it has momentary success in America and then crumples again. That is why we must consider the matter from a wider point of view.

Apart from the inelegance of the proposed solution, it is not only unfair but counter-productive. I agree with the guidance given by the Independent Broadcasting Authority. It said: The health of Channel 4 and the independence depends largely upon the well-being of Independent Television. We can see no justification therefore for an additional mechanism which will simply rob Peter to pay Paul. That is a fair and correct approach. If at some future date — and we shall need to reconsider the industry's position — hon. Members would like to suggest to the Government that their responsibilities do not end with this Bill, I would follow them into the Lobby. But I shall not vote with them tonight.

Mr. Gorst

If I had not just listened to my hon. Friend the Member for Wealden (Sir G. Johnson Smith), I would have said that our debate had been of an all-party nature. Apart from the odd party political fact that emerged, I have not disagreed with anything that has been said from either side of the House, with the exception of the remarks of my hon. Friend the Minister. However, I wish to acquit him of the suggestion which has been made that he has principled objections to this part of the Bill. I also wish to acquit him of any suggestion that he has allowed dogma to masquerade as principle or prejudice. The fact is that he has no practical objections to this part of the Bill. He does not see insurmountable difficulties, and has only been voicing unresolved problems, which could easily be dealt with by his civil servants were there a will to do so.

The debate, therefore, is between the two sides of the House and two tips of a television iceberg. One surfaces intermittently in our proceedings with a sad sigh or a selective statistic, and the other is the Minister. At the end of the debate the Government will undoubtedly use their unspoken weapon—a Whipped vote—to get their way. For the time being we must accept any such verdict, if that is the way in which the Minister concludes our proceedings, but I hope that the other place will note our arguments and exercise its independent judgment on those arguments, without fear of the consequences of which we who must obey a different system must take cognisance.

6.30 pm

I do not wish to rehearse all the arguments that have been advanced this afternoon, nor any that I voiced in Committee, because that would be tedious repetition. But one point that calls for more comment is whether the prices paid by ITV and the BBC for showing films on television are fair. My hon. Friend the Minister seemed to be arguing that low prices for old films were fair, but I am not attracted by that argument, and I hope that hon. Members are not attracted by it. If we go along that path, it is difficult to see how we cannot say that old books, gramophone records, plays, ballets and operas should also receive reduced payments. No one would wish to argue along those lines, not even my hon. Friend the Minister. What should influence the price of those films is the demand for them. I am sure my hon. Friend will agree that the television companies should pay a different price for films for which there is a demand than for films for which there is no demand.

I wish to take up the point made by that quaint character, the head of briefing of the IBA, that the levy will harm television. I ask my hon. Friend the Minister to remember that if ITV can afford to pay a levy to the Treasury, it can afford to pay a levy to the film industry, especially if the Treasury would be so kind as to remove the obligation to pay its levy. The Treasury takes far more in its levy than would have to be paid willingly by consumers for the opportunity of watching films on television.

I end with a hypothetical suggestion to those two tips of the iceberg to whom I referred. Let us suppose that all films were available to the television audience only through the medium of pay television and that the competition from ITV and the BBC did not contain any cinema films. Do my hon. Friend the Member for Wealden and those who think like him believe that the amount of money collected by a pay television channel, with a similar penetration of the nation, would be less than, the same as, or more than is paid in aggregate by the BBC and ITV? If they maintain that it would be the same, they live in a dream world. If they believe that it would be more, they must concede our case and accept the levy so that fairness can operate.

Sir Geoffrey Johnson Smith

rose—

Mr. Gorst

I see that my hon. Friend wishes to challenge me.

Sir Geoffrey Johnson Smith

I know better than to do that, because we wish to draw this debate to a conclusion. From what my hon. Friend says, I assume that he is in favour of pay television. I also favour it, and one reason why I object to the proposal of my hon. Friend is that he supports a levy on British television companies and, in addition, he supports pay television, which will fragment the audience of the companies, which rely on advertising. He cannot have it both ways.

Mr. Gorst

My hon. Friend, with his usual charm, wishes to draw me away from the substance of my argument, which is that if the audience could show what it wished to pay for, the answer would be different from that given by him and by the Minister.

Remorselessly, I come to the conclusion that if the Government will not concede the retention of this provision, gently, stealthily and gradually they will ease the cinema side of the film industry into an unsung burial ground. That will be a great tragedy for Britain.

Mr. Key

We have had a long debate, and I suspect that I am at the bottom of the pecking order, but that does not mean that my speech will leave any important stones unturned.

I hope that the hon. Member for Ashfield (Mr. Haynes) was not offended by my lighthearted intervention in his speech. I was paying him a double compliment, first, because I know only too well that he has a long time to go before he receives his pension, and, secondly, because I meant it literally when I told him to, "Go on." He was proving the point that I wished to make, because he was one of the first hon. Members to refer to the consumer of the product about whose creation we are talking.

I was nearly persuaded by the eloquent speech of my hon. Friend the Member for Richmond and Barnes (Mr. Hanley) to vote for his argument. However, despite his eloquence and the fact that it is always a pleasure to follow my hon. Friend, he will not succeed. My hon. Friend the Member for Wealden (Sir G. Johnson Smith) said that people wished to watch films on television instead of going to cinemas. I doubt that. When we seal the fate of this clause, and later that of the Bill, we may have convinced ourselves that we are collectively right, but we shall then have to try to convince the consumers of the product that we are right.

I speak with some diffidence, because some hon. Members who have spoken have great experience of the film industry. In Committee and today there has been much lobbying from all sides of the industry, which have been working closely together, but the consumer has had somewhat less say. In the borrowed words of the Minister, we must demonstrate that the consequences of the Bill will be beneficial. Incidentally, I congratulate the Minister on guiding us through the Bill. Popular though it may be to blame the Government for everything, the blame for this point must be placed elsewhere.

We are in danger of too many people having it both ways. It is clear that much of the discussion has been carried on as though there was a free market in films. There is not. The Minister taunted us a little by suggesting that everything will be all right because the cable and satellite television revolution is just round the corner. I must immediately declare an interest as a shareholder in a small company called Salisbury Cablevision, which has been knocked off the bottom rung of the ladder to somewhere below the bottom rung by the Government's actions in respect of the fledgling cable industry.

We cannot say that the proportion of films on television is becoming smaller, so a levy would be counterproductive, but at the same time say that cinema audiences are now sitting in front of their television screens, so Britain, almost alone in the world, will do nothing to encourage cinema-going. Those arguments must be exclusive to each other.

There is no free market in the industry and, furthermore, Britain is not an island. The impact of British experience in the international film industry is well known. Only recently I discovered that British citizens are working in every section of the production of Roman Polanski's new epic "Pirates". There are British actors in main and secondary roles, British technicians are doing all the special effects, there are British costume designers, and the pirates' galleon will sail with British masts, sails and riggings, and the film will be overseen by a British naval architect. Even the jolly roger will be made from British cloth.

Mr. Hanley

May I also suggest that my hon. Friend should declare an interest, as he has a minor part in the film "Amadeus"?

Mr. Key

Modesty had forbidden me from mentioning that fact. However, I must emphasise that it was in a purely amateur capacity, and I had no financial involvement. As I said on Second Reading, it is a marvellous film and I think that every hon. Member should see it forthwith.

May we be specific about what we are discussing in terms of cinemas? The decline in cinemas in the country has been sharp, although not as sharp perhaps as the decline in audiences. Over the 10-year period since 1974 the number of licensed public cinemas has fallen from 1,590 to 1,495, but the total of admissions has fallen from 143 million to 55 million. The number of staff in full-time and part-time employment in cinemas has halved in both categories.

When I was discussing the Bill with constituents, I addressed myself to the question of cinemas. It seemed to me that we had not discussed cinemas in any depth. I wrote to the obvious people, the distributors, to ask them what they thought about cinemas and their significance with respect to the Bill. I was told by the Rank Organisation that the reason that cinemas have declined so fast in the United Kingdom compared with other countries is partly because of language, which has protected the cinema in France and Germany, whereas the United Kingdom has a diet of mainly American films; secondly, that disposable income is much higher in the United States, France and Germany than in the United Kingdom; thirdly, that the quality of television varies widely and is probably best in the United Kingdom; fourthly, that due to legislation, taxation and rates, operating costs are probably higher in the United Kingdom than elsewhere, as is the cost of land, and consequently cinema prices tend to be higher; and, fifthly, that unemployment is higher in the United Kingdom, especially among young people. The next reason given is video penetration and demographic changes. The final point is that the United States on average enjoys much better weather, and that 20 per cent. of American cinemas are drive-in cinemas.

We have had an interesting experience in Salisbury recently. The cinema has been closed. It has been said that the reason for the decline of the cinema is that nobody wants to go and nobody is interested any more. I think that the hon. Member for Ashfield would agree that many pensioners much enjoy going to the cinema, particularly to matinee performances. In Salisbury, when threatened with the closure of the cinema by the Rank Organisation, well over 20,000 people signed a petition to keep open the cinema which, in a town with a population of 40,000, is pretty good going.

Thorn-EMI Screen Entertainment had a somewhat different view from Rank. Rank professed that it did, indeed, have an interest in maintaining its distributor chain. Thorn-EMI was rather more open and honest about its own failings, I suppose, claiming that it did not give a particularly good service to the public in the past, that is, in the provinces, one cannot book seats, one has to stand in queues, often in the rain, there is usually nowhere to sit in comfort and, where cinemas have been twinned or tripled, one can often hear the sound from the adjacent theatre, there is no soap in the loos and one cannot find a towel even when one gets to the loo. All the cinemas are in the wrong areas. They should be near the communities, in shopping centres and so on. The local advertising of films is atrocious. As we know, EMI is remedying that situation as well as it can.

I turned for advice to the British Film Institute also. It pointed out that the remarkable level of penetration of video recorders could not be blamed entirely. Indeed, it was a symptom of the public enthusiasm for entertainment by film in spite of its apparent distaste for cinemas.

Mr. Tom Clarke

I was interested in what the hon. Gentleman said about cinema attendances. Would he care to predict — or, if not, would he encourage his hon. Friend the Minister to predict — the effect on cinema attendances if the Bill is enacted?

Mr. Deputy Speaker (Sir Paul Dean)

I hope that the hon. Gentleman will not be tempted to go too wide of the amendment.

6.45 pm

Mr. Key

Thank you for saving me, Mr. Deputy Speaker. I am sure that the Minister will address himself to that point. My hope, however, is that attendances will rapidly increase, and I should say why I think that that is likely to happen.

I refer here to the view of the British Film Institute, when considering evidence from other countries, as to what it believes to be wrong with the United Kingdom situation. First, there has been low or zero investment in cinema fabric refurbishment over many years. There has been no new cinema building in areas of likely audience concentration such as suburbs and out-of- town shopping centres, and that has occurred particularly in the United States. There has been a lack of effective competition between exhibitors to the benefit of the audience and a lack of strategic booking and promotion policies on the part of United Kingdom distributors. Those factors together have as much bearing on the disastrous decline in cinema attendance as has video penetration.

It has been said that Rank and EMI would prefer to be out of the business altogether. I cannot comment on that; it is merely hearsay. Looking at the profitability of that side of their industries, one can understand why they might wish to draw those conclusions. EMI has committed itself to a major programme. Rank has been less forthcoming.

I end on a note of optimism. Like my hon. Friend the Member for Wealden, I do not believe that people do not wish to go to cinemas. I think that they will go to cinemas if the cinemas are in the right place and offer the right kind of comfort and attraction for family entertainment. Having recently been not visibly involved in "Amadeus" but involved in the soundtrack only — I would not wish to put off any hon. Member from seeing the film; it is not necessary to see me — I have seen that end of the operation and the high quality of technology that is going into films. It is a tragedy that more people do not go to cinemas in which there is a high standard of reproductive facility to attract audiences.

I believe that what happened in the United States could happen here if the Government can convince me that they are right and that the supporters of the amendment are wrong. Cinemas in the United States are becoming more sumptuous. There is a complete reversal of the trend towards spartan facilities such as we tended to see in this country. It is significant that in the past two years alone more than 2,000 new cinemas have opened in the United States. Many have 500 or more seats which we are constantly told it is impossible to achieve in this country. The leading cinema owner of Sumner Redstone, president of the North-East Theatre Corporation of Boston, is reported as having said: We have to compete for the public now and the only way is luxury. There have been enormous strides in sound, and ultra-sophisticated equipment is the order of the day.

I believe that there is a great future for the cinema as opposed to just the film. I hope that the Minister in his reply will convince me that a levy is not the answer to this. I hope too that the distributors will convince the consumers that their policies are right and that they will meet demand with adequate cinema provision.

Mr. Norman Lamont

I am grateful to my hon. Friend the Member for Salisbury (Mr. Key) for making clear what he meant when he said that he had a part in the film "Amadeus". Indeed, until he made it clear, I wondered whether he played the part of Mozart or Salieri. I congratulate him on being involved in the film, and naturally I hope that he will be able to arrange for me to see it, as I have read so much about it.

A large part of the debate has revolved round the principle of the levy. As my hon. Friend the Member for Hendon, North (Mr. Gorst) said, it is not really the practicalities that we have been discussing in the debate. I agree with my hon. Friends the Members for Richmond and Barnes (Mr. Hanley) and for Thanet, North (Mr. Gale) that no doubt there are answers to some of the questions which I identified in my opening remarks. All that I sought to do was to say that we had not identified the answers to the questions posed in Committee. It is more than just a small point, because the reaction to a levy would vary according to the answers to those questions. Different people would have different opinions upon a levy, depending upon the answers to those questions. However, it is the principle that we have been discussing.

As my hon. Friend the Member for Hendon, North said, a large part of the debate has been about the restricted market. Questions such as these have been asked: is a cartel operating? Are the prices that are paid for films by television companies unfair? We have heard much about the duopoly. It is an imperfect market. It is literally more than a duopoly. Channel 4, by coming along and financing its own films, is becoming a third force. In the debate we are talking about only part of the market. We are talking about levying part of the market that is available for films. We are talking about levying only part of the television market.

I would not deny for one moment that that section of the market is imperfect. I disagree with the suggestion that somehow the deficiencies of an imperfect market are corrected or made more perfect by introducing the distortion of a levy on top. I do not consider that the appropriate response.

Again and again we hear in the debate that it is not a free market. I hope I have made it clear that I do not think that it is. It is odd that Labour Members tend to say that in almost every debate. In shipbuilding debates, I am told that it is not a free market. I know that it is not a free market. I know that it is not a free market in the film industry as well. It is an imperfect market, but an imperfect market is better than no market at all, or no element of competition at all.

Mr. Gould

The peculiarity of this market is that there are 4 billion occasions on which the demand for the product is demonstrated, but the market reward for that demand cannot be paid to those who supply it because the market is controlled by a duopoly of television companies. The levy is simply a mechanism whereby that constriction of the market can be at least partly overcome.

Mr. Lamont

That is what the whole debate is about, and that is what I am addressing my remarks to.

To my mind, the fact that it is an imperfect market is not proof for the assertion that inadequate prices are being paid for films made by British film producers. That has been asserted rather than proven in the debate. Some hon. Members—not all—have accepted, perhaps uncritically, the claim by those who, after all, have an interest in the matter that producers' remuneration is not all that it might be.

My hon. Friend the Member for Wealden (Sir G. Johnson Smith) put a different gloss on that matter and gave a different set of arguments and examples. It was he who said that what we are often talking about are secondhand goods. We are talking about films which have exhausted their life in the theatrical cinema. If they had not, they would be exhibited. That is why the price for so many of those films is low. My hon. Friend also said that the prices must be compared with those that might be paid for cheaper American material that might be purchased by the BBC or the television companies if they had to face the demands of a levy.

Mr. Gorst

It is clear that it is common ground between my hon. Friend the Minister and everybody else that there is a distortion in the market. What is not clear is whether my hon. Friend concedes that, by whatever means, there is a need to help those who operate to a disadvantage in the market.

Mr. Lamont

What I am saying is that there is an element of competition. Of course, it is not a perfect market. It is not a free market. As has been demonstrated again and again, for example by my hon. Friend the Member for Wealden, there is an element of competition in the market.

The question whether there is rigging of prices in the market between the BBC and ITV, or between different companies, is a serious one. I am sure that the Director General of Fair Trading will read the debate and note that. I am sure that he will consider what has been alleged and asserted. It is for him to investigate the matter and consider whether there is evidence of improper practice. The fact that people assert that inadequate prices are being paid is not, by itself, an argument for a levy. If there is a cartel, operating improperly, it should be investigated. However, that has not been proven beyond doubt and I do not believe that much evidence has been provided in the debate.

Mr. Gorst

rose—

Mr. Lamont

I was just about to refer to another point that my hon. Friend made. He put a good question to the House when he asked, if we had a system whereby films were provided through pay television, would the remuneration to film producers be less, the same or greater than at present? It is a brilliant question, but he gave no evidence for the answer, and he seems to think that it is self-evident that they would be paid more. I agree that the question is right, but of its nature it is almost unanswerable. If there is real evidence of price fixing or rigging of the market between the BBC and ITV, the Government or the Director General of Fair Trading should consider that, but it is not enough just to assert that the remuneration of producers is less than it should be simply because they say that that is so.

Mr. Ashdown

The Minister has denied as strenuously as the hon. Member for Wealden (Sir G. Johnson Smith) that a cartel is in operation—

Mr. Lamont

I did not.

Mr. Ashdown

I apologise to the Minister. The hon. Member for Wealden denied that such a cartel was in operation, but the Minister said that perhaps it was and should be looked into. Let us accept that no such cartel is in operation. If the Minister accepts that it is not a free market, however uncorrupted it may be now — taking that point as read—how long does he believe that, with only two buyers in the market place, it will remain a fair market that reflects fair prices? I ask the Minister to recall that he is setting up a permanent system to fund the film industry. Surely, with only two buyers in the market place, in time it must become corrupted. Does the Minister recognise that the system of levy is trying to measure demand in some other way as that demand cannot be measured by the free market system because it is an imperfect market?

Mr. Lamont

The Liberals are always accusing us of being dogmatic and theoretical, and always trotting out phrases about free markets and fair prices. Life consists of imperfect markets. That is the real world.

Mr. Ashdown

Answer the question.

Mr. Lamont

I will answer the question. I always do. The answer to imperfect markets is not to add distortions such as those proposed by the Opposition. I have been asked how long it will be before the situation alters. That depends on other matters.

My hon. Friend the Member for Gravesham (Mr. Brinton) talked about DBS, and my hon. Friend the Member for Salisbury talked about cable. I was asked whether there was a reason for believing that this revolution and these changes might be slowing down. I concede that there might be problems. Progress on that front might not have been as fast as many of us had hoped or predicted, but I think most people feel that that is the way for the future. Undoubtedly the market for films will open up. Undoubtedly the restricted market will become wider and the element of monopoly or duopoly will gradually change. If that is the future, it is anachronistic and wrong to impose this levy on television companies.

7 pm

On top of that, we have to face the fact that there will be a voracious appetite for films on television. The EC Commission has calculated that by the late 1980s there will be a demand for about 125,000 hours of fiction per year. That far surpasses the combined film production at present of France, Germany, Italy and the United Kingdom. A large market is opening up.

Mr. Gorst

My hon. Friend referred to the Director General of Fair Trading. Is he aware that all the information that one is able to glean about prices comes from the ITV companies? As far as I am aware, the IBA does not know at what price its programme contractors buy in their material. The BBC is extremely cagey about prices as well. Therefore, my hon. Friend's suggestion that the Director General of Fair Trading should look at the matter is not only sensible but welcome, and I hope that he will pursue it.

Mr. Lamont

My hon. Friend would not wish to misrepresent me. I said that if there were evidence of abuse the Director General of Fair Trading would obviously wish to consider that, and that I was sure he would read the debate. However, I take my hon. Friend's point seriously. I am anxious to look at some of these points about prices. I have had conversations with people in the industry about this vexatious question, and the answers have been no more enlightening than the debate. There have simply been assertions after assertions. I agree that there is a case for finding out more of the facts about it. However, until we have the facts, the argument for the levy does not stand up.

It must be emphasised, as my hon. Friend the Member for Wealden emphasised, that television companies have a vested interest in film production. He referred to what Channel 4 is doing for film production. The Channel 4 "Film on Four" programme alone has spent £14.5 million on films. The BBC expenditure on films has, in the past five years, increased by about 100 per cent. Would these sums of money be made available if there were a levy? That is open to question.

Mr. David Crouch (Canterbury)

My hon. Friend may remember that although I was not on the Committee I took a considerable interest in the Bill on Second Reading. I am a considerable film viewer, but I never go to the cinema. I support the film industry. I think my hon. Friend knows that I have a great interest in the theatrical industry. If I go to the theatre, I pay £15 for a ticket, or else I cannot get a seat. However, I can wait to see "Amadeus" on television, and that is unfair. Whatever my hon. Friend is saying, there is not a glowing future for the film industry. There is not a great expanding market. I can see those films which I like to watch by staying at home and paying £47 or £65 to the BBC. The film industry does not have a great future.

Mr. Lamont

With great respect to my hon. Friend, who is a friend of mine, his intervention or little speech went over much ground. If I reply to all his points, I shall repeat the debate that we had in Committee and a large part of the debate that we have had this afternoon. I am pleased that he has been able to join us at this stage in the proceedings, but he will forgive me if I do not answer all his points.

The hon. Member for Dagenham (Mr. Gould) did not answer the point about what would stop the BBC and independent television companies from cutting back on the amount that they already spend on television film if there were this levy. This is a fundamental and important point.

Mr. Gould

I offered a number of points, but the fundamental one is that, even with the levy, the buying in of feature films by the television companies is so much the cheapest form of television that the companies would be a long way from giving up the practice. It would still be the thing that they would be bound to do.

Mr. Lamont

The hon. Gentleman's point illustrates what I was saying. Any pressure put on the television companies by the levy will intensify pressure to buy the cheapest forms of entertainment, such as some American films. The hon. Gentleman, for all his attempts to answer the question, did not address himself to the point, and nor did the hon. Member for Yeovil (Mr. Ashdown). The hon. Member for Ashfield (Mr. Haynes), who is sitting on the Front Bench now, addressed himself to that question when he was on the Back Benches a few minutes ago. His answer was the right one, and I am not sure whether he should not now retreat to the Back Benches again. He was right in saying that there was a great danger that the levy might lead to less money being spent by the television companies on British films.

My hon. Friend the Member for Gravesham attempted to widen the debate to consider the finances of the British film industry. He said that unless there were a levy there would not be adequate support for the British film industry. We were perhaps moving towards the arguments that we had in Committee about the level of funding for the son of the NFFC and capital allowances, and so on. Again, my answer to my hon. Friend the Member for Gravesham was given by my hon. Friend the Member for Wealden. Even if the Government have got it wrong about the finances for the British film industry, that is not an argument for imposing a levy for British films on television.

My hon. Friend the Member for Salisbury was wholly right to emphasise that one cannot base a film industry largely on the prosperity of the television industry. If the film industry is to survive and prosper, we must reverse the trend of decline in our cinemas. A good British film industry must have a strong cinema sector. It cannot survive simply by showing films on television. To impose a levy on the television companies based on films shown on television would be merely to repeat the errors that we had before with the Eady levy. The Eady levy on films shown on cinemas was a mistake, and to extend that principle to the television sector would be an equally grave error.

For those reasons, I urge my hon. and right hon. Friends to vote for the amendment.

Question put, That the amendment be made:—

The House divided: Ayes 224, Noes 164.

Division No. 90]	[7.10 pm
AYES
Alexander, Richard	Hamilton, Neil (Tatton)
Amess, David	Hannam, John
Ancram, Michael	Hargreaves, Kenneth
Arnold, Tom	Harris, David
Ashby, David	Hawkins, C. (High Peak)
Atkins, Robert (South Ribble)	Hayes, J.
Atkinson, David (B'm'th E)	Hayward, Robert
Baker, Rt Hon K. (Mole Vall'y)	Henderson, Barry
Baker, Nicholas (N Dorset)	Hickmet, Richard
Baldry, Tony	Higgins, Rt Hon Terence L.
Banks, Robert (Harrogate)	Hind, Kenneth
Beaumont-Dark, Anthony	Holland, Sir Philip (Gedling)
Bellingham, Henry	Holt, Richard
Benyon, William	Hordern, Peter
Bevan, David Gilroy	Howarth, Gerald (Cannock)
Blackburn, John	Howell, Ralph (N Norfolk)
Blaker, Rt Hon Sir Peter	Hunt, David (Wirral)
Boscawen, Hon Robert	Hunter, Andrew
Bottomley, Peter	Johnson Smith, Sir Geoffrey
Bottomley, Mrs Virginia	Key, Robert
Bowden, Gerald (Dulwich)	King, Roger (B'ham N'field)
Bright, Graham	Knight, Mrs Jill (Edgbaston)
Brooke, Hon Peter	Lamont, Norman
Brown, M. (Brigg & Cl'thpes)	Lang, Ian
Bruinvels, Peter	Lawler, Geoffrey
Bryan, Sir Paul	Lawrence, Ivan
Buchanan-Smith, Rt Hon A.	Leigh, Edward (Gainsbor'gh)
Buck, Sir Antony	Lennox-Boyd, Hon Mark
Budgen, Nick	Lightbown, David
Burt, Alistair	Lilley, Peter
Butcher, John	Lloyd, Peter, (Fareham)
Carlisle, John (N Luton)	Lord, Michael
Carlisle, Kenneth (Lincoln)	Luce, Richard
Carttiss, Michael	Lyell, Nicholas
Chapman, Sydney	McCurley, Mrs Anna
Chope, Christopher	Macfarlane, Neil
Clark, Hon A. (Plym'th S'n)	MacGregor, John
Clark, Dr Michael (Rochford)	MacKay, Andrew (Berkshire)
Clarke, Rt Hon K. (Rushcliffe)	Maclean, David John
Colvin, Michael	Major, John
Coombs, Simon	Malins, Humfrey
Cope, John	Malone, Gerald
Couchman, James	Maples, John
Dickens, Geoffrey	Marland, Paul
Dicks, Terry	Marlow, Antony
Dorrell, Stephen	Marshall, Michael (Arundel)
Douglas-Hamilton, Lord J.	Mates, Michael
Dover, Den	Mather, Carol
Dunn, Robert	Mawhinney, Dr Brian
Dykes, Hugh	Mayhew, Sir Patrick
Edwards, Rt Hon N. (P'broke)	Mellor, David
Eggar, Tim	Merchant, Piers
Emery, Sir Peter	Meyer, Sir Anthony
Evennett, David	Miller, Hal (B'grove)
Eyre, Sir Reginald	Mills, Iain (Meriden)
Fairbairn, Nicholas	Mills, Sir Peter (West Devon)
Fallon, Michael	Moate, Roger
Farr, Sir John	Monro, Sir Hector
Favell, Anthony	Montgomery, Sir Fergus
Fenner, Mrs Peggy	Moore, John
Finsberg, Sir Geoffrey	Morris, M. (N'hampton, S)
Fletcher, Alexander	Morrison, Hon C. (Devizes)
Fookes, Miss Janet	Morrison, Hon P. (Chester)
Fowler, Rt Hon Norman	Moynihan, Hon C.
Fox, Marcus	Murphy, Christopher
Fry, Peter	Neale, Gerrard
Galley, Roy	Normanton, Tom
Garel-Jones, Tristan	Norris, Steven
Gow, Ian	Onslow, Cranley
Gower, Sir Raymond	Oppenheim, Phillip
Green way, Harry	Ottaway, Richard
Gregory, Conal	Page, Sir John (Harrow W)
Griffiths, E. (B'y St Edm'ds)	Page, Richard (Herts SW)
Grist, Ian	Parris, Matthew
Ground, Patrick	Patten, Christopher (Bath)
Grylls, Michael	Pawsey, James
Gummer, John Selwyn	Peacock, Mrs Elizabeth
Hamilton, Hon A. (Epsom)	Percival, Rt Hon Sir Ian

Pollock, Alexander	Taylor, John (Solihull)
Portillo, Michael	Tebbit, Rt Hon Norman
Powell, William (Corby)	Temple-Morris, Peter
Prentice, Rt Hon Reg	Terlezki, Stefan
Price, Sir David	Thomas, Rt Hon Peter
Renton, Tim	Thompson, Donald (Calder V)
Rhodes James, Robert	Thompson, Patrick (N'ich N)
Ridley, Rt Hon Nicholas	Thornton, Malcolm
Ridsdale, Sir Julian	Thurnham, Peter
Roberts, Wyn (Conwy)	Townend, John (Bridlington)
Robinson, Mark (N'port W)	Tracey, Richard
Roe, Mrs Marion	Trippier, David
Rossi, Sir Hugh	Trotter, Neville
Ryder, Richard	Twinn, Dr Ian
Sackville, Hon Thomas	van Straubenzee, Sir W.
Sainsbury, Hon Timothy	Waddington, David
Sayeed, Jonathan	Wakeham, Rt Hon John
Shaw, Sir Michael (Scarb')	Walker, Bill (T'side N)
Shelton, William (Streatham)	Waller, Gary
Shepherd, Colin (Hereford)	Ward, John
Silvester, Fred	Wardle, C. (Bexhill)
Sims, Roger	Watson, John
Skeet, T. H. H.	Watts, John
Smith, Tim (Beaconsfield)	Wells, Bowen (Hertford)
Speed, Keith	Wheeler, John
Speller, Tony	Whitfield, John
Spence, John	Whitney, Raymond
Spencer, Derek	Wilkinson, John
Squire, Robin	Wolfson, Mark
Stanbrook, Ivor	Wood, Timothy
Stern, Michael	Yeo, Tim
Stevens, Lewis (Nuneaton)	Young, Sir George (Acton)
Stewart, Allan (Eastwood)
Stewart, Andrew (Sherwood)	Tellers for the Ayes:
Sumberg, David	Mr. Michael Neubert and
Taylor, Rt Hon John David	Mr. Tony Durant.
NOES
Alton, David	Deakins, Eric
Archer, Rt Hon Peter	Dewar, Donald
Ashdown, Paddy	Dixon, Donald
Ashton, Joe	Dobson, Frank
Bagier, Gordon A. T.	Dormand, Jack
Banks, Robert (Harrogate)	Douglas, Dick
Barnett, Guy	Dubs, Alfred
Barron, Kevin	Duffy, A. E. P.
Beckett, Mrs Margaret	Dunwoody, Hon Mrs G.
Beith, A. J.	Eadie, Alex
Benn, Tony	Eastham, Ken
Bennett, A. (Dent'n & Red'sh)	Edwards, Bob (W'h'mpt'n SE)
Bidwell, Sydney	Evans, John (St. Helens N)
Boyes, Roland	Ewing, Harry
Bray, Dr Jeremy	Fatchett, Derek
Brinton, Tim	Faulds, Andrew
Brown, Gordon (D'f'mline E)	Field, Frank (Birkenhead)
Brown, Hugh D. (Provan)	Fields, T. (L'pool Broad Gn)
Brown, N. (N'c'tle-u-Tyne E)	Fisher, Mark
Bruce, Malcolm	Flannery, Martin
Buchan, Norman	Foot, Rt Hon Michael
Caborn, Richard	Foulkes, George
Callaghan, Jim (Heyw'd & M)	Freeson, Rt Hon Reginald
Campbell, Ian	Gale, Roger
Campbell-Savours, Dale	Garrett, W. E.
Carter-Jones, Lewis	George, Bruce
Clark, Dr David (S Shields)	Godman, Dr Norman
Clarke, Thomas	Golding, John
Clay, Robert	Gorst, John
Clwyd, Mrs Ann	Gould, Bryan
Cocks, Rt Hon M. (Bristol S.)	Gourlay, Harry
Cohen, Harry	Hanley, Jeremy
Concannon, Rt Hon J. D.	Hardy, Peter
Cook, Frank (Stockton North)	Harman, Ms Harriet
Corbyn, Jeremy	Harrison, Rt Hon Walter
Cowans, Harry	Hattersley, Rt Hon Roy
Cox, Thomas (Tooting)	Hogg, N. (C'nauld & Kilsyth)
Craigen, J. M.	Home Robertson, John
Cunliffe, Lawrence	Howells, Geraint
Cunningham, Dr John	Hoyle, Douglas
Davies, Ronald (Caerphilly)	Hughes, Dr. Mark (Durham)
Davis, Terry (B'ham, H'ge H'l)	Hughes, Robert (Aberdeen N)

John, Brynmor	Prescott, John
Johnston, Russell	Radice, Giles
Jones, Barry (Alyn & Deeside)	Randall, Stuart
Kaufman, Rt Hon Gerald	Redmond, M.
Kennedy, Charles	Rees, Rt Hon M. (Leeds S)
Leadbitter, Ted	Rhys Williams, Sir Brandon
Leighton, Ronald	Richardson, Ms Jo
Lewis, Ron (Carlisle)	Roberts, Allan (Bootle)
Lewis, Terence (Worsley)	Robertson, George
Litherland, Robert	Robinson, G. (Coventry NW)
Lloyd, Tony (Stretford)	Rooker, J. W.
Loyden, Edward	Rowlands, Ted
McCartney, Hugh	Sheerman, Barry
McDonald, Dr Oonagh	Short, Ms Clare (Ladywood)
McGuire, Michael	Short, Mrs R.(W'hampt'n NE)
McKay, Allen (Penistone)	Skinner, Dennis
McKelvey, William	Smith, C.(Isl'ton S & F'bury)
McNamara, Kevin	Snape, Peter
McTaggart, Robert	Soley, Clive
McWilliam, John	Spearing, Nigel
Madden, Max	Steel, Rt Hon David
Marek, Dr John	Stewart, Rt Hon D. (W Isles)
Marshall, David (Shettleston)	Stott, Roger
Mason, Rt Hon Roy	Strang, Gavin
Maxton, John	Thompson, J. (Wansbeck)
Maynard, Miss Joan	Thorne, Stan (Preston)
Meadowcroft, Michael	Tinn, James
Michie, William	Wainwright, R.
Mikardo, Ian	Wallace, James
Millan, Rt Hon Bruce	Wardell, Gareth (Gower)
Morris, Rt Hon A. (W'shawe)	Welsh, Michael
Morris, Rt Hon J. (Aberavon)	White, James
Nellist, David	Wigley, Dafydd
O'Brien, William	Williams, Rt Hon A.
O'Neill, Martin	Wilson, Gordon
Orme, Rt Hon Stanley	Winnick, David
Park, George	Woodall, Alec
Parry, Robert	Young, David (Bolton SE)
Patchett, Terry
Pendry, Tom	Tellers for the Noes:
Penhaligon, David	Mr. James Hamilton and
Pike, Peter	Mr. Frank Haynes.

Question accordingly agreed to.