British Film Industry

HC Deb 03 March 1999 vol 326 cc1017-37

11 am

Mr. Tom Clarke (Coatbridge and Chryston)

I begin by declaring an interest, as already recorded. Specifically, since 15 February this year, I have been non-executive chairman of Spring Studios. More generally, my interest in film goes back a long time. Since the House returned from the summer recess, I have been trying to obtain this debate because of that long-standing, passionate and professional interest in film.

Before I came to the House in 1982, I had spent most of my working life as an executive with the Scottish Film Council, and I had the privilege of serving later as a governor of the British Film Institute, under the chairmanship of Lord Attenborough. It was with real delight, therefore, that I heard that the House would have a chance to discuss the future of the British film industry.

I look forward to speeches from hon. Members on both sides of the House, and especially from the Minister for Tourism, Film and Broadcasting, whom I congratulate warmly on her appointment. She used my parking space for many years and, in the unlikely event of my driving in London—something I have never done—and thus spreading terror throughout the metropolis, I am sure that she would reciprocate.

The House will know that the Government's review of the film industry, "A Bigger Picture", was published in March last year. It was co-chaired by Stewart Till, president of Polygram Filmed Entertainment, and myself. If I may say so, it was described by the Financial Times as the most comprehensive review of the film industry in over 30 years. It was, I believe, a testament to the excellent work done on the review by all who contributed to it.

We had an expert team to work with us on the review—a team which covered every aspect of Britain's film industry and film culture, with every kind of company, from the smallest independent to the largest corporation, drawn from every part of Britain. The findings of the group were eagerly awaited not just in the UK, but in Europe and across the Atlantic. The review group was set key objectives by the Government, which were announced in Cannes days after the election by the Secretary of State for Culture, Media and Sport.

The crucial challenge was how to ensure that the flow of quality British films reached our audiences. Specifically, one of the key objectives was to double the market share of British films. Thankfully—and in full accord with the new Labour style of government—the objective was realised during the months in which the report was compiled. The share of domestic box office taken by British films did double—in large measure due to the extraordinary success of films such as "The Full Monty". However, that vintage year also contained "Shooting Fish", "Mrs. Brown", "Bean", "The Borrowers" and "Brassed Off'. Speaking personally, I had a high regard for "Brassed Off', which deserved even more success. That may be because my father was a miner rather than a stripper, and I still have many ex-miners in my constituency.

By March 1998, as the review indicates, the audience share for British films had risen to 23 per cent. However, with the most recent figures showing that it is down to 14 per cent., there is a danger of boom and bust—a worry for my Front-Bench colleagues. Evidence of our talent became apparent again when, this year, "Elizabeth" received seven Oscar nominations, and "Shakespeare in Love" received 13. In this week's BAFTA nominations, the films picked up 28 nominations between them.

All that is welcome, and it confirms what we already know—that our movies are capable, without compromising their individuality, of attracting huge audiences at home and abroad. The successes show that we have real genius in this unique area where culture and commerce meet. I have always believed that we can build on those talents to a far greater degree, and produce a truly creative, integrated and robust British film industry.

Despite our talents and their considerable success, we must acknowledge that that success is precarious. There is no doubt that we have some of the most gifted film makers in the world, but we do not have enough of the structures in place—something which is crucial in today's modern, global enterprise economy. We must ensure that we sustain and improve on our success, year on year.

Despite our recent achievements, we are, to say the least, in the questionable situation where there is no guarantee that revenues from British success stories will be reinvested in the production of more British films. We need only look at the excellent "Four Weddings and a Funeral", which is still the biggest-grossing UK film world wide. Its producer, Duncan Kenworthy OBE—as of yesterday—made a sterling contribution to the review. We wish him well with "Notting Hill", the film he has just completed. I am sure that he will continue to inspire others to invest and support this creative industry.

We desperately need the modern companies and business skills that could enable more of our film makers to make bigger and better pictures that get on more screens in Britain and around the world. Far too often, the vision of a renaissance of our film industry has been waved before our eyes, only to be replaced with broken dreams and dashed hopes. Plainly, the industry in Britain has structural weaknesses which prevent it from reaching its full potential, as a comparison of the US and UK industries demonstrates.

The US film industry is undoubtedly extremely successful. However, when we share the same language advantage as the US and when our film makers are acknowledged to be some of the most creative in the world, we must ask why the British film industry does not perform as the American industry does. "A Bigger Picture" showed that there are massive differences in structure between the US and UK industries.

The US industry is dominated by distribution-led integrated companies, where the processes of development, production acquisition and distribution are financed and carried out by a single entity. They believe that vertical integration is the right approach. By contrast, the UK industry is fragmented, and sometimes gives the impression that it lacks the ambition to change. The production process is separate from the distribution process, which is dominated by big US companies. In Britain, most producers have no close relationship with their distributor, and often have to sell all their rights for their films to be distributed.

Dr. Julian Lewis (New Forest, East)

I am sorry to interrupt the right hon. Gentleman's flow, but I cannot resist interjecting at this point to confirm one contrast between the US and British film industries: the US film industry is willing to take far greater poetic licence. I have in mind the new US film about the alleged capture of a German submarine by Americans who, supposedly took hold of the Enigma machine, thus shortening the war by enabling the code breakers to do their work.

I wonder whether, even at this late stage, representations might be made to the American producers to allow a walk-on part to my constituent, the then Royal Navy Sub-Lieutenant David Balme DSC, who actually captured the Enigma machine from the U-110 seven months before America even entered the war.

Mr. Clarke

I enjoyed the hon. Gentleman's little speech. He will understand if I do not respond in detail, as this is only a short debate and others want to speak.

Mr. Robin Corbett (Birmingham, Erdington)

May I quickly pay tribute to my right hon. Friend's work as films Minister? On the point about distribution weakness inhibiting the success of British films, has our mutual friend Barry Spikings had any success in Hollywood with the American film distribution companies in trying out new arrangements with Britain and the rest of Europe, on a partnership basis, to make it easier for films made in the European Union to be shown in our own countries?

Mr. Clarke

My hon. Friend is absolutely right to refer to our mutual friend Barry. He is, indeed, working away on those projects in the United States.

We cannot complain about American investment and integration or even about the huge American influence in Britain's cinemas. The Americans have cracked it and we should welcome their investment. The United States can see the attraction in investing in Britain, but we do not invest with the same enthusiasm in our indigenous industry.

Mr. David Chidgey (Eastleigh)

Is not the problem that we simply cannot attract sufficient investment in the production of British films to get beyond the critical mass that would enable our films to attract worldwide distribution and get the return on the investment that would bring growth to the industry?

Mr. Clarke

That is absolutely right. That was the main thrust of "A Bigger Picture". Frankly, until we reach that point, I do not believe that we can claim success for our film industry.

It is perhaps no surprise that the average budget for wholly British films produced in 1997 was less than £3.5 million, compared with more than £18 million for the overseas films made in the United Kingdom. The comparison highlights the bizarre situation of the British film industry. After all, if overseas—usually US—companies can, rightly, see the potential of investment in Britain, why is domestic confidence so much weaker?

The film policy review group had that in mind when it examined the underlying structures, and it soon became obvious that we need to encourage the emergence of a distribution-led industrial process, with firms capable of attracting major private investment, and greater integration between production and distribution. If we are to create a modern industry that is successful at every stage, from initial development of a script through production to marketing and distribution and, finally, exploitation by television or video, every part of it must come together and play its full role in building the conditions for success.

It was my belief during the review, as it is now, that the long-term interests of the British film industry and of the small independent production groups within it rests in collective action to address the needs of the industry as a whole. A great start in the process of all sectors coming together was my right hon. Friend the Chancellor's welcome announcement in his first Budget of tax reliefs for film production.

That announcement was excellent, and demonstrated the Government's will to assist the film industry, but if we are to get anywhere, Government actions must be matched by all who benefit from our film industry. In "A Bigger Picture", we proposed that, to complement the Government's fiscal initiative, the whole industry be invited to contribute on a co-operative and voluntary basis to an all-industry fund to improve the development, distribution and marketing of British films.

If enhanced, those activities will benefit the whole industry, and I still believe that they should be funded at least in part by the industry itself. After enormous consultation and debate, it was estimated that a voluntary contribution of as little as 0.5 per cent. of the film-related revenue of approximately £3 billion a year would raise about £15 million a year. With that funding, we agreed, there should be a significant increase in the size and prospects of the British film industry, to the benefit of all, which would more than outweigh the relatively small cost.

Some of the other measures recommended in the report are already being implemented. I hope that the House will recognise that the scale of what can be achieved will be greatly increased if the industry is prepared to underpin the Government's strategy with its own investment. That is an essential ingredient of success.

In effect, we faced a choice. We knew that we had identified desirable policy objectives, and we could either introduce the first Films Bill since 1985 or seek to bring everything and everyone with us, here and abroad, with a something for something principle, in which I still believe.

After all, should not those who benefit from films contribute to the investment in them? Are we to suffer from chronic lack of investment while our wiser, but no more gifted, competitors race ahead? In that spirit, I ask my hon. Friend the Minister whether progress is being made on the fund, which is a key element in the package. Considering the difficulties, has the action committee explored the scope for an alternative that will achieve the aims of the original proposal?

The fund would complement the work of the Arts Council of England, which has considered committing £100 million of lottery money to film over the next three years. I am sure that the House would agree that it is right to continue to support the British film industry, and I believe that the Government have set the policy options.

A further consideration that we identified was the need for significant progress in the development of links between the City and the industry to create long-term investment opportunities. That was the reasoning that helped to establish the film finance forum, which was to consider specific proposals and might improve the industry's investment potential, one of its primary tasks being to undertake a cost-benefit analysis of front-end tax relief schemes for investors to encourage the creation of well-capitalised, integrated distribution entities.

It would be helpful if my hon. Friend the Minister could tell the House about the progress of the finance forum. I am sure that she has kept the Treasury informed of the industry's views about the beneficial effects of the 100 per cent. tax write-off for production. Can she give us any information about the Treasury's thinking on further tax reliefs for the industry? Has there been further dialogue, for example on the £15 million cut? Given that the ad hoc working party that was set up in June 1998 by the film action group, which I briefly chaired, has presumably reached some conclusions on distribution tax reliefs, can my hon. Friend the Minister enlighten the House on what those might be?

A debate about the British film industry would not be complete without mentioning the role of the country's highly skilled broadcasters. It was the view of the group, and still is the view of many to whom I have spoken in the industry, that our terrestrial and satellite broadcasters should stand up and take more responsibility for their obligations to the British film industry. After all, broadcasters use film. They should make a contribution to the success of film.

When I met broadcasters, including Channel 5, Granada and BSkyB, there was an obvious synergy in the training and development of writers and actors which, with convergence, is bound to increase. It is a shame that there may be some broadcasters who object to contributing to the fund, as great care was taken to ascertain the views of the broadcasters during the review and afterwards in the action group. It simply is not on for some to suggest that they were not consulted. They were involved as much as every other section of the industry. That said, it would be wrong not to mention the BBC, with whose help "Mrs. Brown" was a major success, and Channel 4, which has recently made an excellent contribution to the industry. I understand that the ITV network has signalled that it wants its companies to invest more in film and we look forward to seeing the fruits of that £100 million investment. Some broadcasters still play a minor role, and, in all candour, I had expected satellite and Terrestrial broadcasters to be more vibrant as we move into the digital age.

The development of the industry depends heavily on film industry training and that point cannot be overemphasised. An adequate supply of skilled professionals is the only sure way to service a growing industry and to keep labour costs competitive. If the success of the industry in Britain is to be sustained, we need to emphasise the requirement for training, both for this and the next generation of the work force behind the camera, and in scriptwriting and development. We also need to encourage Skillset, the national training organisation for film and television, in its sterling work. In that context, it defeats me to understand why—if I understand the position correctly—the national film and television school has been largely sidestepped in consideration of structural issues.

I found it almost unbelievable that, before the review, in an industry with an annual value across all media in the United Kingdom estimated at more than £3 billion, the then independent production training fund raised as little as £90,000 a year. That represents a minuscule proportion of the value of the industry to this country. For that reason, a skills investment fund has been established. Producers of British films will be asked to contribute 0.5 per cent. of the production costs of their films up to £10 million and 0.25 per cent. for any costs above £10 million. For two years, the contributions will be voluntary. Because the group felt so strongly about the need for increased financing—and I agree—if the trial period was unsatisfactory, the Government would consider whether proper action needed to be taken. I hope that my hon. Friend the Minister can confirm that that is still the position.

Training should be seen as the responsibility of all sectors of the industry that rely on the quality of British films produced. I take this opportunity to ask my hon. Friend what discussions she has had on the skills investment fund and what plans she has to progress the crucial policy area of voluntary arrangements should they be proving elusive.

Obviously, the commercial appeal of films is central to their box office success. In that area, the group tried to set up an action plan to help the industry increase the marketability of British films and, equally, the attractiveness of films and the cinema for the British public. We recommended the establishment of a film marketing agency which would promote a generic interest in film, based on a permanent audience research capability, providing the sort of information that the British Audience Research Bureau provides for television and staffed by marketing professionals. Such a proposal would make it possible to determine the attitudes of the actual and potential audience for film, enabling the industry to respond to or even anticipate consumer demand, as television does.

The report also recommended that more should be done to help independent producers get their films shown at the major film markets. I understand that the Producers Alliance for Cinema and Television has agreed to take this on. I would like to ask my hon. Friend the Minister what progress has been made on the setting up of a film marketing agency and the PACT initiative on overseas marketing. Can she update me on how we are to launch script development in the absence of voluntary arrangements for the all-industry fund? It is often said that one can make a bad film from a good script, but one cannot make a good film from a bad script. Will my hon. Friend also update us on the script development scheme that has been proposed by the Arts Council? Will such a scheme include previous box office success in the criteria?

Some believe that the British film audience is less adventurous than some of its counterparts abroad, and that it should be a longer-term goal to create what is called a more cine-literate—although I do not much like the word—population, through education in its wider sense at all stages and at all levels. It was for that reason that we proposed the setting up of a working group to draw up a strategy for film education. Not only would this have education benefits for generations to come, but it would provide social and economic benefits. A broader range of film makers, distributors and exhibitors would be able to find an audience and to survive in the marketplace. What discussions has my hon. Friend the Minister had with ministerial colleagues at the Department for Education and Employment on that important matter and on whether the BFI's plans for it have now matured?

In terms of the UK industry and the worldwide marketplace, the UK has a real advantage. Because of its language, the Hollywood production companies find it relatively compatible with the work environment that they require and, even more significantly, our films have the ability to find an audience outside the local marketplace. arious measures were implemented, such as the setting up of an office in Los Angeles, and I wonder whether my hon. Friend has any plans to visit it in the near future. I recommend that she should.

Closer to home for me, the Scottish contribution to the British film industry continues to be extremely important. We have film-making talent in abundance up there, although I am too modest to include my own little effort, "Give Us A Goal", in that category.

The lack of structure of the industry in the whole UK, however, has a detrimental impact on Scottish film production. I ask my hon. Friend to clarify the relationship between Scottish and UK film institutions. The British Film Institute, British Screen and the British Film Commission appear to have a mixture of British and English responsibilities, and I urge my hon. Friend and her counterpart in Scotland to clarify that situation as soon as possible, not least because of the setting up of the Parliament in Scotland this year. It would be helpful if dialogue was known to be taking place this side of that Parliament's taking up its duties. As a Scot, I would welcome clarification.

It is important that the changes recommended for the British film industry should be seen within the objectives of creating a self-sustaining European audiovisual industry that is able to win a greater share of the European market. The European Union's audiovisual seminar at Birmingham during our presidency last year was a great success. Excellent work is being carried out in Europe by Commissioner Marcelino Oreja, whom I met a few weeks ago in Brussels, not least in his policy, which I wholly commend, of encouraging the development of centres of training and excellence.

In Britain, it was proposed that the film finance forum should make it a priority to develop plans to encourage the growth of European investment vehicles to lead private money investment in a slate of films attached to the distribution entities. What is the Government's position on the proposals in Commissioner Oreja's document, "The Digital Age", particularly those relating to the securitisation fund?

"A Bigger Picture" was largely silent on structure in the British film industry because we knew that the comprehensive spending review would produce proposals. The review was followed by a document containing a section titled, "Film—What happens now?" In another document from the Department for Culture, Media and Sport—"A New Cultural Framework"—I read: Work will start immediately with existing film bodies in preparations for the establishment of a new body, with input from Lord Attenborough. Lord Attenborough is one of Britain's most respected film makers, and I am pleased to see that he is involved in such an important initiative. Perhaps the Minister can comment on the current status of that work.

Film means many things to different people. For some, it is an industry, for others an art form. Many see it as an aspect of creative Britain. However, there is no doubt of film's enduring qualities, and its ability to adapt to changing demands from the most basic broadcasting to digital television. The audiovisual industry faces a challenge, but it is more than capable of taking it on. What is abundantly clear is that there is no limit to the role that the industry can play as we approach the millennium. The future can be a glowing one. Given a fair wind, and given the determination to succeed, that glowing future is well within our grasp.

11.34 am

Mr. Robert Maclennan (Caithness, Sutherland and Easter Ross)

I express the House's gratitude to the right hon. Member for Coatbridge and Chryston (Mr. Clarke) for giving us a rare chance to consider the film industry, of which he has been a luminary for many years. Many people respect his personal contribution both in and out of Government and Parliament. He has given us a wide-ranging conspectus, and I shall not seek to follow that. Most of us will wish to hear what the Minister will say to the points that he has raised, and my contribution will be more of a declaration than a main theme.

The right hon. Gentleman was right to emphasise that the boom in the British film industry is remarkable. Its international recognition since 1990 has been enormous—18 per cent. of all Oscars, 15 per cent. of prizes at Montreux and 15 per cent. of prizes at the Monte Carlo television festival have been awarded to English, Scottish, Welsh and Irish feature films and television programmes.

The box office grosses have also been staggeringly impressive: "Four Weddings and a Funeral" took $256 million; "The Full Monty" took $249 million; "Bean" took $234 million; "The English Patient" took $230 million; "Sense and Sensibility" took $134 million; and, "Trainspotting" took $74 million.

These are extraordinary achievements. The United Kingdom is today second only to the United States as a source of films for the international market. We want a springboard for growth and development. Although we have the great advantage of the English language, other challenges exist. There is important new activity in European countries, including Germany, Poland and Spain as well as France, and that is making an impact on the film market while enjoying considerable Government support. Some countries provide much more strategic capital investment than we provide, and we must be clear about what processes we may initiate to ensure that the success that we have enjoyed continues and that we are not squeezed out of our relatively good current position.

On the debit side, it is important to recognise that our structural problems remain acute. During the period that I have already mentioned, we have seen the disappearance of several companies—Thorn EMI, Screen Entertainment, Rank, Goldcrest, Handmade Films, Virgin, Palace Pictures, Helmdale and Embassy—that were engaged in production and distribution. All of them had access to money, but all of them have gone.

As the Producers Alliance for Cinema and Television has pointed out, we have enormous talent in our new breed of producer—gifted people such as Tim Bevan and Eric Felner, Nik Powell, Steven Woolley and Duncan Kenworthy. Fifteen years ago, we had companies, but today we have the people.

Mr. Chidgey

Is not it a fact that the British film industry has traditionally been a cottage industry, working from film to film on an almost ad hoc basis? It is incredibly difficult to match the power of the American studio system which sees film making as a business, not just an art.

Mr. Maclennan

That is true, and that is the challenge. There is no straightforward answer, but some answers can be made to the questions put by the right hon. Member for Coatbridge and Chryston.

The case for investment in the industry is strong given the growth of the business world wide, and especially the growth in English language film making, which has enjoyed a growth rate of between 11 and 15 per cent. since the mid 1980s. With the further growth of pay television services, the introduction of digital television and digital video disc, and the growth of other world markets in Latin America, the far east and central Europe, we can anticipate a market for the product. If the investment can be delivered, there should be a major return on it.

The Government have recognised those facts and taken some significant steps to which we must properly pay tribute. Early on, they granted the long-requested 100 per cent. tax relief on film production in the year in which expenditure is incurred. Its absence had been a major drawback for the corporate consortium investor. Like the right hon. Member for Coatbridge and Chryston, I want to know what is happening about the removal of the £15 million cap. That remains a live issue. On the eve of the Budget, we cannot expect to learn what the Government have in mind, but it is important to use this opportunity to press for the issue to be tackled.

Another issue is the withholding tax system, under which all payments, including transport and other expenses, are taxed at basic rate at source. That continues to add up to 20 per cent. to the cost of employing a foreign actor in the United Kingdom. Given the need to cast American actors to help the prospects of film distribution in the United States, the Government should address that. If they made known their calculations of the effect of increased production on the economy, we might learn that withholding tax would yield more.

Many British films are largely financed by the major American studios. Fox financed "The Full Monty". "Shakespeare in Love" is similarly a largely American-funded picture. While the American giants control the market, it continues to be difficult for smaller film makers to make their mark. We have no major studio of our own. In the longer term, the Department should consider the feasibility of the incentives—export incentives, tax credits and other funding mechanisms—that were used by the United States to boost the fortunes of American studios in the early 1970s. In the meantime, we must consider the problems of film making as they stand.

We welcome the forthcoming establishment of British Film and hope that it will bring together the various strands of strategic thinking, allowing a policy for the whole industry with adequate financial support and investment from the centre. It will operate in devolved Britain, and it is important that national institutions such as Scottish Screen play their part on the basis of participation, not mere consultation.

The British Screen Advisory Council calculates that total lottery funding will need to be at least £35 million per annum and that grant in aid support must be maintained at the present level, at the very least. The funding must be put on a secure medium-term basis, with resources committed by the Government for three years. That will allow adoption of a strategic plan to ensure the best use of funds.

I am concerned about distribution. British films are hard pressed to get on British screens. As long as ago as 1994, the British Film Institute asked the Monopolies and Mergers Commission to investigate unfair practices in British cinemas. Although the commission seemed sympathetic to the case, it considered that it could not examine film supply more generally. Have the Government considered whether that regulatory approach could be reconsidered?

PACT, which represents 1,400 British film and television making companies, proposes that British Film should earmark a fund to underwrite some of the marketing costs incurred by distributors of UK qualifying films. The Government could consider a tax shelter mechanism targeted at the independent distribution business to attract new entrants and consolidate the strength of those who are still in it.

The distribution of British films in America will remain a problem for the foreseeable future. It is exceedingly difficult for most British films to secure distribution there, without which it is difficult to succeed. That is recognised by Government and industry. It is good that, through the lottery, subsidy can be spent on the development of projects and film distribution, as well as on film production.

Our industry could be a world beater. In artistic and technical terms, there is no doubt that it is so recognised. The right hon. Member for Coatbridge and Chryston was correct to emphasise the importance of training. We do much work on individuals who are valued throughout the world. They tend to be sucked out to Hollywood where their skills are recognised. We must guarantee film training throughout the nations and regions of the United Kingdom. We must do all that we can to ensure that the products of that training can work in our studios.

We must ensure that the tax burdens that draw film makers away from production in Britain are lifted and that the tax incentives used to lure film makers from abroad examined. Most of all, British Film and its brother organisations must encourage and promote public and private partnerships to invest in film making and distribution in the United Kingdom. I conclude by again thanking the right hon. Member for Coatbridge and Chryston.

11.47 am

Mrs. Ann Cryer (Keighley)

I thank my right hon. Friend the Member for Coatbridge and Chryston (Mr. Clarke) for calling this much-needed debate. As Minister of State at the Department for Culture, Media and Sport, he advanced many useful ideas on the film industry with great expertise, due to his lifelong commitment and great devotion to, and vast knowledge of, films and their production. His contribution is much appreciated throughout the industry.

I was not expecting to speak, so I have not had the time that I would have liked for research on a subject for which I have such enthusiasm. I will therefore concentrate on matters that I know well from personal experience over what may be too many years. The production and showing of British films do not only generate money for the Exchequer and provide employment for the many skills and talents in the industry; the spin-off in wealth generation can go well beyond that. British films, particularly those celebrating our way of life, such as "Four Weddings and a Funeral", "Mrs. Brown", "Brassed Off', "The Full Monty" and "Shakespeare in Love"—which I have not had the opportunity to see yet—and the imaginative use of location work promotes tourism, both from abroad and domestically. My constituency is a microcosm of that. The Keighley and Worth Valley railway, of which I am a vice-president, has attracted many film and television producers to use the various locations, from industrial heartland to the magnificent Pennines above Haworth and Oxenhope, in such films as "Yanks" and the much loved "The Railway Children".

I shall be a little self-indulgent, because my interest in "The Railway Children" stems from the fact that I fear that my claim to fame will never be as the Member for Keighley or as the wife of Bob or mother of John but as an extra on that film. Hon. Members will have difficulty spotting me. I had dark hair in June 1970 when we had four wonderful weeks of sun—amazing for the Worth valley. So also was my hon. Friend the Member for Hornchurch (Mr. Cryer), as he and his sister Jane, aged six and four at the time, dutifully waved their flags in the presentation scene when the Old Gentleman William Mervyn presented gold watches to the saviours of the iron road", as only William Mervyn could. That scene was on Oakworth station platform. The crossing keeper's house was Perks cottage, now a successful bed-and-breakfast establishment organised by a friend of mine, Councillor John Cope, and his wife Patricia.

For 29 years Keighley and the Worth valley area's hotels, shops and cafes have benefited from that one film. So we can see that a great deal of money can be generated for the country as a whole from the films that we produce.

Before I leave the subject of "The Railway Children", I pay tribute to the man who was behind the camera throughout the eight weeks of production, especially at Oakworth and in Oxenhope. The real stars of that film were the railway engines, not Jenny Agutter, William Mervyn and the others. The railway engines were brought to life by cameraman Arthur Ibbetson's use of the camera. "The Railway Children" was the first film directed by Lionel Jeffries. As it was his first film, he did not have a great deal of expertise in film making, but I feel that Arthur Ibbetson carried him through, such was his expertise. Arthur died last year and that is why I am mentioning his name so much.

Arthur lbbetson started his career as a clapperboy on "Brief Encounter", made largely at Carnforth. He was the lighting cameraman on 30-odd films, including "Whistle Down the Wind", "The League of Gentlemen", and "A Countess from Hong Kong". In "Where Eagles Dare", he was able to demonstrate his expertise in the use of day-for-night shooting. For "Anne of the Thousand Days", he received an Oscar nomination, and rightly so. I am not sure what the position is regarding the film school, but I hope that it and other organisations will continue to produce skilled people such as Arthur Ibbetson for the benefit of our film industry.

I shall go outside Britain to demonstrate how there can be a spin-off from film production. A few weeks ago, I was in Strasbourg for a meeting of the Council of Europe. I talked for the first time to a colleague, a socialist Member of Parliament for the centre of Vienna. I said that I knew Vienna well because I had seen "The Third Man" about 10 times, although I had never been there. I asked what was left of Vienna at that time. She said that "The Third Man" was a growing source of tourism. Apparently, the little cabins on the big ferns wheel can now be hired for functions such as children's parties, and they are very popular. I asked her about the cemetery, which is still there. I asked her about the wonderful railway station, too. I am afraid that that has gone. I also asked about the wonderful shots of Harry Lime being chased in the sewers.

My colleague told me that there were now guided tours of the sewers. Hon. Members will be relieved to learn that sewage is no longer carried down them; they now form a culvert for a river. The tourism industry is linking on to the film and providing guided tours along an underground walkway.

When Carol Reed made "The Third Man" in 1949, he demonstrated to us all and, I hope, to younger film makers of today, that it is possible to have the audience on the edge of their seats with excitement and spellbound by what is going on without using gratuitous violence, blood and gore. He used shadow and atmosphere to generate enthusiasm in his audience.

I shall try to be brief because I know that others want to speak, but I wish to put in a plug for Bradford. "Billy Liar" and "Room at the Top" were made there, and we are now proud to have the national museum of photography, film and television, which I think is the only place in the world where one can see all forms of film projection, including Imax, 3-D, cinemascope and cinerama. On Friday, the Bradford film festival begins, to run for two weeks. I am sure that it will be of great benefit to our industry. In a few weeks, we shall see the reopening of the museum, which has been completely refurbished. I am sure that many hon. Members will want to see the museum.

I am afraid that my cinema-going is now dominated by my grandchildren. The most recent film that I have seen is "A Bug's Life". I am sure that Conservative Members will not agree with me, but for me the film expressed the philosophy of "the workers united will never be defeated." I am not sure that Conor and Robert thought that, but I did.

During the general election in Keighley, I was ably assisted by Lord Dickie Attenborough, who has already been mentioned. He came up to campaign for me, and he was wonderful. He did that not because he thought that I was wonderful but because he felt that a Labour Government would have a greater understanding of and give greater support to the British film industry. So I shall finish by saying that I hope that we do not let the British film industry down and that we do what Dickie Attenborough hoped that we would do.

11.57 am

Mr. Eric Pickles (Brentwood and Ongar)

It is a great pleasure to follow the hon. Member for Keighley (Mrs. Cryer). She referred to Oakworth. I had the honour to live in Oakworth for some 16 years. I have fond recollections of the Worth valley railway and of the hon. Lady's late husband in connection with the film industry. My family's claim to fame is that we supplied extras to "Yanks", which was also filmed there. My late uncle Bob ate successive bowls of rice pudding to act as a backdrop to one of the Rank charm school films.

I congratulate the right hon. Member for Coatbridge and Chryston (Mr. Clarke) on obtaining the debate. He was a distinguished Minister for the film industry. He spoke at great length of the needs of the industry, but he left out something which I know—he is a great enthusiast for films and the media. He made only one mistake and it was a fatal one. He succumbed to the curse of the Cannes film festival, which as hon. Members may know is as fatal—perhaps the Minister will understand this—to the interests of British film Ministers as the Tutankhamun curse is to those who wish to dig up ancient Egyptians.

The right hon. Gentleman demonstrated characteristic courage in the debate. Today is virtually the anniversary of "A Bigger Picture", a publication which laid out the Government's action plan. For most of the right hon. Gentleman's excellent speech, he was doing the monitoring for the Government. There are certain things that we want to know have happened. On page 6 of the document, the various recommendations are listed. It is a matter of regret that the first of the so-called radical plans—the all-industry fund—disappeared without much lament in November last year. The fund was described as the linchpin of the British film revival. Without that linchpin, many of the other items in the 12-point plan have come to naught.

The right hon. Members for Coatbridge and Chryston and for Caithness, Sutherland and Easter Ross (Mr. Maclennan) both referred to the July 1997 Budget, the first to be presented by the Government, which introduced the 100 per cent. write-off for films with a value of less than £15 million. I am not aware of one film that has benefited from that, although, if I am wrong, I shall be happy for the Minister to correct me on that point. Perhaps the reason is that it has taken 18 months for the regulations to be prepared. The Government might want to make amends—possibly next week—and they could do so by lifting that £15 million cap. There are still strong reasons for the measure, because it was introduced to protect our studios and our skills base and to attract to our economy inward investment that would otherwise have been directed elsewhere—notably to Ireland.

However, it is true that there has been something of a boom in current production. I have the honour to be chairman of the all-party group on film; recently the noted film critic Barry Norman appeared before the working group. He told us that in the early 1980s he and Lord Puttnam speculated on the future of the British film industry in the 1980s and the early 1990s. They confidently predicted that cinemas would virtually disappear, except from our major cities. Barry Norman said with pleasure that they had been proved entirely wrong.

There has been a huge growth of multiplex cinemas and, most interestingly, that growth has been almost wholly supply driven. The more cinema screens there are, the more people are prepared to go to the cinema. Perhaps, to misquote Kevin Costner in "Field of Dreams", "If you build them, they will come".

I deliberately quoted an American film because we are sometimes in danger of being too nationalist about the British film industry, and of adopting the more restrictive views of the French. As the right hon. Member for Caithness, Sutherland and Easter Ross pointed out, we have enjoyed the growth of English language films largely because of America. The more people go to the cinema and get into the habit of seeing films, the more they will see British films. As has correctly been pointed out, there is a steady growth in the number of English language films available and great enthusiasm for them in central Europe and the far east. That has nothing to do with the British film industry, but is related to the culture of Coca Cola, McDonald's and MTV.

As has been said, other things make this a good time to be involved in film production, especially the growth of video and the deregulation of terrestrial television—first in western Europe and then in central and eastern Europe—which offer many new channels for the use of film. If we add to that the growth in satellite television, digital television and digital video disc, we see that there are many ways in which those engaged in film production can receive additional returns on their money.

There are two particular factors that will help the British film industry. The first is the marketability of commercial, well put together English-language films. Hon. Members have referred to "The Full Monty"; that film grossed $35 million in the United States, and "Trainspotting" grossed $16.5 million. All the successful films of the past few years—"Four Weddings and a Funeral", "Lock, Stock and Two Smoking Barrels" and "Secrets and Lies"—were produced with budgets of less than £3 million.

The second factor is that there is now more openness and friendliness from the US majors. That is not for wholly altruistic reasons; it is because there is a degree of nervousness about the creative process in Hollywood and a need to alleviate production costs. The growth of markets, the appetite for well-produced, low-budget films and the openness of the major companies make this a good time to be engaged in the British film industry.

There are, however, a number of problems, including the decline of the independents, referred to by the right hon. Member for Caithness, Sutherland and Easter Ross. Most of the risks for independent film makers are passed on to distributors; the distributors' share, from which they take acquisition and marketing costs, is only about 27 per cent. of ticket sales and there has been an enormous decline in the number of those companies. Perhaps that is why the number of films produced in Britain has fallen: in 1996—only a few years ago—128 films were produced here, but now only 91 films are in production.

The world is starting to open up for the British film industry, but whether we refer to film as a cultural or an educational experience, we should recall the words of John Ford to the House Un-American Activities Committee. He was undoubtedly one of the greatest geniuses in the film industry in the 20th century, but he told the committee that his name was John Ford and he made westerns. That was an enormous understatement. What he meant was that no matter how artistic or educational a film might be, the strand running through all films that make it—from those of the Lumière brothers, through those of David Lean and John Ford and "Star Wars"—is that they entertain and have a good narrative. I believe that the British film industry now has a good narrative and I am sure that all Members of the House wish it success.

12.7 pm

Mr. David Lepper (Brighton, Pavilion)

I congratulate my right hon. Friend the Member for Coatbridge and Chryston (Mr. Clarke) on securing the debate and, as other hon. Members have done, on the work that he has done over the years to develop policy to support and encourage the British film industry. I am sure that his all-embracing and trenchant analysis this morning will be taken to heart far beyond the rather small audience in this place. I also declare my own interest—which is in the register—as a trustee of Lighthouse Media Training, a company based in Brighton which trains the new generation of film makers to whose importance hon. Members have referred.

Hon. Members will be aware of the part played by Brighton—the area which I represent—in the history of the British film industry. If things had been slightly different in about 1906, we might now be referring to Brighton rather than Hollywood as the centre of world's film industry. History moves on, but Brighton has retained that vital connection with the film industry over the years. Only a few weeks ago, some of us had the pleasure of joining Lord Attenborough for the 50th celebration of the first showing of "Brighton Rock". The image of Brighton that has developed through the cinema has helped to make the town the tourist attraction it is. If hon. Members want to explore that early film history, I draw their attention to the excellent southern regional film archive, supervised by Frank Gray, and the exhibitions at Hove museum.

I do not want to dwell on the past; I want dwell on the present and the future. This morning, although my hon. Friend the Member for Keighley (Mrs. Cryer) alluded to it, we have not heard much about the importance of our film industry to our regional economies. I come from the south-east region—the Government office of the south-east region—which includes Pinewood and Bray studios and we are fortunate that the southern screen commission is based in our region. The commission is one of the network of 24 regional film commissions, based on the model developed by the New York film commission shortly after the second world war, to co-ordinate the industry in their areas and to attract location shooting. Gerard Rosenberg, the screen commissioner based in Brighton, estimates that in the first year of its existence—1996–97—the commission succeeded in attracting about £6.5 million in additional production spending to the region.

Many people who work in the media live in the Brighton area. Some figures suggest that Los Angeles is the only place in the world where a higher proportion of the population are employed in the media. While I cannot vouch for the reliability of those figures, a great difference is that media workers in Los Angeles, by and large, do not have to leave Los Angeles unless they are working on location. However, media workers who live in the Brighton and Hove area must often go elsewhere to work as film or television technicians. It seems to me that the network of regional film commissions can play a vital role in attracting location filming to the country's regions—my hon. Friend the Member for Keighley estimated the knock-on benefits to the local economy, including the spin-offs in terms of attracting tourists.

The authors of "A Bigger Picture", which has been referred to many times this morning, set out a specific role for the regional film commissions, referring to them as sources of up-to-date information about the industry and for the industry. The document talks about working with the industry in the regions and about the role that regional film commissions can play in training the next generation of film makers. The document also contains the important statement: The Department for Culture, Media and Sport will work closely with the British Film Commission and the UK Film Commission Network to assure the future role and funding of regional film commissions". I conclude my brief contribution by asking the Minister to describe what she believes to be the future of regional film commissions—particularly working in conjunction with regional development agencies. Perhaps she will comment specifically on the promise, which I believe is made in "A Bigger Picture", of Government support for the film commissions.

12.13 pm

Mr. Richard Spring (West Suffolk)

I warmly congratulate the right hon. Member for Coatbridge and Chryston (Mr. Clarke) on securing this debate this morning about an industry that has real cultural, historic and economic importance. The right hon. Gentleman's knowledge and understanding of the film industry are exceptional. He was the driving force behind the report of the film policy review group, "A Bigger Picture". It is a matter of regret that that report did not receive a proper airing in the House at the time of its publication, so today's debate is especially welcome.

I thank all hon. Members who have contributed to the debate, particularly my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles), who is a real film buff, and the hon. Member for Keighley (Mrs. Cryer), who followed in a family tradition. One of the central reasons for our continued success in obtaining Oscars and British Academy of Film and Television Arts awards is the creative genius of our people and their love and appreciation of acting and the theatre.

Turning to the current state of the industry, we must examine several areas this morning. The new umbrella body of the film industry, British Film, will begin in April 2000 distributing approximately £27 million of lottery money each year. It will seek to develop a strategy for the industry. However, British Screen will maintain its private sector status and the British Film Institute will retain its charitable status, pursuing educational and cultural objectives. It is unclear what relationship the British Film Commission will have with British Film.

I realise that we are a year away from the target date, but it is difficult to understand at this point exactly what roles these bodies will play and to what extent the proposed new structure will be streamlined and produce clear benefits. I hope that the Minister will expand on those interconnecting corporate relationships when she responds to the debate.

One of our greatest national success stories is our film skills base. For many years, British individuals have scooped awards for technical skills all over the world. That is a remarkable achievement. However, the Minister will know that there is considerable and genuine concern in the industry about the future of training in this country, which appears to be under pressure. I understand that Lord Puttnam has expressed his anxieties directly to the Secretary of State. This is the seed corn for the future of the industry, but only 32 students are currently taking film and television freelance training courses.

I shall give an example of the difficulties being experienced. In the field of creative writing, the Television Arts Performance Showcase—TAPS—has said that it can remain open for only another two months without some form of Government or lottery funding. It has been one of the most successful developers of new talent in the film and broadcasting industries.

The Government responded to this type of problem by founding Skillset, which was established with a training remit to all media industries. However, many of the training opportunities provided by Skillset are on the technical rather than the creative side of the industry. Do the Government consider that a more flexible approach to funding criteria may be appropriate?

In July 1997, the Chancellor of the Exchequer introduced a 100 per cent. tax write-off on expenditure on the production of films up to £15 million. Will the Minister indicate for precisely how long that write-off has been guaranteed? I am not clear about that point. Will the Minister also confirm to the House how many new films have been made under section 48 legislation? I fear that she already knows the answer: sadly, it is none. The reason is that the statement of practice was issued some 18 months after the write-off was promulgated in July 1997. Its implementation by the Treasury has, regrettably, been a fiasco.

Meanwhile only one large production is currently being filmed in this country: the new James Bond film at Pinewood. We have a high cost structure in the United Kingdom. Why does the Minister think that we are unable to attract large productions to this country? The spin-offs are obvious. Has she discussed with the Treasury the £15 million cut-off and whether that is the right level for this tax concession? Tax rules for employee travel expenses were introduced in April 1998, to undisguised dismay in the industry. It is estimated that the majority of the industry's employees work as freelancers on short-term contracts of typically a few weeks' or months' duration.

Herein lies the irony: the Treasury has given a tax write-off concession for production, but has hurt the people employed in the industry. Under Treasury rules, producers must gross up expenses payments in order to allow for income tax and national insurance. That occurs only if the film is being shot in the United Kingdom. If it is being filmed in Ireland or France, the producer will not have to gross up expenses, so costs are much less. Despite assistance from Treasury officials, that remains a considerable problem.

I would also be grateful to hear the Minister's views on how the working time directive will impact on film making in Britain. I was disappointed that, in a written reply to me on 22 February, the Minister of State, Department of Trade and Industry, the hon. Member for Makerfield (Mr. McCartney), indicated that no specific assessment had been made of the impact on film making. Our concern is obvious. What discussions has the Minister had with the Department of Trade and Industry about minimising any potential damage that the directive may cause?

Let us turn briefly to the role of the lottery in funding British films. The emphasis thus far has clearly been on the production side. There must be a balance between commercially viable films and culturally significant productions. Several films produced with lottery money have not been box office successes, to say the least. I understand that box office receipts cannot be viewed as the sole and exclusive criterion for judging a film's success, but there must be an appropriate balance. After all, it is the people's money and there is always a risk of lottery fatigue—which may have started already.

I know that the right hon. Member for Coatbridge and Chryston will agree that the success of American films is substantially due to the structure of their industry, which invariably includes production and distribution. We simply lack a vertical approach. I hope that British Film will tackle that problem. However, I point out to the Minister that there may be an imbalance in the provision of lottery funding in favour of production rather than distribution. Ultimately, of course, the market will determine the success or failure of a film, no matter what the Government or lottery distributor may want.

This is a wide subject and I have sought only to touch on issues that are now of concern to the industry. We make brilliant films such as "The Full Monty", "Chariots of Fire" and "Four Weddings and a Funeral", and we feel proud of their success. When our actors and actresses triumph, we share their delight, and we salute the quality of our technical expertise here and abroad. The right hon. Member for Coatbridge and Chryston has done a great deal to highlight the industry and to seek to put it on a more sustainable path, away from the rather roller-coaster ride that it has always had. However, the jury is out on the future of the industry.

I am grateful to you, Mr. Deputy Speaker, for allowing me to participate this morning, and I look forward to the Minister's response to the issues that have been raised.

12.21 pm

The Minister for Tourism, Film and Broadcasting (Janet Anderson)

In the short time left, I shall try to deal with as many points as possible. First and foremost, I pay tribute to my right hon. Friend the Member for Coatbridge and Chryston (Mr. Clarke) for securing the debate and bringing to the House his knowledge, expertise and enthusiasm for the film industry, which it is extremely difficult, if not impossible, for any of us to match.

I pay tribute in particular to my right hon. Friend's achievement in bringing to a successful conclusion the film policy review, "A Bigger Picture", which now underpins Government film policy. His was the most thorough and imaginative review for many years. It was a partnership with the industry, and working with his co-chairman, Stewart Till of Polygram Filmed Entertainment, my right hon. Friend managed to secure broad agreement to a blueprint for the future development of the British film industry. I have the privilege of implementing that blueprint, and I thank him for giving me that opportunity.

I shall briefly refer to some of the contributions to the debate. My hon. Friend the Member for Keighley (Mrs. Cryer) mentioned all the connections that her constituency and the surrounding Pennines have with the film industry. She referred particularly to the spin-off in tourism. She will know—if I may refer to this, Mr. Deputy Speaker—that the tourism strategy that we produced on Friday specifically mentioned that relationship and the benefits to the local and the national economy.

The hon. Member for Brentwood and Ongar (Mr. Pickles) referred to his family connection with "Yanks". There cannot be any hon. Member who does not have such a connection. I thank him for his contribution. He referred to the curse of Cannes, and I assure him that I am well aware of it.

The right hon. Member for Caithness, Sutherland and Easter Ross (Mr. Maclennan) referred to the way in which we competing with other countries in attracting film makers. He is right—New Zealand, Australia, Ireland and the Isle of Man are all passionate about that. We must match their enthusiasm and I hope that we can.

My hon. Friend the Member for Brighton, Pavilion (Mr. Lepper) referred to the recent 50th anniversary celebrations of "Brighton Rock", which starred our noble Friend Lord Attenborough, and Brighton's links with the industry. He referred particularly to the role of the regional commissions, and I take this opportunity to pay tribute to their excellent work in facilitating film making in their areas. Following the departmental spending review, we are closely examining the relationship that they will have with regional development agencies and other regional structures because, as he rightly said, that is very important.

I shall do my best to answer the questions of the hon. Member for West Suffolk (Mr. Spring). He referred to the structure of British Film, although I am not sure that the organisation will be called that because we have not yet made a final decision on that. He asked what roles the various bodies would play. We are concerned to make sure that the new body brings together the cultural and industrial sections of British film and we shall, I hope, make an announcement very soon. I take this opportunity to pay tribute to Lord Attenborough's contribution to that process, for which we are grateful.

I shall try to deal with most of the hon. Gentleman's questions, but if I do not, I will write to him. On the working time directive, I understand from colleagues and friends in the industry that they are relaxed about the directive and do not expect it to present them with huge problems, but of course we shall keep an eye on that.

My right hon. Friend the Member for Coatbridge and Chryston set out clearly the objectives of "A Bigger Picture", and I reassure him that we have made substantial progress on many of its proposals.

Many hon. Members have referred to a continuing dialogue with the Treasury. I assure them that that dialogue is continuing, and a fax will be winging its way to the Treasury this afternoon to emphasise the importance of the current tax concession. We want to examine how that is working, and if I have time, I will deal with that. Various hon. Members mentioned that there was no evidence that British film had benefited from the concession, but I can tell the hon. Member for Brentwood and Ongar that I have lists, provided by Ernst and Young, of films that are being produced or are about to be produced which have benefited from it. Ernst and Young told me the other day that it has a number of investors who are investing in British film precisely because of the concession.

Mr. Pickles

Will the hon. Lady place the list in the Library?

Janet Anderson

I certainly shall place the list in the Library and give the hon. Gentleman the information that he needs.

My right hon. Friend the Member for Coatbridge and Chryston mentioned cine-literacy. That is important, and we are having discussions with colleagues in the Department for Education and Employment about it. We shall also need, as he rightly pointed out, to clarify the relationship with our Scottish colleagues following the establishment of the Scottish Parliament.

On the Oreja report, which my right hon. Friend mentioned, I reassure him that we broadly agree with the recommendations, but we are waiting for the more detailed proposals from the European Commission, which we shall study very carefully.

Overseas earnings by UK film companies reached a record level of almost £700 million in 1996 and 1997. British films captured their highest share of the home market for many years—23 per cent. in 1997, which was almost double their share in 1996. We know that in this country there is an intense interest in the whole world of film, and cinema admissions and takings are at their highest levels. I join my right hon. Friend the Member for Coatbridge and Chryston in congratulating all those who have been involved in the success of British film, particularly Duncan Kenworthy, who recently received the OBE. I join my right hon. Friend in wishing him well with his forthcoming film, "Notting Hill".

It will be difficult to fit all my points into the remaining time, so I shall try to concentrate on the main issues. The fundamental problem identified in "A Bigger Picture" remains; the UK industry is fragmented and there is a problem in the separation of production and distribution. Indeed, some now believe that our attention should be turned away from production and towards distribution, and we understand that view. That is one of the reasons why we have been working with the industry to implement the recommendations of the film policy review. Our commitment to film was demonstrated in the Chancellor's first Budget. I mentioned our discussions with Ernst and Young, which will shortly announce plans fully to finance and produce its own £30-million slate of feature films in this country. I say to the hon. Member for Brentwood and Ongar that that is evidence that the tax incentive is working.

My right hon. Friend the Member for Coatbridge and Chryston mentioned the need to work together. The action committee, which I continue to chair with Stewart Till, brought together everyone in the industry, including those from video and broadcasting, which is very important. A British Film Office has been established in Los Angeles. The Film Finance Forum, to improve links with the City of London, is up and running, and progress reports are encouraging. Film Export UK, a new trade association, has been established to help to promote the international sales of British film, and the film education working group has been set up.

I have very little time left, so I shall briefly mention the all-industry fund and the skills investment fund. We undertook a cost-benefit analysis on the all-industry fund, which demonstrated—

Mr. Deputy Speaker (Mr. Michael J. Martin)

Order. We now come to the debate in the name of the hon. Member for Winchester (Mr. Oaten).