Lords Sitting of 19 February 1948

Preamble
The House met at four of the clock, The Lord Chancellor on the Woolsack.
Prayers.
  ROYAL MARINES BILL.
  House in Committee (according to Order): Bill reported without amendment.

  CINEMATOGRAPH FILMS BILL.
  4.5 p.m.
  Order of the Day for the Second Reading read.
  THE FIRST LORD OF THE ADMIRALTY (VISCOUNT HALL): My Lords, the main purpose of this Bill is to amend and continue the provisions of the Cinematograph Films Act, 1938. That Act, as your Lordships are aware, succeeded the first Film Quota Act of 1927. This Bill is designed chiefly to continue the system of exhibitors' quota, to encourage and protect the production of British films, and to restrain any growing tendency of monopoly in the industry. The noble Viscount, Lord Swinton, with his usual conspicuous skill, piloted the 1927 Act through another place when it was felt that the application of the system of quota had become necessary, for at that period American distributors supplied no less than 95 per cent. of the films exhibited in this country. Even now, the showing of British films occupies only about one-fifth of our screen time in some 4,500 theatres in this country. It is not a good thing for a country such as ours to have almost all the films shown made in another country for, as the Films Council have often pointed out, the cinema industry cannot be regarded as just one business among others. Its possibilities are vast as a vehicle of expression of national life, ideals, tradition and instruction.
  This industry touches our national life at many points, and while the scope of producing films is limited at the present time, the public demand for seeing them
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  is immense. I saw a statement a short time ago that in 1937 the number Of seats bought weekly was about 15,000,000. According to estimate, the present weekly rate is nearer 30,000,000. Some 30,000,000 persons per week use the cinema as a means of relaxation and amusement, while tens of thousands of workpeople in various sections of the industry—production, distribution and exhibiting—are dependent upon it for their livelihood. This industry is confronted with many problems at the present time, and while this Bill will be of some assistance it cannot alone solve either the short-term or the long-term problems. We must look at this Bill against a background of the present difficulties which the industry is experiencing, not only on its productive side but as the result of the cessation of the import of films from the United States of America. It is true that if this embargo on the supply of further films continues indefinitely, the effect on the choice of films open to the public, and therefore on employment and box office earnings, will be considerable.
  While this is not the occasion to debate the attitude of His Majesty's Government in relation to the embargo and to the import duty on American films, I think your Lordships would like to know the attitude of His Majesty's Government in relation to this matter and I can do no better than refer to the statement made by the President of the Board of Trade in another place on the Second Reading of this Bill. He said:
  "We ourselves stand by the import duty and I do not think I need labour the point that we cannot continue finding dollars to meet the payments due on American film earnings here. We are prepared to make any reasonable arrangement, and we have stated that we are prepared to work out a scheme which would allow extra earnings for foreign films to be taken out of this country to the extent that our British films earn more money overseas. We are not interested merely that British films be ' taken ' by overseas distributors; we want to see them really effectively shown and actually earning dollars."
  So long as we secure the required dollar saving, we are prepared to agree to some modification of the duty. This, I think, is the attitude shared by the Opposition, for Mr. Oliver Lyttelton, after making suggestions for the removal of the deadlock said on the Second Reading in another place:
  "I do not suggest—I want to make this very clear—that in our opinion, His Majesty's

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  Government should retire from the main position they have taken up. I express the hope that with certain good will and flexibility the present problem can be satisfactorily solved."
  That is the attitude of His Majesty's Government at the present time.
  I have no doubt, my Lords, that many people have asked why, after twenty years of protection, the industry needs a continuance of such assistance. The answer must be that, mainly because the war intervened, the 1938 Act never had a fair run. The extension of the industry for which the Act provided has been seriously impeded, not only by the late war but also by the dislocation which followed it. It may be said that during this period there has been a striking advance in the quality of British films and achievement: which reflects the greatest credit on all concerned with their production. This progress was made in circumstances of great difficulty, partly through shortages of studio space and skilled personnel. Nevertheless, the volume of output has fallen short of expectations; and, as I have already pointed out, British films are still filling only a small space of our screen time. Moreover, the market here is only about one-quarter as large as that for the product of Hollywood. It is clear that a continuation of some form of protection is required. That is the view of all sections of the industry on the need for the continuance of this Act.
  The industry, and the Cinematograph Films Council, in their valuable report published last July, agreed that the general framework of the 1938 Act was soundly conceived and should be retained, with amendments to meet present-day conditions. The Council include representatives of both sides of the trade, together with a number of independent members, and have been fortunate for the last three years to have as their Chairman the Earl of Drogheda, who has deserved no small share of the credit for the Council's businesslike discharge of their functions. In that space of time the noble Earl has acquired an extensive acquaintance with the industry's problems and leading personalities and has the esteem of all those associated with the industry.
  I turn now to the Bill itself. Its clauses are only ten in number, and the rest of the print—from page 9 onwards, consists of two Schedules. The clauses
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  replace and amplify certain provisions of the existing Act of 1938, and entail some consequential amendments to various other provisions of that Act. These and some other amendments are effected by the First Schedule, which amends or repeals various provisions of the Act of 1938. Part I of this Schedule deals with amendments and Part II with repeals. The latter includes the repeal of the renters' quota provisions, enacted in 1938, and also the formal repeal of the now obsolete Act of 1927. The Second Schedule sets out the revised text of the 1938 Act as it will read when amended accordingly. The new quota regime prescribed for the exhibitors in this Bill will differ in three main respects from the 1938 arrangements under the present Act. As these provisions are the kernel of the Bill, I will, with your Lordships' permission, dwell briefly on each of them.
  In the first place, there is the provision in Clause 1, subsections (2) and (3), for separate calculation of the quotas in respect of "first feature" films and the films which go to make up what the trade call the "supporting programme." The 1938 Act draws a distinction, for quota purposes, between "long" and "short" films—films respectively over and under 3,000 feet in length. First and second features are not, however distinguished. This created the anomalous position whereby films of one class could be offset, foot for foot, against films of the other, although in the normal double-feature programme there is generally a wide difference in price and quality between first and second feature films. Clause 1 of the Bill proposes to correct this anomaly by abolishing the "long" and "short" film quotas, and substituting separate quotas for the "first feature" and the "supporting programme." This latter—the supporting programme—will cover the items other than the first feature, except for news-reels and advertisement films., which are outside the scope of this Bill.
  By Clause 2 it will be possible under the Bill to appoint different quota percentages for different classes of cinemas. Some cinemas are much better placed than others for booking a satisfactory proportion of good British films—sometimes because of their geographical position and sometimes because they are units in powerful cinema "chains" or

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  circuits. Any exhibitors' quota with a uniform incidence on all cinemas is likely to bear too hardly on some and too lightly on others. The Bill therefore includes provisions which in future will enable the obligation to be varied between three main categories. The first class includes the circuits comprising more than 200 cinemas and the pre-release cinemas—often called "shop-window" theatres—in the West End of London. The second comprises the general body of the cinemas—that is to say, all the cinemas without the special advantages of the first class and without the disabilities of the third. This third group will consist of any cinemas where the exhibitors concerned have satisfied the Board of Trade that their local competitive situation justifies some measure of relaxation of the normal obligation. Within this group the Bill also gives effect to what was substantially the Films Council's suggestion, that cinemas in competitive situations with average takings of less than £100 a week should enjoy total exemption from the ' operation of the quotas. Their importance in this respect is not considered sufficient to justify the amount of work which enforcement of quotas for them would involve.
  The third significant new feature of the exhibitors' quota provisions of the Bill lies in the new and flexible provisions for determination of the quota percentages. In accordance with the expressed wishes of all sections of the industry, the quotas will be fixed in future by Board of Trade Orders, made after consulting the Cinematograph Films Council and requiring affirmative Resolutions of both Houses of Parliament. The Orders will aim, on the one hand, at assuring for every worthwhile British film the widest possible exploitation in this country's own cinemas, and at the same time will avoid imposing an excessive burden on any exhibitor. No statutory minimum percentages are laid down in the Bill, but my right honourable friend the President of the Board of Trade has given assurances in another place that it is, in fact, his firm intention never to let the quotas fall below the levels prescribed next summer.
  I should like to touch briefly on the quota provisions of the Bill as they affect the British producers of so-called "specialized" films—that is, films not primarily
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  intended for exhibition as first features. The Government are particularly anxious to support this section of the industry, and there are two respects in which I believe this Bill will prove to be helpful. In the first place, I am hopeful that the separate quota for the "supporting programme," taken as a whole, will bring about some improvement in the demand from exhibitors for these types of film, since it will enable exhibitors to use British short films to offset not only foreign "shorts," as they can under the present Act, but also to offset foreign second features. In the second place, Clause 3 (6) of the Bill, by the imposition of a cost test, accepts the view that it is now desirable to protect the producers of "specialized" films from the very cheap competition to which they are at present exposed. It is now considered reasonable to prescribe a minimum production expenditure on labour costs of 10s. per foot—the figure which was recommended for short films by the Films Council. For exhibitors' quota purposes, therefore, any film which fails to comply with this test will fall into a neutral class, and will be ignored in the 'quota calculations.
  With regard to the major cinema circuits—the groups of 200 cinemas or more—Clause 5 (7) of this Bill will now provide a statutory basis for the implementation of the Government's policy of preventing any further expansion of these powerful groups, subject only to the qualification that it is not the Government's intention to give one group a permanent advantage over another. This places on a statutory footing the position established since 1943 by undertakings given by the chief representatives of the circuits. Clause 5 (2) of the Bill will also make statutory the existing arrangement whereby each major circuit can be called upon by the Board of Trade to book up to six British films a year for exhibition as first features on the recommendation of the special Selection Committee. This will ensure that a circuit booking is available to the independent British producer for all his pictures of the requisite standard, up to a total of eighteen pictures a year (plus, of course, whatever pictures the circuits book on their own accord). The Selection Committee, which were set up in 1946, have as their Chairman the noble Earl to whom I have already referred, and, besides one representative of each of the

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  three circuits, the Committee, include a preponderance of independent members of widely representative character.
  Clause 8 of the Bill alters the composition of the Cinematograph Films Council—the body set up under the Act of 1938 to discharge certain advisory functions. Persons who are not members of the Council may also now be co-opted as additional members of any committee of the Council. The Council's responsibilities are enlarged under previous clauses. The Government are most anxious that the Council should now become an even stronger and more effective body. The altered composition originally proposed in the Bill has been significantly modified as the outcome of discussion of this Clause 1n another place. The Government confidently recommend it to your Lordships as striking a fair balance between the claims of the various interests—including, not least, the claims of the general public. Although the independent members will no longer preponderate in numbers, I would like to assure your Lordships that there is No 1ntention of diminishing their influence. The Council remain an advisory body, not taking executive decisions on the basis of counting heads, but presenting reasoned recommendations to the President of the Board of Trade.
  I should like, finally, to say a word about the prospects of British film production. There is a danger that the un-settlement in the industry as a result of the American film embargo will lead to some slackening of the tempo of film production. There are, indeed, already signs of that. The principal British producers, however, have stated that they have every confidence in their ability to maintain full production in the studios which they control, and the Government have done their best to see that the maximum amount of studio space is available. It is now more than ever necessary that this space, and the man-power which it employs, should be used to the best advantage and with the maximum efficiency. I would remind your Lordships that, in order to keep under review the measures taken to promote all aspects of production efficiency, and to enable the Government to take steps to remove any avoidable obstacles, my right honourable friend the President of the Board of Trade is inviting the interested parties to nominate representatives to serve on a
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  National Joint Production Council of which he will be the Chairman.
  It can be said that this Bill was discussed in another place in an atmosphere of good will, the Minister making and conceding many Amendments. What is remarkable for a Bill of this kind is that it was carried through all its stages without a Division, and it can now be accepted by your Lordships' House as representing the collective opinion of all Parties in another place.
  In conclusion, I am sure that your Lordships will join me in paying a tribute to those who stood by the industry during the very difficult war years, and who spent much time and money in bravely attempting not only to re-develop the film industry on the productive side but in raising considerably the general standard of the product. The enhanced reputation of the quality, character and educational value of British films is an excellent testimony to the success of their efforts. I beg to move.
  Moved, That the Bill be now read 2a.—(Viscount Hall.)
  4.28 p.m.
  VISCOUNT SWINTON: My Lords, I seem always to be lending my cordial support to every Bill introduced by the First Lord of the Admiralty. If we go on at this rate of mutual disarmament, we shall tooth be getting sadly out of practice. However, on this occasion I feel that I must lend my support to the Bill, not only because I think that this is, on the whole, a very good Bill, but also because I take a grandfatherly interest in it. This Bill is the direct descendant of, and is in many respects like, the Bill which I introduced more than twenty years ago. Therefore it may not be irrelevant to a consideration of this Bill to recall briefly the circumstances in which the original Act came to be, produced and passed.
  Before the First World War, the young' British film industry was fairly successful; during that war it suffered, and after that war it had almost faded out. As the First Lord of the Admiralty has said, by 1925 5 per cent. or less of the films shown in this country were British films. I felt that that was an intolerable situation. If we had been entirely dependent upon foreign books for what we read everybody would have agreed that

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  socially and educationally, it would be an impossible position. Yet almost as many people see films as read books. Indeed, I am not at all sure that if one applied a test it would not result in films coming out on top. Economically the situation was equally serious. I remember being greatly impressed at that time by a statement by Mr. Julius Klein, who was the Secretary for Commerce in the United States. He said that in his considered opinion the value to American export trade of American films which dominated the screens of the world was worth all other direct advertisement put together. I was then President of the Board of Trade, and reports which were coming from commercial counsellors and consuls from all over the world were very much to the same effect; and yet the position had been tacitly accepted.
  It was superficially supposed that here was an industry or craft in which we had not either the talent or the capacity to compete. Yet in the United States some of the best actors and producers were British. We certainly had the authors—past, present and future. There could not be any doubt about that. Then it was said that we could not make films in England because it is full of fog, and what is required in order to make a satisfactory film is the clear, pure air of Hollywood. The question then arose: Why is it that in Germany, which is at least as foggy as England, admirable films are being produced with beautiful photography? The answer was simple. These films were not produced in the open air at all; 90 per cent. or more of them were produced in air-conditioned studios under artificial light. It also appeared to me that this question was of just as much—or almost as much—interest to the Dominions as to ourselves; therefore I brought the subject before the Imperial Conference.
  All the Dominions and all the Commonwealth countries warmly endorsed the proposition. I would like to read to the House the resolution passed by the Imperial Conference in 1926. It was this:
  "The Imperial Conference, recognizing that it is of the greatest importance that a larger and increasing proportion of films exhibited throughout the Empire should be of Empire production, commends the matter and the remedial measures proposed to the consideration of the Governments of the Empire, with
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  a view to such early and effective action to deal with the serious situation now existing as they may severally find possible. Any action it might be possible to take in Great Britain would undoubtedly be of the greatest assistance to the other parts of the Empire in dealing with the problem."
  Fortified by that we went ahead. I tried, in the first instance, to secure a voluntary agreement between the "three estates of the realm" in this industry—the producers, the renters, and the exhibitors. There was plenty of good will, but they said at an early stage "We cannot possibly agree." Nevertheless they all gave me the greatest possible help in drafting the Bill.
  The main features of that Act—and they are virtually reproduced here—were these. We went out for a progressive quota. The films to be treated as British were not only films produced in this country but, provided they were British in character, films produced anywhere in the British Empire. We introduced a separate and higher renters' quota. Perhaps for good reasons that quota has now been eliminated, but at that time the exhibitors were extremely anxious to have it, because they said, "The renter or distributor will always have to have more films than we must take." We abolished blind booking—a system whereby exhibitors had to book up films that nobody had ever seen. We said that in future the film must be "trade" shown before it could be booked, and we restricted what was called "block booking." Finally, as all sections of the trade wished, the administration of the Act was vested in the Board of Trade, with the assistance of an advisory council, to-day the Films Council, to which such a deserved tribute has been paid. I would like to remember a noble Lord who, alas, is no longer with us, namely, the late Leader of the House, Lord Moyne. He also contributed a great deal to the administration of the Act.
  In those early days there was a great deal of Parliamentary opposition, and the atmosphere was very different from the placid atmosphere which now prevails. The Socialists opposed the Bill, not, I think, because they really objected to it. I believe that in their hearts they really liked it, but it was a principal Government Bill; and so, as a right thinking or right acting Opposition, they had to oppose it. The Liberals opposed it hotly. They said that it was contrary

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  to all the dogmas of Free Trade, and we shall perhaps see to-day what is their attitude now. Perhaps it will be characteristic. However, the Bill went through and once through it worked well. In a few years the exhibitors were showing more than three times as many films as the compulsory quota laid down, and then, ten years later, as the First Lord has said, Parliament had to approve or reject my Act. And, as experience showed to be desirable, it was renewed by general consent, with certain amendments.
  There was one question which did not figure in our Bill, and which does not, I think, figure in this—although I am not quite sure about one Clause 1n which the wording is a little doubtful. I was greatly pressed from some quarters to set up a film censorship in the Board of Trade. Some worthy people, although perhaps not well acquainted with the film industry, wanted the Board of Trade to be a judge of quality and æsthetics. Some others even went so far as to say that we were also to be a judge of morals. I should have been very good at that; but even so I set my face against that idea. I thought there ought to be one arbiter of taste or of morals and that was the British public, and a very good arbiter they proved to be, too. That matter came up again when certain ingenious people, largely foreign, thought they had found a way round the Act by an unpleasant thing called the "quota quickie," which is well-known to those of your Lordships who are acquainted with the industry—something which is cheap and nasty.
  We had to consider then how we were to meet that, and again we met people who said "Let the Board of Trade be the test of what is a good film and what is not." The only real test of what is a good film and what is not is the box office—whether people will go and see it. We decided against a kind of aesthetic quality test by the Board of Trade, and came down in favour of what I may call a means test, which was not always popular but was certainly a sound test in this case—that in order for a film to qualify a certain amount of money had to be spent on it. I think in those days it was £1 a foot. I am not quite sure why it has gone down to ten shillings, when every other price has risen. The minimum labour cost was set at £7,500. An excep-
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  tional case, of course, could be specially met. If somebody produced quite cheaply a good film which the public, would like to see, there was no difficulty in admitting it.
  From what I have said, your Lordships will see how closely this Bill, the third of its kind, follows the original Act, and I naturally welcome the present Bill as a lineal descendant. In this case I join with the Government in support of the hereditary principle. We shall have to consider in Committee the provisions of the Bill. I agree with the noble Viscount, the First Lord, that they raise no Party issues, and we shall find, I am sure, as we have so often found in this House, that in both the general and special experience of members of this House we have just what we want for the rapid and effective consideration of the Bill. I would only direct attention on Second Reading to some questions of principle to which we shall have to revert in more detail during the Committee stage. We are legislating not or a temporary emergency, but for a more normal future. But we are in a temporary emergency with regard to films—at least, I hope it is only temporary; I trust that this American impasse will be satisfactorily resolved. But let me make it quite plain now that we on this side of the House stand solidly behind the Government in the general position which they have taken up in this matter. If that is clearly understood, I am sure that it will be much easier to reach a solution advantageous to both countries. British films are getting better and better, and it is not only we who are suffering in this matter; it is the Americans who are suffering too. I am sure that if they take account of our difficulties and fairly meet the situation it will be to the 'benefit of both sides. But let us remember that we are legislating how for a permanent condition.
  May I advert, briefly, to what I think are the general principles which experience has shown to be necessary, and which were present in the original Act? First I would say there must be certainty—certainty for all. Secondly, the Bill should be fair both to the producers and to the exhibitors. Thirdly, it should be fair as between the different classes of exhibitors. Fourthly, it should stimulate production of good films—and by good

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  films I mean films that the general public will want to see. Finally, administration should be simple and elastic—the Board of Trade working with the different sections of the trade, producers and exhibitors, and the invaluable independents on this Council. I hope the. noble Viscount, who will not, I realize, be answering in Committee at first hand, will not be put off or misled by the bogy of complicated administration. It is not at all complicated to administer an Act of this kind. I venture to be a little dogmatic about that, because I wrote every word of the earlier Act myself, and I administered it for a year or two. I administered it practically with two men and a boy, and the good will of all sections of the industry. Vast returns of the most complicated kind are not required. We administered the Act quite simply with test checks, and if a thing is right and reasonable (as I suggest this is) I beg the Government not to be bamboozled by an idea that an enormous staff is called for to make the thing work efficiently. It is not. Indeed, I go so far as to say that the smaller the staff the better this measure will work.
  If those principles are sound, we should apply them all through, and in particular to the following points. First, I would ask: Ought there to be a minimum quota? Without that certainty it is difficult to plan ahead and to finance. I know that the Government say: "What we fix as the first quota will, in fact, be the minimum." I would have been inclined to put that into the Bill. I believe that it is to the interest of exhibitors, as well as producers, to have this certainty. I am sure we need not be afraid that in practice the minimum will become a maximum. As I say, within a year or two of the old Act coming into operation, although the quota was relatively low, exhibitors were showing three times the amount of the compulsory quota. Then there is the question of the progressive quota. That is entirely sound, and perhaps it is better to have it fixed by the Board of Trade in an affirmative Resolution, in the light of knowledge gained from year to year. But give as long notice as possible, and make the quota period for as long a time as possible. That is in the interests of both the producer and the exhibitor.
  The noble Viscount has explained to us the rather complicated provisions
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  about separate treatment of the smaller theatres which have takings of £100 a week or less. I thought the original provision in the Bill was very bad: they were all excluded. That would have meant something like 1,000 of them in the aggregate and it would have represented a good deal of money to the producer. And the Board of Trade can always relax or exempt. We had that power under the old Act, and we exercised it quite frequently if for some reason or other a man could not get films. I am told by all sections of the trade that that worked smoothly and well. Clause 3 has been amended, as I understand, so that it exempts only those small cinemas which meet with competition and which have real difficulty in getting British films. That is probably right. But what about the converse of this—as I may call it? The converse I find in the provision in Clause 5 about the extra quota for the big circuits, the circuits which own 200 theatres or more.
  I am not quite sure that I understand the principle on which that provision is based. It seems to me that it is based on the principle that a large company must bear a heavier burden than the smaller ones. That may be all right. If it is, I would only say in passing—I hope that I am not bringing a slightly controversial element into the discussion—that it would be a more appropriate application of that principle if the great nationalized monopolies accepted heavier burdens themselves and put rather lighter burdens upon us. But perhaps that suggestion would be more relevant to another debate. Still, I must send that down to the noble Viscount; I cannot bowl in half-volleys all the time. I am all in favour of these big circuits showing the maximum number of British films, but why is the obligation confined to this arbitrary number of theatres?—I know, of course, that there are the "big three." Surely the purpose of the Bill is to have as many good British films shown in as many cinemas as possible. It seems to me that different quotas are justified only if some theatres would have genuine difficulty in obtaining the requisite number of British films. But if a circuit with under 200 houses has not that difficulty, I do not see why it should have a smaller obligation. I have mentioned the matter on Second Reading as I do not want to take the Minister by surprise at a later stage. I

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  think he will agree that it is a new point which was not considered before, and I think we ought to discuss it in Committee.
  Another provision which I do not think is satisfactory is that under which British films can be shown only in the first half of the week. Again I beg the noble Viscount not to ride off on the administrative bogey. I am perfectly satisfied that it is not in the least difficult to administer this Bill on the basis of giving all films a fair chance throughout the week. We all have more leisure time at the end of the week—even noble Lords have, though I do not know about Cabinet Ministers—and anybody who knows about films knows that many more people go to the cinema on Friday night, Saturday and Sunday than during the first half of the week. If films are to be given a fair showing, they ought to be shown then. This is important from a takings point of view because I understand that films are generally paid for on a percentage of takings. If that is so, obviously what is wanted is a percentage when the house is full and not when it is half empty. Even I can appreciate that mathematical proposition!
  This matter also has a bearing on exports. In the keen competition to show films abroad people in this industry are very quick not only to boost their own wares but somewhat to decry the wares of other people. Nothing could be worse for those who are trying to sell British films in the export market, where they will earn dollars and hard currency, than that the statement should go out that "This was a Monday-to-Wednesday film and not a Friday-to-Sunday film." I am sure that if this provision is not amended, that is the kind of thing which will be said. We shall consider that point in Committee in a quite unprejudiced way and see what is the right thing to do.
  I would add one other word on finance. There is nothing in the Bill about it, but a good deal was said in debate in another place regarding the importance of this industry obtaining finance. A suggestion was made that some new finance corporation might be set up, or some new method of financing the film industry found. I am very doubtful about that. I do not like new bodies. If this industry is what I believe it can be and will be—a really sound proposition, an efficient industry—it ought
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  not to have difficulty in getting its finance. There are already the great financial corporations which we set up, one for major finance and the other for small finance—which is very important; I always feel there is a great place for it—to help the fellow who wants £25,000 or £50,000. It is not the business of the banks; their business is to lend largely at call or on short notice, and this money may be locked up for two or three years. The amount required may not be big enough to justify making an issue, but the proposition might be a very sound thing. That is the kind of thing this existing corporation, which I may call the junior corporation, exists to handle. I certainly should have thought that the right channel of finance for this industry was through these existing and established corporations.
  I repeat the general welcome which I have given to the Bill. I think it was greatly improved in another place, but that does not mean that we cannot make it still better here. I am sure that we shall go into Committee with the greatest good will possible and with the genuine desire on all sides to see if we cannot make this an even better Bill.
  4.57 p.m.
  THE EARL OF ROSEBERY: My Lords, I shall speak for only one moment; therefore I am sure that I shall not be intervening at the wrong time. The noble Viscount who introduced the Bill, and the noble Viscount, Lord Swinton, have both traversed the Bill fully, and I do not want to say anything about it beyond welcoming it and mentioning one or two points from the point of view of Scotland. We hoped we would have a Scottish Committee, but now, I am afraid, although we still think we ought to have a Scottish Committee, we shall not have one, though provision has been made for a Scottish sub-committee. There are twenty-two members of the Committee, but there are only two Scots on it, and even on the Goschen quota we are entitled to another member. Therefore I sincerely hope the noble Viscount will be backed by my noble friend, Lord Morrison, in obtaining for us another member.
  A NOBLE LORD: Sometimes you get more than the quota.
  THE EARL OF ROSEBERY: We get all we can. We never want to get less than our quota. I should like to make a

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  point about the English quota for Scottish cinemas. I am not going to say anything about Scottish humour being better or worse than English humour, but there is no question about it that a certain number of English films are quite unsuitable for Scotland. Take a broad Lancashire film: people in Scotland hardly understand what the actors are talking about. As the noble Viscount, Lord Hall, said, we must consult the audience as much as the people who produce films. The noble Viscount, Lord Swinton, has pointed out, rather to my horror, that many more people go to films than read books; therefore I think the people who go to films should be consulted. Some of the films unsuitable for Scotland should be allowed to be expunged from the quota and thereby the quota for Scotland be lowered. I have spoken in a hurry for obvious reasons, but I hope I have put these two points clearly to the noble Viscount. I say again that I hope very much that he will be supported by my noble friend, Lord Morrison, on the extreme right of his Bench.
  LORD AMMON: My Lords, I think this would be a convenient moment to break off for the Royal Commission.
  House adjourned during pleasure. House resumed.

  ROYAL COMMISSION.'
  5.0 p.m.
  The following Bills received the Royal Assent:
  Post Office and Telegraph (Money), Requisitioned Land and War Works.
  House adjourned during pleasure.
  House resumed.

  CINEMATOGRAPH FILMS BILL.
  5.12 p.m.
  Debate resumed.
  THE EARL OF DROGHEDA: My Lords, it is traditional that the Chairman of Committees should speak in this House only if the subject matter of the debate
  1252
  is entirely non-Party and if he has, or at any rate is supposed to have, some special knowledge of the subject. I hope that your Lordships will think that this is one of those occasions. I am most grateful to the noble Lord the First Lord of the Admiralty for the kind words he used about the small amount of work I have been able to do on the Films Council. No one who has been a member of that Council could fail to learn something about this most fascinating and complex industry, but I am very conscious how superficial and incomplete is my knowledge of it. May I add that anything I have to say this afternoon is merely the expression of my own personal views; I make no claim to speak for the Films Council as a whole, or even for the non-trade members of it. As is only right, many schools of thought and different interests are represented on the Council, and few indeed are the subjects upon which the Council are unanimous. I think, however, that all my colleagues would wish to join me in expressing their appreciation of the efficiency and the helpfulness of all the members of the Films Section of the Board of Trade.
  In a sense, the present Bill is quite overshadowed by two events of major importance to the industry. The first of these, of course, is the Customs Duty and the subsequent embargo on the shipment of films to this country from the United States which has created a situation of very great difficulty for many exhibitors. The second event is the announcement by the President of the Board of Trade of his intention to set up a Committee to inquire into the whole question of the distribution and exhibition of films, and also a Production Council, under his own chairmanship, to keep under review every aspect of production efficiency. The subject matters with which those two bodies will have to deal are of the utmost importance to the industry—they go to its very roots—and the outcome of their deliberations, when the international situation has permitted the Committee to be set up, will be watched with the deepest interest. In comparison with some which have come before your Lordships, this Bill is a very modest affair. All it does is to maintain in force for a further ten years the quota protection afforded by the previous Act, and to amend and modernize in some way the provisions of

  1253
  the 1938 Act. Nevertheless, the maintenance of the quota protection is by no means unimportant. It is quite unthinkable that we should risk losing the ground which has been gained with so much effort during these difficult years. I am sure that one day the British film industry will be so well established, and British films will be so much in demand, that they will need no artificial help; but until that day comes we must have the quota protection and I do not think that any one seriously contends that that is not the case. For my part, I am extremely glad that the Government did not fix any quota percentages in the Bill. I know that it is argued—and, indeed, I believe the noble Viscount, Lord Swinton, said to-day—that: it might not matter if the percentages were fixed too high and subsequently there turned out to be a shortage of British films, because that fact could always be taken into account in considering quota defaulters. That is perfectly true. But surely, on general principles, it cannot be right to create large numbers of offenders whose offences have to be overlooked because the law that they have broken cannot be carried into effect.
  I have been for three years a member of the Defaults Committee of the Council, which considers these defaults in the first instance. Owing, no doubt, mainly to the war, and also to the rigidity of the 1938 Act, we have been faced year by year with something like 1,000 defaults. We have gone through them carefully, and we have been satisfied that the vast majority of cases have arisen simply because the exhibitors have not been able to procure sufficient British films. I submit that a total of something like 1,000 offenders, and perhaps ten prosecutions by the Board as a result of our saying that some of the cases are particularly bad, simply brings the law into disrepute. I do not think that it does any good to anyone, not even the independent producer, to assist whom is one of the main objects of the Bill.
  If any of your Lordships who have not yet made a film were to wish to produce, not a very expensive film, but an important film—shall we say a film costing £200,000—and supposing again that it was not quite convenient for you to find most of that money, it would not be any help, I think, when you went to. look for finance, to say: "Oh, it is quite
  1254
  all right, the quota percentage is 35 per cent." I think that your bank would very likely reply: "That may be so, but what we want to know is that the film you are going to make will have a quota booking; until then there is nothing doing." I am quite certain that it is a fallacy to think that, by making high percentages, we can thereby stimulate production. What the producer must know is that his films are going to have a large showing. The quota percentages should, in my opinion, be substantial, but they should not be unrealistic. To fix the percentages too high is to inflict considerable hardship upon exhibitors, particularly the more conscientious exhibitors, and it does no good to anyone at all. I am sure that the quota percentages must be most carefully considered and related to British films that look likely to be coming forward in the next quota period; and that is one of the reasons why it is difficult to fix the period too far ahead. The Films Council, or whoever advises the Board of Trade, must be able to see what is in view before they can advise reasonably as to percentages.
  May I turn for a moment to the position as regards Scotland? During the passage of the Bill through another place apprehensions were expressed lest the Scottish defaulters might be treated with undue harshness, because there was such a small number of Scottish representatives on the Council compared with the numbers of their English colleagues. I know the noble Earl, Lord Rosebery, made that point, but I do not think those fears have any foundation. The procedure of the Films Council in advising the Board of Trade, certainly during the past three years and I think since the establishment of the Council, has been as follows. The Films Council appoint a Committee consisting of eight members. Two Scottish representatives are members of the Committee—and I an assure your Lordships that they have in full measure the eloquence and the zeal for Scottish interests which we have come to associate with the representatives of Scotland in your Lordships' House.
  On every Scottish default the Committee is guided by the advice given by the Scottish representatives, and I do not recall a single case—I am sure there is not one—in which their advice has not

  1255
  been accepted. Indeed, I may say that if for some reason or other neither of the Scottish representatives had been able to be present at a particular meeting, the whole consideration of the Scottish default would have been postponed until one or both had been able to be present. Then the Defaults Committee report to the Council; the Council consider these cases and give their advice to the Board of Trade, and if the Films Council have shown any disposition to be unduly severe on Scottish defaulters, again the two Scottish representatives are there to argue their case. But there has never been the slightest necessity for them to do so. Therefore I think that so far as Scottish defaulters are concerned, Scotland has not had at all a raw deal in the past, and I cannot imagine that in future the Films Council would treat the defaulters in any different way.
  The Selection Committee, which is mentioned in Clause 5 (2), have so far not been overburdened with work, as not a single film has yet been submitted to them. I do not think that any of us really expected that any films would be submitted to them yet. The position now is that if a good British film is made it is absolutely certain of a circuit booking and a very wide showing in Great Britain. Indeed, I think there is far less chance of a good British film not being shown than there is of an indifferent British film having to be shown. I myself should be delighted if I could think that many films were likely to come before the Selection Committee, but I fear that for some time to come the Selection Committee will not be overburdened with work, because there are not and cannot be for some time enough British films coming forward. In this connexion, may I say how delighted I was to see that the President of the Board of Trade said in another place that films are to be recommended by the Committee eventually, when some come forward, as being suitable for exhibition by reason of their entertainment value? There is a vast potential field for educational films that has not yet been touched, but in general I feel sure that the man in the street, who is after all the customer upon whom the whole industry depends, looks for entertainment rather than instruction.
  The British film industry has made great strides in the last few years, but
  1256
  this is certainly no time for complacency. Receipts are falling, expenses are mounting, and the immediate outlook is, to say the least of it, very obscure. Nevertheless, I think that the British film industry can view with pride what it has achieved and can look forward with hope and confidence to the future. It is most fortunate that the leaders of this industry, of whom Mr. Rank is such an outstanding figure, are men of such high ideals and tenacity of purpose in the midst of great difficulties. There is only one other point upon which I should like to touch, and that is the question of finance, with which the noble Viscount, Lord Swinton, dealt. I noticed that in the debate in another place a very interesting suggestion was put forward for the first time—I think it was by the honourable Member for West Nottingham—that films which might be difficult to finance should be subsidized out of the entertainments tax. I do not ask for an answer about that to-day, but I hope that it is one of the things that will be borne in mind by the Government as a very interesting possibility. I think this Bill is a good Bill, a necessary Bill, and I hope it will receive the favourable consideration of your Lordships' House.
  5.28 p.m.
  LORD STRABOLGI: My Lords, we hear too seldom the voice of the noble Earl who has just sat down, addressing your Lordships, so to speak, on his own ground. I am sure we have been most interested in the informative address to which we have listened. We have enjoyed the benefit of his experience; and he holds a unique position because of his special office. Before making a few remarks on this Bill—remarks which will be of the most friendly nature, let me reassure my noble friend the First Lord of the Admiralty—I think it right to say that for some years I have had an interest in the business, in an old but small firm producing British films. I am therefore trying to do my part to help the production of British films.
  The Bill has been received, I gather, in all parts of your Lordships' House and by all Parties in another place with general satisfaction. According to the noble Earl who has just addressed us, that view is shared by those who have the interests of the great industry at heart and who work for it in the various

  1257
  branches of production, distribution and so on. It certainly has the support of the organized workers in the film industry, and perhaps I might be allowed to quote here the words of the General Secretary of the Association of Cine-Technicians, Mr. George Elvin. The noble Viscount, the First Lord of the Admiralty, and I have known Mr. Elvin for many years, and we know that he certainly speaks with authority from the point of view of the more highly-skilled workmen in the industry. This is the letter he personally wrote to me at my request:
  "On the Bill generally, we think it excellent. Certainly the best of the three Quota Bills we have had. A lot, of course, depends on the results of the Committee of Inquiry which the President of the Board of Trade proposes to set up and the result of his promised discussions with the Chancellor of the Exchequer on the question of a Films Bank.''
  That is a weighty opinion and, in my small way, I would like to endorse it. It is a good Bill and I should like to congratulate my noble friend on the clear and concise way in which he has explained it. Apart from the complaints made by the noble Earl opposite on behalf of Scotland, the only solid criticism which I have heard is in regard to the 10s. a foot minimum labour costs. My noble friend knows the arguments very well. I hope that in Committee, even now, that matter can be re-considered. I gather from all informed persons that the general view is that 10s. a foot labour costs is really too low—that with all economies and eiffciency a worth-while film cannot be made for that money. If you are to have that sort of cost test at all, make it really effective. I refer to Clause 3 (6).
  I have given my noble friend notice of a certain matter which I intended to raise. This was not referred to by the noble Viscount who spoke from the Opposition Benches, or by the noble Earl, Lord Drogheda. I refer to the extraordinary situation in which we find ourselves to-day in respect of the boycott in Hollywood on films for this country. The Americans have taken this unfortunate decision, which was dealt with by my noble friend and also by the President of the Board of Trade in another place. One would suppose that that decision would have given a tremendous impetus and stimulus to the production of British films in British studios; and yet about one-third of the
  1258
  available studio space is lying idle. My noble friend said something about labour and materials. The position is that employees are being sacked right and left, and there is great unemployment amongst highly skilled technicians because of the idle studios.
  Let me quote from an article by the Films Correspondent of the Daily Express which appeared on February 11, 1948. Mr. David Lewin is very well known—I am sure that the noble Earl, Lord Drogheda, knows him too. Mr. David Lewin knows what he is talking about, and he says:
  Seven of our smaller studios capable of making twenty films a year are closed. Denham and Pinewood, the largest studios, which can make between them six or seven films at a time, are only working on four. Three hundred to four hundred film technicians—30 per cent. of the total number on feature films—are out of work"—
  that is one-third of the total number of film technicians. That is an extraordinary state of affairs. I wrote to Mr. Elvin for confirmation of this. I wonder if your Lordships would permit me to read now what he says about it. Subsequent to the statement in the Daily Express which I have quoted, Mr. Elvin said:
  "Herbert Wilcox's next film will not be made at Metro-Goldwyn Mayer's studio, but at Shepperton. Over 700 workers have a? a consequence been dismissed from M.G.M. studios, and when the present production finishes there is No 1ndication of any further films being made there. No films have been made by M.G.M. since the end of the war"—
  and this is one of the largest studios.
  "The only films made there—four in all—have been made by independent companies who have hired their space. Of the other American-controlled studio space, the A.B.C. studios at Elstree (controlled by Warner Bros.) have not yet re-opened since the end of the war."
  Then he goes on to talk about structural alterations, but I will omit that part for the sake of brevity. He continues:
  "Welwyn studios, controlled by the same company, have been intermittent in production. Warner Bros. own studio at Teddington is just making its first film since re-opening. Twentieth Century Fox, who own the studio at Wembley, have not yet re-started to make films in it. Their record is only one film made at Denham. M.G.M. studios are the second largest studio in the country, Denham alone being larger."
  So he goes on to give more details with which I will not trouble your Lordships. I shall be glad to send the detailed in-

  1259
  formation to my noble friend, but the net result is—and here I am quoting from this letter:
  "… that the American owned or controlled space is about one-third of our existing studio space. None of this is fully occupied. Most of it is threatened with complete idleness resulting in a quarter of A.C.T.'s members"—
  that is the trade union of the skilled workers—
  "engaged in feature production being to-day unemployed."
  He then goes on to speak of the remedy proposed by the union.
  "The remedy proposed by the union is that if the Americans are not going to use space themselves then others should not be deprived of using it. It should be requisitioned by the State and made available to independent producers. This, of course, must tie up with our plea for a Films Bank, financing independent production."
  That is the writer's proposal which I do not necessarily endorse because I quite understand that there might be difficulties and complications. However, I put it forward as coming from the responsible officials concerned.
  My noble friend and other noble Lords are well aware that the Americans, in order to meet the quota, have been making films in this country—which was one of the objects of the original legislation—and they have used their money for that purpose. It was a suitable arrangement until the "quota quickies" were invented. Then we had the 1938 Act, which has been referred to by my noble friend and its parent, the noble Viscount, Lord Swinton. That ended the "quota quickie" and we had real production with American finance. This is what the President of the Board of Trade said on the Second Reading of the Bill. It is reported in Column 224 of Hansard of January 21, 1948.
  "The Motion Picture Association of the United States has given us an undertaking that, subject only to the qualification that no company will be pledged to make films here if and when it is not sending American films to the British market"—
  that, of course, is the loophole—
  "the American companies who are its members will maintain film production in the United Kingdom at the rate contemplated by their original plans for production which were formulated early last year. This should result in a volume of production from this source at least as great as we could have expected from it if we had maintained the renters' quota."
  1260
  My right honourable friend, the President of the Board of Trade, was explaining the dropping of the renters' quota, and there is the explanation. Later on, Mr. Wilson said that
  … studio space is a very scarce asset, and we cannot afford not to see all of it used."
  Here we have one-third of this studio space unoccupied and unused, apparently in retaliation, as it seems to me, for the duty imposed on American films which has been referred to in this debate by my noble friend and by the noble Viscount, Lord Swinton. That is a very serious situation.
  The cutting off of the supply of American films by reason of this boycott from Hollywood will cause a lot of inconvenience and disappointment to the British public, thousands and millions of whom look upon their weekly visit to the cinema as one of their great relaxations and pleasures, unless the loss can be made good by British films. There will be a considerable loss to the owners of theatres and there will be unemployment amongst the people they employ, all of which is very serious. If, in addition to that, we are not to have a real effort to fill the gap with British films—and, after all, the same ad valorem duty prevents other foreign films coming in, though the public for such films, non-English-speaking films, is not very great—then the situation will be more serious still. What is to be done about it? The lying idle for long or prolonged periods of these great studios cannot be tolerated. I think something will have to be done about that.
  With regard to the question of finance, the noble Viscount, Lord Swinton, spoke about some new-fangled idea. I suppose he meant this proposed film bank, which was referred to in the Second Reading debate by the President of the Board of Trade; he then said that he has an open mind on the matter. That proposal has been debated and discussed and examined for twenty-five years, to my knowledge, and the need for some strong corporation to provide finance for the competent independent producer has been known for a long time. Lord Swinton made an interesting suggestion that the Government corporations, especially those for assisting industry, might be approached. I have never heard of their

  1261
  being approached. I only hope that he made that suggestion with some authority behind it. If they can, and if the so-called junior corporation can provide some of the finance for reputable producers, under some sort of safeguard, that might help; but there would still be this shortage of studio space and this artificial idleness created by the American controllers. Mr. Rank's organization has been referred to by the noble Earl, Lord Drogheda, and I agree entirely with what he said. I think Mr. Rank and his co-operator; have done a splendid service to the country and, incidentally, to the British film industry. Mr. Rank has brought business methods and also a great deal of money to the industry. He has produced some remarkably fine films which have helped our prestige abroad and helped the whole industry; but I presume that Mr. Rank's organization itself must be pretty fully stretched for finance, and I do not see how it can be expected to fill the whole of this gap.
  The independent producers, also, apparently cannot obtain sufficient finance to make enough films and they are, above all, faced with these idle studios. I suggest to my noble friend that the Government will have to look at this matter very seriously indeed. A Committee of Inquiry into the whole industry has been proposed. I do not know when that is to be set up. These Committees of Inquiry cannot be hurried, and this is an extremely complicated industry. The Committee may take a long time to report, and there is sometimes quite a long time between the Report of a Committee and actual action by the Government. My noble friend Lord Lucas can tell us something about that. With great respect to my noble friend and his advisers, I suggest that we cannot afford to wait for this Committee of Inquiry before we deal with this very real emergency of artificial idleness in the studios of this country, artificial unemployment amongst the skilled technicians—the very heart of the industry, of course—and the lack of films to keep our studios supplied and the public entertained. Something must be done about it.
  I want to say only one thing with reference to the dispute with the Hollywood industry. I regret it deeply, and I am sure that we all regret it. During the Second World War, and especially during the period before Pearl Harbour
  1262
  and American intervention, the leaders of the film industry in the United States were among our best friends; and the influence (which is not an inconsiderable influence) of the Hollywood industry was very much in favour of the Allied cause. That should not be forgotten. We are their second best market after their own great home market, and surely some compromise can be reached. I entirely agree with what was said in another place by my right honourable friend the President of the Board of Trade, by the First Lord to-day and, indeed, by Lord Swinton, that we cannot afford the amount of dollars which were going out. There; must therefore be a compromise which will save the dollars, perhaps by some reciprocal arrangement—as has already been suggested—whereby the undoubtedly good British films of to-day can be allowed to earn dollars as a quid pro quo to balance up. I hope that some sort of arrangement as that will be made. Both parties are losing at present, and it is both sad and disturbing to find our very good friends there with a grievance, perhaps because they do not really understand our need to save dollars. There is, nevertheless, an undoubted grievance which I hope will be resolved.
  I do not want to detain the House longer in this matter. I have ventured particularly to bring forward this matter of the idle studio space, and of unemployment in the industry at the present time, because I do suggest that it is of considerable importance. I hope that earnest consideration will be given to this problem by the Board of Trade and by the Government, despite the many distractions and responsibilities and anxieties which they have in other directions. I very much welcome the Bill itself, and I again congratulate my noble friend on introducing it.
  5.47 p.m.
  LORD GRANTLEY: My Lords, I will venture to trespass for only a few moments upon your Lordships' patience. There are noble Lords in this House who know that for twenty years I have had close connexion with the film industry, especially with Mr. Rank's organization. I hope that your Lordships will not assume that that necessarily means a glamorous life; it does not; it means facts and figures. I would like; to comment particularly on two aspects of the speech

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  of the noble Lord, Lord Strabolgi. In the first place, I think that we should look at this Bill from other aspects than the question of the complexities and problems raised by ad valorem duties. It is a Bill that is to last for ten years and is to protect (and solely to protect) the interests of British film makers in this country. Secondly, I would add that I think Lord Strabolgi has painted a rather blacker picture than should be painted in regard to the present closing of the studios. It is, of course, perhaps an indirect result of the ad valorem duty, but it cannot be cured with extreme speed. Motion pictures cannot suddenly be flung on to studio floors. A great deal of preparatory work has to be done in order to fill studios with pictures actually being shot.
  We who are concerned with the making of motion pictures in this country consider this Bill a very good one. The 1927 Bill, of which my noble friend Lord Swinton rightly claims to have been the author, did a great deal for the film industry, even though it was heavily criticized from time to time. The excellent work done by the Chairman of the Committee appointed in 1938, the late Lord Moyne, led to an even better Bill in 1938. Notable in the improvements in the 1938 Act was the minimum labour cost clause, which entirely and effectively remedied the making of what used to be known as "quota quickies." The improvements—and they are notable improvements—in the present Bill, designed to meet present conditions and alterations and war effects, are the four categories of separate quota, by which provisions the theatres that are able more easily to get bookings of British films are allotted higher quotas than theatres in a more difficult position in that respect. It must result in giving more screen time to British pictures; and that, after all, is the final object of this Bill.
  I would like, if I may, to make a brief comment with regard to the Films Council, the work of which has already been touched upon by the noble Earl, Lord Drogheda. I was a member of the Films Council during its early years, approximately from 1938 to 1941, and I gained valuable experience by reason of my connexion with it. Naturally, I learned something about the attendance of members at meetings of the Council. Conditions
  1264
  may have altered now, of course—I have not had an opportunity of asking my noble friend Lord Drogheda about that—but I would urge the President of the Board of Trade, when he comes to select the seven independent members of this Council which is to be formed, to bear this in mind. When the appointments were made under the 1938 Act, those appointed were men of immense position, prestige and reputation. That carries the obvious corollary that they were also tremendously busy men, and I am bound to say that the attendance of the independent members in the last years of the last decade was poor. I hope, therefore, that when he makes his selection the President of the Board of Trade will have special regard to the ability of those selected to attend with frequency at meetings of the Council.
  LORD STRABOLGI: May I ask the noble Lord whether it would be possible to have deputies for these members; substitutes as well perhaps?
  LORD GRANTLEY: I would hardly like to answer that myself. I feel that, while it may be a valuable suggestion, it is a matter for His Majesty's Government. I would like to add that, in my opinion, one of the reasons why this Bill is, as I believe, a splendid one, lies in the assiduity and the enthusiasm with which the President of the Board of Trade and his officials have consulted with all branches of the industry. They have, to my knowledge, been in continuous consultation with all branches of the industry for nearly a year. That consultation has gone a long way to the successful making of a Bill which I think should be welcomed by your Lordships. There are three or four matters—some of them have been touched upon by the noble Viscount, Lord Swinton—which your Lordships will no doubt wish to deal with during the Committee stage. For the present, as a practical film maker myself, I would like to pass on a message from my fellow film makers—namely, that we welcome this Bill.
  5.53 p.m.
  LORD HAWKE: My Lords, I intervene for a few moments only in order to express what experience has taught me to believe are likely to be the views of the British populations overseas with regard to this Bill. The noble Viscount, Lord Swinton, has said that the Americans attribute enormous power to their film industry as a

  1265
  means of advertising their goods. I am afraid that it is not only their goods but also the American way of life which is publicized by American films. Your Lordships may well think that, judging by what you have seen on the screen, the American way of life is not always good. Of course, what is shown in the films may possibly not be the American way of life. British films, however, rarely distort the British way of life, and those who have lived abroad, as I have done, have always, eagerly awaited the arrival of a new British film.
  Another point I wish to make is this. I hope that the British film industry will never stoop to make films which pander to the tastes of the more illiterate coloured populations, or films which will depreciate in any way the "White" way of life, as has so often been done by Hollywood. I hope that this Bill will lead to a great increase in the number of good British films available for showing to audiences overseas, but I respectfully suggest that if British actors and actresses wish to be understood by foreigners, they must learn to speak more clearly, and particularly not to drop their voices on the last syllables of their words.
  5.55 p.m.
  LORD TEYNHAM: My Lords, we have had a very interesting debate this afternoon. I should like to add a few words of appreciation of the Bill as a whole and of the very clear way in which it has been presented by the noble Viscount, Lord Hall. Having said that, I should add that I think there are certain aspects of matters contained in the Bill which seem to me to require a little more elucidation and explanation. It was mentioned in another place that, in addition to the passing of this Bill a series of boards of inquiry are to be set up to examine sections of the film industry. I should like to ask, are these to be working parties, or boards of inquiry, or what? How are they to proceed, and what are their terms of reference? Surely these inquiries (I believe there are to be three) are interdependent. Why not have one inquiry? I hope that these inquiries will not mark the beginning of the appearance of the dead hand of nationalization in the film industry.
  We have heard mentioned the possibility of State finance and State studios. There
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  may he something to be said for State finance, but certainly not for State studios, for which the taxpayer would undoubtedly have to foot the bill—as he is beginning to now in the case of other nationalized industries. I can conceive a form of financial credit somewhat similar to the assistance given to farmers by the Agricultural Finance Corporation, which would assist independent producers who are outside the big combines and who may have difficulty in raising funds unless they have a guarantee of distribution by the large groups. But I am sure that it would be a great mistake to have the State actively engaged as a partner in the British film industry. I think that the noble Earl, Lord Drogheda, put forward an interesting suggestion, that a subsidy might be given out of entertainment tax. I hope that the noble Viscount, Lord Hall, will look into that point. In any case, there are finance corporations in existence, as was mentioned by the noble Viscount, Lord Swinton, which should be able to take care of the small producer, provided, of course, that he has something good to offer.
  In some quarters there is a tendency to oppose and belittle the major organization in the film industry which has grown up in recent years. I was much interested to hear the noble Lord, Lord Strabolgi, put forward a good word for this organization. I feel that it has helped greatly to put our film industry on its feet in this country. And I am sure your Lordships will agree that it is absolutely necessary to have at least one organization which, in size and efficiency, can compete with the big concerns in Hollywood and thereby put the British film in the world's markets. In my view the country owes a great debt of gratitude to this major organization. The Bill which is before us to-day lays down a provision for special quota theatres, but relates this quota only to circuits of 200 cinemas and over. I would suggest that it is rather unfair that the small circuits, which are frequently very profitable and often have little or no competition, should be omitted from the provisions of the special quota. Surely it is only fair that they should pull their weight in the special quota scheme. I think this was mentioned by the noble Viscount, Lord Swinton.
  As the Bill is drawn, I think it can be said that for the purposes of the quota

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  cinemas in this country fall into four classes. In the first class there is the large category which under the Bill will have to show, in addition to a special quota, some six films selected by a Selection Committee to be appointed by the Board of Trade. Then there are the second class which are to be called special quota theatres and which will have to show a larger quota than that borne by the general class. The third, or general, class are to be theatres which can apply for a reduced quota if they can bring evidence to show that they have more powerful rivals in their locality and that they have difficulty in getting regular supplies of up-to-date British films. Finally, there are the fourth class, which are theatres free of all quota restrictions and which will qualify for exemption if they can show that they have competition from powerful rivals and their net takings are less than £100 per week.
  I have taken the House rather carefully through these classes, because I think it is clear that the Bill provides machinery by which owners of theatres in the general class can drop into a lower quota class. It appears, however, that the Bill provides no means by which a cinema in the general class can be up-graded—that is the best way to put it—into the class of special quota theatres. The point was referred to by the noble Viscount, Lord Swinton. I think it should not be forgotten that there are many cinemas, perhaps owned by a man who owns not 200, but fifty or five or even one cinema only, which, because of their geographical position, have certain advantages and are quite able to comply with the special quota allotted to theatres in the second class. For example, there is the case of a theatre in a solus position—that is to say, a theatre which is the only one in the locality—which may be in a stronger position than a theatre which is one of a circuit of 200 and has two or three rivals in close proximity. In some towns one man or one company owns all the theatres and in this position of monopoly the theatres are well able to accept the special quota. There are something in the nature of 700 to 800 theatres in this position which could be promoted to the special quota theatre category.
  It appears that no provision has been made in the Bill for a Sunday quota. I
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  would suggest that there is no reason why the public should not have the opportunity of seeing the best British pictures on this day as well as any other. If this provision is not made, there is a danger that the tendency may arise for an exhibitor to show any bad or cheap film on that day. Again there is nothing in the Bill to prevent an exhibitor from showing his quota in the first half of the week and other films in the second half, which would have the effect of preventing British films from being shown in the best half of the week. I think it is true to say that box office takings in the second half of the week are usually 50 per cent. higher than in the first half of the week. I hope the noble Viscount will take note of that point. We all want to see more British films, more studios, and good working conditions, but what perhaps is more essential than anything else at the present time is a reduction in the costs of production. No doubt more care than hitherto could be taken by the producing organizations to cut down delays and speed up the efficient production time of a film. But I suggest that there are certain restrictive practices which have grown up on the set, due to trade union regulations which I feel could well be relaxed during these rather difficult times for the benefit of the industry as a whole.
  I fully support His Majesty's Government in their efforts to reduce the dollar expenditure on films, and I hope the American film industry will realize that we mean business in this country, and that we intend to stand by the restrictions which have been imposed on American films until such time as our dollar position is on a more favourable basis. On the other hand, we shall welcome any arrangement that may be made whereby the dollar receipts from the showing of British films in America can be set against the showing of American films in this country. I think the Bill on the whole will be of great benefit to the film industry. The noble Lord, Lord Grantley, who knows a great deal about this industry, welcomed it cordially. I suggest that it should not be forgotten that the Bill is all in favour of the producer, who is not under any obligation to make films, whereas the exhibitors are controlled, and rightly so, by a quota system which the exhibitors accept in good heart as beneficial to the film in-

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  dustry generally. The Bill is, of course, academic and meaningless until normal relations are again established with the American film industry, which I am sure all your Lordships hope will occur in a very short time.
  6.7 p.m.
  VISCOUNT HALL: My Lords, I am grateful to the noble Viscount, Lord Swinton, and to all noble Lords who have taken part in this debate for the kind way in which they have received this Bill. I fully expected the noble Viscount, Lord Swinton, to have some paternal feeling towards this measure. I well remember the introduction of the first Bill in 1927, just twenty-one years ago, and this Bill represents the mature legislation. It is a very much improved Bill and one which I think everyone will welcome. The first Act was a try-out in very difficult circumstances, but so good was that Act that it laid the foundation for the legislation which followed.
  I can quite understand the noble Viscount, Lord Swinton, and other noble Lords who have taken part in this debate, intimating that there are certain points which they propose to raise on Committee stage. Indeed, I think most of the points which have been raised, with one or two exceptions, are points which we well might deal with at that stage of the Bill. The noble Viscount referred specially to the question of administration, which he hoped would be kept as small as possible. He can be assured that the Board of Trade are doing their utmost to keep down to a minimum the numbers employed in this department, and they fully appreciate how necessary it is to have the administration as small as possible. He also raised the question of the minimum period for the quota. Provision is made in the Bill for a minimum period of twelve months, with six months' notice to be given of any change that is likely to take place. I think that will meet any criticism which may be levelled against the continuance of the quota and of the giving of notice.
  The noble Earl, Lord Rosebery, raised the question of the difficulties with which the Scottish people are faced because they have not a special Scottish Committee. I must say that I have a good deal of sympathy with him. I come, as he does, from a small country—but still an important country. I think he and I can
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  almost join in a united front on this matter. The only thing I can say is that under this Bill, and in almost all other legislation which is being passed, Scotland comes out of it very much better than my little country of Wales. I am not complaining, but there it is. Much time was spent on this question in another place, and, as he said, a special subcommittee is being appointed to deal with one branch of the work provided for by the Bill, and two special representatives of Scotland are to sit on the Cinematograph Films Council. That does not prevent the President of the Board of Trade appointing another Scottish representative, if it is deemed necessary, but there are these special representatives.
  THE EARL OF ROSEBERY: One is independent; he is not an expert.
  VISCOUNT HALL: He might not be an expert but he is a Scotsman which is more important. The noble Earl mentioned something about a special Scottish quota. I hope that he will not think that foreign films are more acceptable to Scotland than the good old British films—I will not call them English films. After all, the actors and actresses are from the three countries. They generally find their way to London and: hey put their best into the production of what I consider to be jolly good British films.
  LORD TEYNHAM: You might have a Scottish report committee, which may meet the case.
  VISCOUNT HALL: It might. I can assure the noble Earl that a considerable amount of attention was given to this matter in another place, although I do not for a moment suggest that he was not quite justified in raising it here. I have no doubt that the President of the Board of Trade will take note of what has been said. I am sure that all noble Lords join in welcoming the intervention in this debate of the noble Earl, Lord Drogheda. He brought to the debate a great knowledge, based upon a long and valuable experience with the Films Council. It was pleasing to have the tributes paid to him by colleagues of his who are members of another place; and from outside sources we have also heard of the excellent work which he has done. I, too, took note of the suggestion which was made by one of the honourable members in another place regarding the financial

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  assistance which might be obtained from the entertainments tax. That, of course, is a matter upon which the Chancellor of the Exchequer will have to be consulted, and which he will have to examine very carefully.
  My noble friend Lord Strabolgi raised the important question of studio space and finance, and also the difficulties which have arisen as a result of the American space in this country not being used. The noble Lord will know that my right honourable friend announced in another place that a Production Committee was to be set up. I think he went so far as to say that he had already issued invitations for the setting up of this Committee. I have no doubt that he will give attention to this question of the proper utilization of space, and to any other difficulty which hinders the production of the films which we hope to see from the full use of these studios. The noble Lord also raised the question of the labour costs for the films, which is based upon a minimum of 10s. per foot. There is some slight difference between the cost of 10s. per foot provided for under this Bill, and the £1 per foot referred to by the noble Viscount, Lord Swinton. The £1 per foot was based upon a renters' quota, whereas this is based upon an exhibitors' quota. It makes a considerable difference which basis is used. I have no doubt that this matter will be raised in Committee, when greater attention can be given to it. I would like to say here that the Government have not been unmindful of the difficulties of studio space. I was informed only to-day that no less a sum than £1,000,000 has been spent upon the repair and building of studios in this country, and licences have been granted for an expenditure amounting to something like another £500,000. So the Government are seized of the importance of this matter.
  The noble Lord, Lord Grantley, in his pleasing contribution to our debate, also brought to bear a practical experience on this matter. He mentioned one point about the selection of the seven independent members. I agree with him that there is a danger that the people of great ability may not have the necessary time
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  to give to the work of a Council of this kind. I have no doubt that the President of the Board of Trade will take note of the valuable suggestion which the noble Lord made.
  The noble Lord, Lord Teynham, made several points, and he will pardon me if I do not deal with them fully. He raised the question of a change in quotas. I have no doubt that we will be able to deal more fully in Committee with what, after all, is a rather intricate matter, and the points can then be brought out. He also dealt with quota theatres, and the same thing applies to that point. On the question of State studios, the noble Lord will have read what was said by the President of the Board of Trade in another place. He stated, quite frankly, that he had an open mind; that he was going to appoint a Committee to deal with it, and that after the Committee had reported their report would be published. I think he even went so far as to say that it would be presented to both Houses of Parliament. He wants to be quite fair in relation to this matter, and I hope noble Lords do not think that he will in any way attempt to take an unfair advantage. With regard to the setting up of Committees and the Report, the Government are fully seized of the difficulties with which the producers of British films are confronted at the present time. I assure your Lordships that anything which can be done to bring about an improvement in the situation will be done. Again, may I express my thanks to noble Lords for the helpful and kind way in which they have received this measure?
  On Question, Bill read 2a, and committed to a Committee of the Whole House.

  BUSINESS OF THE HOUSE.
  LORD AMMON: My Lords, before we adjourn, may I draw attention to the fact that on Wednesday next there are to be three introductions? It is therefore proposed that we meet at 2.15 instead of at 2.30.
  House adjourned at twenty minutes past six o'clock.