HL Deb 08 February 1949 vol 160 cc588-99

3.59 p.m.

Order of the Day for the House to be put into Committee read.

Moved, That the House do now resolve itself into Committee.—(Lord Lucas of Chilworth.)

On Question, Motion agreed to.

House in Committee accordingly:

[The EARL OF DROGHEDA in the Chair]

Clause 1 agreed to.

Clause 2:

Loans by the Corporation.

(3) The Corporation shall not, except in such classes of case as the Board of Trade may approve, make a loan to any person unless he is carrying on the business of distributing cinematograph films to persons carrying on the business of exhibiting such films to the public, and the loan is to be employed in financing the production of such films.

VISCOUNT SWINTON moved, in subsection (3) to leave out "except in such classes of case as the Board of Trade may approve." The noble Viscount said: When we debated this Bill on Second Reading, I think there was a large measure of agreement between us. We all wanted to help the independent producer—indeed, it was the independent producer about whom we were most anxious. I hope we all agree that if the Government are to help they must take a real share of the risk and must not play for "safety first." But your Lordships will see that Clause 2 of the Bill forbids the giving of a loan to an independent producer direct, and confines the loan to distributors except in special "classes of case." No special provision is inserted to ensure that the Corporation shall see to it that where they do give a loan to a distributor the conditions as between the producer and distributor are fair and reasonable. I think the Committee would generally agree that that ought to be so. Whether we should put that provision in the Bill or not, I am not sure. I have not put down an Amendment to that effect, but perhaps the Committee would wish to have an Amendment of that kind inserted. However, I will not move such an Amendment now. It could easily be moved during the Report stage, if we agreed that it would be a wise thing to do. But we certainly wanted to give the independent producer his chance, and "giving him his chance" means giving finance where it is reasonable to do so.

If your Lordships look at this very odd passage, Clause 2 (3), you will see that it says: The Corporation shall not, except in such classes of case as the Board of Trade may approve, make a loan to any person unless he is carrying on the business of distributing cinematograph films to persons carrying on the business of exhibiting such films to the public, and the loan is to be employed in financing the production of such films. That means that the Corporation can normally make loans only to a distributor. I have not the faintest idea what is meant by "classes of case." I asked the noble Lord, Lord Lucas, when we were discussing this Bill on Second Reading. He was very informative about everything else, but he could not give me any information as to what was meant by those words. He did not know, and if he did not know then I do not suppose that the Board of Trade knew either. Had they known, no doubt they would have instructed him. It is possible, though, that, between now and then, the noble Lord or the Board of Trade have thought out what they mean by "such classes of case." Films do not fall into classes. A film is a good film or it is a bad film. It is a film you like, or it is a film you dislike. It may be an æsthetic film, an intellectual film, a moral film or a less moral film. But it is not really meant by this clause that a loan is to be given only if the film satisfies some æsthetic and moral standard. I am sure that the noble Lord does not mean that.

What is really meant, undoubtedly, is that a film should be likely to be a good box office proposition—that is to say, likely to succeed, to earn more than it costs. If that is what is meant, then why not say so? I think, indeed, that that is appreciated in the Government Amendment. Your Lordships will see that the next Amendment is one the object of which, if I may paraphrase a page of writing, is this: before the Corporation makes a loan it has to be satisfied that a film or a group of films is likely or are likely to earn more revenue than the cost of the film or the cost of the group of films as the case may be. That seems to me to be perfectly good sense, and I am prepared to agree that that ought to be taken as a test.

The other test which I suggest we should apply is the one in my Amendment. We want to do two things: we want to encourage good propositions and good producers, and we want to keep costs down. Now the way to do this, I think, is to say that the producer and his backers have to take a minimum share of the risk. If they do that, they will not be likely to put up bad propositions to the Corporation. If they take a reasonable share of the risk, then they will have every inducement to keep costs down and to make as good films as possible—"where the treasure is there will the heart be also." I venture to suggest that we had much better cut out these odd words about classes of case and say that the Corporation must be satisfied of the two sets of conditions before it makes a loan direct to the producer. It must be satisfied that the film is likely to earn more than it costs. Further, the Board of Trade may lay down a minimum proportion of risk which is to be borne by the producer and his backers.

I do not think the Committee would wish to insert words without knowing clearly what they mean. It is altogether wrong—I am sure we shall all agree upon this—to put words into a Bill which either do not mean anything, or are such that we do not know what they mean. I am sure that the Committee, with its anxiety to help the independent producer in this business and this art, will be very anxious to know, before they agree to words of limitation, what are the conditions which are to be imposed on the producer. If they saw them afterwards in Board of Trade regulations which will not come before the House (I do not say that they should), we might find that we had passed the Bill and that the Board of Trade were laying down regulations about classes of case of which the Committee would not at all have approved and which we might think rendered the Bill and the whole of its objects completely nugatory. There has been so much agreement as to what we have in mind that I venture to hope that we can agree upon this. In any case, I beg to move.

Amendment moved— Page 2, line 30, leave out ("except in such classes of case as the Board of Trade may approve").—(Viscount Swinton.)

LORD LUCAS OF CHILWORTH

Perhaps it will meet with the convenience of the Committee and with that of the noble Viscount, Lord Swinton, in particular, if I deal with both Amendments at the same time, as they are complementary. It is quite true that during the debate on the Second Reading of this Bill I could not give your Lordships a definition of "classes of case." The reason was that I did not know what was the definition—and I think that was a very good reason. But I did say that the definition of "classes of case" was at that time being worked out between the Board of Trade and the interim company—the National Film Finance Company Limited. That task has now been completed, and I think that if I give your Lordships the intention of my right honourable friend the President of the Board of Trade and what the initial definition will be—I stress the word "initial" and I will come back to it later—it will help the noble Viscount.

It is proposed, as soon as the Corporation is set up, to authorise the directors to make loans to companies organised to carry out a programme of production of cinematograph films and equipped with the necessary experience in a relevant type of production, provided there is an adequate amount of private investment ranking behind any money lent by the Corporation. In making loans, the Corporation will not only impose such particular terms and conditions as the directors may think applicable to each company, but will also require to be satisfied on such general points as arrangements for distribution of the films and deferment of certain payments—for example, producers' remuneration—until other costs have been recovered. Your Lordships will see that in the definition of "classes of case" two requirements have to be satisfied: a financial requirement, which the noble Viscount is so desirous of having, that there is an adequate amount of private investment ranking behind any money lent by the Corporation, and also a commercial requirement (which I think the noble Lord will agree with me is equally necessary) that the producer must have the necessary experience in a relevant type of production. I agree with the noble Viscount that it is wrong to put in a Bill words the sense of which we cannot apprehend, but he will agree with me that it is equally wrong to put into a Bill words which might have to be altered from time to time. I would stress that this is the first word upon this subject, and not the last.

This will be the general definition of the classes of case where the Corporation will be authorised to grant loans, other than through the distributive agencies, for film production; but my right honourable friend the President of the Board of Trade may want to add to this definition in the light of new circumstances. I think the noble Viscount will agree with me that it is far better to leave this definition as it is and not attempt to use precise language. It is difficult to express these conceptions satisfactorily in precise and legal language which would be appropriate to an Act of Parliament. The other points raised by the noble Viscount come up properly for discussion on the Amendment down in my name. Perhaps, in view of what I have said, the noble Viscount will agree that I am not being unreasonable in asking him to withdraw his Amendment.

VISCOUNT SWINTON

I am much obliged to the noble Lord, who has now been able to tell us what he did not know, and what I gather the Board of Trade did not know, on Second Reading. A scheme was hereafter to be revealed, and now it is revealed. It is not easy to follow a long technical definition read out to us, and if I withdraw my Amendment now, I do so reserving the full right to return to this point at a later stage in the Bill. I can say at once that I do not think I like it. There is one thing about it that I am sure I do not like. The noble Lord, if I followed him rightly, said that one of the conditions which must be fulfilled before any loan can be made, is that there must be a certain amount of money ranking behind the Government loan. I do not like that. I said on Second Reading, and I thought I carried the House with me, that I did not believe that was right. This is playing for "safety first." If you are to lend money as a financial institution, I agree that it is perfectly reasonable to act in this way. But this, we all admit, is a very odd kind of industry; it is nearly "on the rocks" to-day. It has an interest which far transcends the production of films itself—that is why we have this Bill—and all over the world we want British films to carry British ideas; and we want individual producers.

The Government are taking £38,000,000 a year out of this industry. I want them genuinely to put some of that back, and I want it put back on fair terms. I do not consider that taking a first mortgage constitutes fair terms, in the sense of taking a risk in this particularly risky business. If we play for safety in that way, we merely assist a few films which I dare say in the long run would have obtained the finance anyhow. The proposition sot out in my Amendment is that the Government may lay down conditions as to the minimum risk which the producer may take pari passu with the Government. That, I think, is right, but I do not think the Government ought necessarily to rank in front of him. I shall certainly move on Report stage to strike that out, because I do not think any business will be done under that condition. If we want this Bill—and I think the House does want it—we want a risk to be taken. It is not a great sum of money—only a revolving credit of £5,000,000—and the amount ventured on one film will be only a fraction of that. The £5,000,000 itself is no large percentage of the £38,000,000 which the Chancellor of the Exchequer already extracts from the industry. As at present advised, I am definitely against the proposal to put the Government first and the producer second. I think there ought to be a chance of them going into the venture together.

I would like now to study the question of commercial experience. I will tell you frankly the difficulty I feel about it. I want the new man to have a chance. At the same time, the new man ought to be associated with somebody who knows the business. As I have said, the film industry is very odd; it is not like any ordinary business proposition which we are accustomed to finance. It is something wholly different, and it has to be approached in a spirit partly practical and partly imaginative. I do not think the Government are being very imaginative about this. So far as I can make out, whereas what the clause purported to do was to give a chance to an individual producer, it seems to me that the words uttered by the noble Lord do not carry that out.

The individual producer has to have an arrangement with the distributors and with a company which must have a considerable financial backing. If we hedge him round as closely as that, there seems to be no practical way, except by going through one of the distributive agencies. I know the Minister to be perfectly frank, and I do not know whether he has had time to consider that point. I myself would like time to consider it. It may be a wise thing to adjourn the Committee stage. I think these discussions across the Table enable us to get the facts better than on Report stage, when one can speak only once, except by leave of the House. I am sure the Minister and also you, my Lord Chairman, dislike the idea of converting the Report stage into a Committee stage. There might be a possibility of passing the Committee stage and recommitting this clause. In any case, I will raise this matter again when we come to Report stage.

LORD LUCAS OF CHILWORTH

I follow the noble Viscount's arguments precisely, and I am grateful to him for withdrawing his Amendment.

VISCOUNT SWINTON

I had not finished. I thought the noble Lord was going to answer something. I was then addressing myself to the Lord Chairman. Unless it is possible to recommit the clause, perhaps it would be more convenient that I should move that the debate on this matter should be adjourned.

THE CHAIRMAN OF COMMITTEES

I think I am right in saying that the proper practice would be to recommit the Bill.

VISCOUNT SWINTON

Would that be after, or before, the Report stage?

THE CHAIRMAN OF COMMITTEES

Before the Report stage.

VISCOUNT SWINTON

Then I reserve my right to move the recommitment of the Bill. I hope we shall not rush this matter, because I understand the Corporation are going on with this job and making some advances ahead of Parliamentary authority. I would like to have an opportunity of considering this point with those who advise and help me in these matters, in order to decide whether we should recommit the Bill. I also wish to make this suggestion. As I say, I do not very much like the conditions which the noble Lord has read out. At the same time, the noble Lord says: "We may want to alter them." That is true, but as the matter stands at present, the right to alter them rests entirely with the Minister. If we part with the Bill we have no right to say anything about it.

There is a way in which this could be done. The Minister could put his regulations into an Order which could be laid and prayed against. I suggest that if we are not quite sure that the long formula—I almost said rigmarole—which the noble Lord read out is to be moved by him as an Amendment on the Report stage—if it is merely an indication of what is at present in the mind of the President of the Board of Trade—

LORD LUCAS OF CHILWORTH

I said on Second Reading that there would be an initial definition of the class of case where finance would go to the producer direct (that is, under the exception made in Clause 2) which would obviate the necessity of financing production through a distributing agency.

VISCOUNT SWINTON

Where is the definition to go? Usually the definition is in the Interpretation Clause of the Bill. Is the noble Lord going to put it there? I gather he is not. I am obliged to the noble Lord for that information. But what he is saying to-day is that the President of the Board of Trade, who this day last week did not know what he meant—I am not complaining—has now had an initial idea, having very properly taken counsel with his Corporation, and, as at present advised, thinks this is the sort of thing he would like to do. But if we part with the Bill, he may have second thoughts in a fortnight's time which may be even worse than these (which I do not like) and which may make the position even more strict. Parliament will have parted with the Bill, and we shall have no chance to consider it. Obviously this clause will have to be recommitted, as the Lord Chairman has suggested. I warn the noble Lord that, if we agree to pass the clause without any definition in the Bill of what it means, we may ask that Parliament should have an opportunity of approving or disapproving the regulations that are laid down. I feel sure the Committee would like to hear the noble Lord in reply, and I propose then to withdraw the Amendment.

LORD LUCAS OF CHILWORTH

I apologise for having interrupted the noble Viscount; I thought he had finished. May I say what I intended to say then? I follow the noble Viscount's arguments precisely, and I am grateful to him for offering to withdraw this Amendment. I will undertake to put his points to my right honourable friend the President of the Board of Trade, and if the noble Viscount will give me the opportunity I shall be pleased to discuss with him, through the usual channels, the best way of dealing with the situation as outlined. I agree that the matter is too important for it not to be thoroughly understood at this juncture.

VISCOUNT SWINTON

In that case, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD LUCAS OF CHILWORTH moved, after subsection (3) to insert as a new subsection: (4) The Corporation shall not make a loan to any person for the purpose of financing the production of a film or programme of films unless that person agrees to produce from time to time to the Corporation, as and when required by them so to do, an estimate of the cost of producing—

  1. (a) that film or, as the case may be, each film in that programme of films; and
  2. (b) any other films the production of which he finances, either in whole or in part, or in the commercial success of which he has any financial interest, at any time before the loan is completely repaid,
and in making any such loan and exercising their other powers under this Act in relation to any such loan, the Corporation shall have regard to the amount which might reasonably be expected to be received by the person to whom the loan is made from the distribution—
  1. (i) of the film or films the production of which is to be financed by means of the loan; and
  2. (ii) to such extent, if any, as appears proper in the circumstances, of the said other films."
The noble Lord said: This Amendment carries out an undertaking which I gave to your Lordships on Second Reading.

The effect of the Amendment is twofold. First, it empowers the Corporation to require every borrower (whether a producer or a distributor) to produce the budgets of all films which he finances, or helps to finance, up to the time his loan has been repaid. Secondly, the Corporation are required always to have regard to the borrower's expectations of revenues from films wholly or partly to be financed by means of the Corporation's loans, and in suitable cases to have regard to his expectations from other films. The Amendment makes it quite clear (as the noble Viscount pointed out in the speech he made on the Amendment which he has just withdrawn) that the Corporation are not expected to make loans for producing films merely because they will have artistic or other merits, and regardless of whether or not the receipts (including receipts from overseas) are likely to cover the costs of production.

I do not disguise from your Lordships the fact that the directors of this Corporation will have a difficult task to discharge. The commercial prospects of films must play a prominent part in their considerations. The difficulty will be especially great with the more expensive type of film, designed for competitive exhibition in the international market. But—and I would emphasise this very strongly—it will never be possible for British film production to prosper by making only "small" pictures, intended mainly for the protected home market. My right honourable friend, in his general directions to the Corporation (the noble Viscount, Lord Swinton, asked me on Second Reading whether I would give some indication as to what they would be), will ask them not only to keep close watch on the costs involved in the projects submitted to them but also to remember the importance, both to the industry and to the national economy, of the different types of film production, including international pictures. In proper cases the Corporation must be prepared to run proper risks. They will be expected—and I think your Lordships will agree, rightly expected—to operate with reasonable prudence, but it must not be forgotten (this should be underlined) that the Corporation are being established for the purpose of supporting and encouraging the production of films. If at the end of five years the £5,000,000 which is being made available remains undiminished, and that result has been achieved only because the Corporation have in fact done very little business, this Bill, which has been received so warmly, not only by your Lordships but in another place and (I think I am right in saying) in the industry in general, will have failed to achieve its purpose.

The references in this Amendment to "other films" in paragraph (b) and subparagraph (ii)—that is, to films which will not be financed by means of the Corporation's loans—are necessary because, in many cases, the Corporation will have to look for repayment of the loans not only to the revenues from films which have been financed, but also to the general assets of the borrower. Your Lordships will see that the Corporation will necessarily be interested in the borrower's other activities and, in particular, in the costs and potential of his other productions. The reference to "exercising their other powers under this Act," which is also incorporated in the Amendment, is directed mainly to the possibility that, if the borrower is behaving imprudently, it may be necessary for the Corporation to foreclose upon him. This Amendment implements to the full the undertaking I gave, and I hope it will be acceptable to your Lordships. I beg to move.

Amendment moved— Page 2, line 35, at end insert the said new subsection.—(Lord Lucas of Chilworth.)

VISCOUNT SWINTON

I think your Lordships will readily accept this Amendment. I would offer one or two observations, although not as to the merits of the clause, which I think is well drawn and carries out the intention. But if it is possible and convenient to define as closely and carefully as this what is intended here, why cannot we have equal precision when we come to what is much more obscure, the "classes of case"? That is my first point. The second is that, as the Government have laid down—as I thing is quite right—that the Corporation are not to advance money unless they think the proceeds from the film or series of films will be equal to the costs of production, I cannot see why the Government should want a clause or a regulation which says that they must come in in front of the producer, the distributor, or whoever it is who is to have the loan, and why they cannot go into the venture together. With regard to the administration of this subsection I will not press the noble Lord, who I think would be a bit venturesome in this matter—I like his outlook better than that of the President of the Board of Trade. But I hope that when he is discussing the points I have made with the President of the Board of Trade, he will not fail to remind him of the unpleasant consequences which befell the gentleman who kept his talent in a napkin.

On Question, Amendment agreed to.

Clause 2, as amended, agreed to.

Remaining clauses and schedule agreed to.

House resumed.

Bill reported with an Amendment, and recommitted to a Committee of the Whole House.