HL Deb 17 February 1949 vol 160 cc979-83

4.59 p.m.

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

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 omit "except in such classes of case as the Board of Trade may approve." The noble Viscount said: I understand that the noble Lord in charge of the Bill has a proposal to make, and so I will be content with formally moving this Amendment.

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

5.0 p.m.


When this Bill was before your Lordships in Committee last time, the noble Viscount, Lord Swinton, deployed some very powerful arguments against the definition of the "classes of case" in which my right honourable friend proposed to give his initial instruction to the Film Finance Corporation, to enable them to loan finance direct to the independent producer and not through the ordinary channels as set out in the Bill—namely, through the distributive agencies. The noble Viscount's point was, I believe, that the proposed definition would defeat the very argument I had previously used as to the risk which the Corporation would have to bear. If your Lordships will allow me, I would like to quote exactly what I said from Column 597 of the Official Report of February 8: 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 … 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, but if that result has been achieved only because the Corporation have in fact done very little business, this Bill, which has been received so warmly … will have failed to achieve its purpose. My Lords, I was so seized with the powerful nature of the noble Viscount's argument, that I undertook to take this back and have consultations with the noble Viscount and also with my right honourable friend the President of the Board of Trade. May I take this opportunity of thanking the noble Viscount for affording me the benefit of his long experience, with the result that, after further consultations with my right honourable friend, he has agreed to adopt the principle of giving the Finance Corporation a free hand in their decision as to how finance should be arranged. And his initial instruction to the Corporation will be altered to cover that position.

I think perhaps it would be as well if I now read the instruction, as my right honourable friend proposes to amend it, which defines the "classes of case" referred to in the noble Viscount's Amendment. My right honourable friend proposes, 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 that there is an adequate amount of private investment ranking with or behind any money lent by the Corporation. My right honourable friend the President is prepared to make that an initial instruction. I think it is also as well to repeat once again that it is his intention that this Corporation should take wide and long views. And if, in the end, the £5,000,000 is diminished or—as the noble Viscount, Lord Swinton, would like plain language—is lost, but the Corporation have achieved their purpose in establishing the production of independently-produced British films, I think the noble Viscount will agree that the Corporation will have justified their existence. In view of that undertaking and assurance, I hope the noble Viscount will withdraw his Amendment.


I am much obliged to the Minister. I think this is a satisfactory arrangement. I do not mind whether the provision is inserted in the Bill or in a regulation or directive—the Minister of State likes "directive," the President of the Board of Trade likes "regulation"—but at any rate, it means the order given to the Corporation as to how they are to do their job. My whole anxiety was that they should be left a full discretion in this business. I say at once that in a particular case I think they ought to have the right to require the borrower to take an ultimate risk. I do not believe that that will be the mass of cases, but I can well suppose that the Corporation might say "Here is a case where we think the producer ought to reduce the costs a little." Obviously, they cannot go in and manage the business and get them down.

Alternatively, there might be a case where the Corporation think that he or his colleagues are taking a little too much out in fees or costs as the business goes along. I can readily imagine that in such a case the Corporation might say, "We are not going to become a joint adventurer with you in this. We cannot control you directly. We cannot do your job for you. If this is the way you are going to do it, we think you are entitled to some finance, but you have got to bear 10 per cent. (or whatever proportion it may be) of the final risk yourself, and we shall come in between the banks and you." On the other hand, they may well find that it is a good venture, that the film ought to be a success, though of course they have to be satisfied that there is a reasonable prospect that the earnings of the film, both here and overseas, will meet the costs. In such a case they may say: "This is a well-managed business; we think that the budget of costs seems reasonable, and we do not think anybody is getting excessive remuneration out of it. This is a scheme into which we ought to go as a joint adventurer." And they may say, "It is the last 20 or 25 per cent. of the money that has to be found, and we will go into that as a joint adventurer, each taking our risk pari passu."

I think that would be a perfectly proper thing to do. As was originally proposed, the Corporation could not do that; they had always to come in as, what I called, for the sake of convenience, "second mortgagees." I do not think that was right. Here they will be in a position to judge every case on its merits, and to go in as joint adventurers if they think that is the right thing to do. But if they think they ought to be stricter in their financial terms, they can come in more or less in the position of secured creditors or mortgagees. I think that is a right discretion to give them. These regulations have now been given to us in a convenient form, but I would like an assurance because the President should not be tied to this process, because we have to learn as we go along, and he may want to alter this. I would like the assurance—I rather think it was given last time, but it might be repeated—that if the Minister finds it necessary to make any change he will inform Parliament. I think this is part of our general understanding, but I take it that in that case he will not hereafter change the regulations in such a way as to make the financial terms more onerous than they are made here.


I would like to answer that question straight away. The President has no intention of altering these instructions which he is empowered to give the Corporation without affording Parliament the opportunity of expressing its opinion.


I am very grateful for that assurance. It is extremely satisfactory, and I think that probably it is in the interests of the Corporation to give them a direction of this kind; I think it will strengthen their hand. I think the Corporation have to be tough, practical and imaginative. I sincerely hope that they will secure people with all those characteristics. I am very much obliged to the noble Lord. I think we have had a useful debate in this House, and that in consequence the Bill leaves here—as I hope most Bills leave this House—a better measure than it was when it entered. I hope that the Corporation will be successful in its endeavour. I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Clause 2 agreed to.

Remaining clauses and Schedule agreed to.

House resumed: Bill reported without further amendment.