HL Deb 31 March 1949 vol 161 cc903-26

3.9 p.m.

LORD LUCAS OF CHILWORTH

My Lords, I beg to move that the Special Order, as reported from the Special Orders Committee yesterday, be approved. Through the courtesy of the noble Viscount who at the present moment leads the Apposition, I was able a week ago to give your Lordships notice that I should be moving this Motion this afternoon. I feel that your Lordships would expect from me some explanation as to why the films quota has been reduced from 45 per cent. to 40 per cent. Before I give it, may I refresh your Lordships' memories with the circumstances which surrounded the imposition of this 45 per cent. quota? The 75 per cent. import duty, which His Majesty's Government felt obliged to impose owing to the acute dollar shortage, was replaced by what is known as the Johnston-Wilson agreement, which altered that duty to an arrangement whereby 17,000,000 dollars could be sent out of the country from the earnings of American films.

Those circumstances created a position—I need not go into the reasons why—which was favourable to the production of British films. My right honourable friend, the President of the Board of Trade, sought to give an assurance to British producers that if they seized this opportunity of establishing themselves, they would have something they had never had before, and that was a market for the films they produced. So, given an assurance by the British producers that they would make available the number of films necessary—and this I would impress upon noble Lords—my right honourable friend imposed a quota of 45 per cent. I maintain that His Majesty's Government had every right to expect that the British film producing industry would seize this opportunity of establishing itself, produce the number of films which they said they were capable of doing, and make the 45 per cent. quota work.

But neither of those two things happened, and it is pertinent to ask why. It appears that there was an entire lack of confidence in the industry. Those gentlemen who used to introduce the equity capital into the film industry (known I think as the "angels") had flown; and so all through the past quota year we were faced with a position whereby, through the shortage of British films, quite a number of the cinemas in this country which were doing their level best to complete their quota were quite incapable of doing so. I am grateful to the noble Viscount, Lord Swinton, for giving me prior notice of a question he is to ask, and if he will not mind my anticipating his asking me, I will give him the answer now, because it may be for the convenience of your Lordships to have the information. Of just under 5,000 cinemas in the country, 1,471 were relieved of the obligation to give 45 per cent. screen time of British films, and their quota was reduced on a sliding scale to anything from 10 to 40 per cent. A further 307 cinemas were relieved of the obligation in its entirety.

Section 4 of the Cinematograph Films Act empowers the Board of Trade to allow reduced quota percentages, and in some cases total exemption, to exhibitors who apply for relief and who satisfy certain conditions. Those conditions are, first, that each applicant must be able to show that, owing to circumstances beyond his control, two or more competing theatres in the same locality as his theatre are showing British films before his theatre can show them. Moreover, where an exhibitor is able to show at the end of a quota period that he did his best to fulfil his quota, and that he failed to do so because it was commercially impracticable for him so to do, his default under the Act would not constitute an offence. Those were the reliefs granted under the Act for the last quota year, and I should be misleading your Lordships if I gave any promise that under the new quota of 40 per cent. there will be any fewer reliefs. Those reliefs from the 45 per cent. quota brought the effective quota to 38 per cent. Now that our proposal is to reduce it to 40 per cent. the effective quota, with those same reliefs, will come down to about 33⅓ per cent.

There are some very strange consequences, and I might also say strange happenings, in the film world to-day. To illustrate this, I may tell your Lordships that the Films Council, which my right honourable friend the President of the Board of Trade is statutorily required to consult, were almost equally divided upon the question of whether to maintain or reduce the existing quota. The proclucers, the renters and half the trade union representatives wanted the existing 45 per cent. quota maintained; the exhibitors and the other half of the trade union representatives supported a proposal to reduce the quota to 33⅓ per cent. Noble Lords will understand the diffidence I have in mentioning the Films Council in your Lordships' House, because of the presence of the noble Earl, Lord Drogheda, who is the Chairman of that body. And it was the Chairman's casting vote which swayed the report of the Council in favour of a reduction. I think I am right in saying, however (if I am not, I am sure the noble Earl, Lord Drogheda, will correct me), that although he was in favour of a reduction and his casting vote swayed the recommendation of my right honourable friend, he was not necessarily in favour of a reduction to 33⅓ per cent.

VISCOUNT SWINTON

Before the noble Lord passes from this recital of how people voted, would he tell your Lordships what I think would carry more weight with them—namely, how the independent members of the Council voted?

LORD LUCAS OF CHILWORTH

Again, perhaps the noble Earl will correct me if I am wrong, but I believe they voted in such a manner that the two sides were equally divided, and they had to have the casting vote of the Chairman.

VISCOUNT SWINTON

Then, if the noble Lord is uninformed at the moment, would he in the course of the debate obtain the information and tell me whether it is not a fact that the independent members were four to one in favour of 33⅓ per cent.?

THE EARL OF DROGHEDA

My Lords, perhaps I may intervene. I think the figures showed that three independent members, including myself, voted for the resolution, and one voted against.

LORD LUCAS OF CHILWORTH

That is typical of the divided opinions and counsels of the film industry, with which my right honourable friend the President of the Board of Trade is embarrassed. Also he suffers not only from a divided film industry but from a surfeit of advice from every conceivable quarter. It is volunteered by all who think they have the slightest knowledge or connection with the film industry—and they are legion—until his position is somewhat like that of the man with a drunken wife—everyone knows what to do with her except the man who has her. In face of all these difficulties and all these contrary opinions, my right honourable friend has to come to a decision.

To bring this down to a realistic basis, what are the opposing forces arguing about? For a cinema which changes its programme once a week a 45 per cent. quota means that to satisfy that quota it has to show in one year twenty-four British films. A 40 per cent. quota requires a showing of twenty-one films, a decrease of three. A 33⅓ per cent. quota requires eighteen films. So the exhibitors who wanted a 33⅓ per cent. quota differed from my right honourable friend's 40 per cent. by only three films per annum. Of course, if the cinemas change their programmes twice a week, the figure is doubled. I do not claim that the reduction in the quota of British films will affect the basic problem of this industry. It will not. It must be realised that any reduction in the quota is detrimental to our great effort to stabilise British film production.

I agree that the British film producers are not the only ones to be considered. The exhibitors must also be considered and a balance has to be held. But it is as well to realise that the only advantage of reducing this quota will be that the exhibitor will have a slightly greater freedom of choice, and the net result may be an improvement in the quality of films—a subject about which there has been a great deal of adverse criticism during recent months. After consultation with the Films Council, it has been estimated that during the quota period about eighty British first-feature films will be made available, and a 40 per cent. quota could be satisfied by the showing of sixty-three British films. The difference between that figure of sixty-three in satisfaction of the quota and the approximately eighty which will be made available will be the measure of the exhibitor's freedom of choice.

THE EARL OF ROSEBERY

Are we to understand from that that within the next year there will be eighty new British films?

LORD LUCAS OF CHILWORTH

There will be eighty new British films made available. Some are being made now; some have been made. Altogether, eighty will be made available for exhibition for the first time.

THE EARL OF ROSEBERY

Old and new?

LORD LUCAS OF CHILWORTH

All films which have not been previously shown. It is hoped that the reduction in the quota will be temporary, but the present position is very difficult. I made the observation before that the equity "angels" appear to have taken to their wings and flown. In general terms, it is true that the only equity capital available for the production of independent British films to date is coming from Government-sponsored sources. The National Film Finance Company, which will be displaced by the Film Finance Corporation, has prepared the ground well. It has already financed three distribution organisations and has laid plans, and will make recommendations to the Corporation, when it is set up, to finance seven different and independent producing enterprises. From this it seems reasonable to assume that in the immediate future seven British films will be under way which would not otherwise have been started.

As I said in your Lordships' House the last time we debated this matter, if my right honourable friend is satisfied that all the circumstances are there to warrant it, he will have no hesitation in going to His Majesty's Government and requesting an increase in the financial limitation of £5,000,000 at present imposed on the Film Finance Corporation. But may I repeat that the salvation of the British film industry has got to be worked out by itself? Any aid which the Government can give is purely first aid. There can be only one basis upon which a successful British film industry can be built and sustained, and that is by the closest co-operation between producers, renters and exhibitors. I hope that the Portal Committee which are at present inquiring into this matter will bring forward a basis upon which that co-operative structure can be built. As we in this House know the noble Viscount so well, I have no doubt that we shall have a very constructive Report.

I would again underline the fact that all sections of this industry must co-operate. It is no good—if I may be allowed to use colloquial language—one section of the British film industry wanting to take fur coats off cinema stars and at the same time wishing to wrap up another section in cotton wool. We have got to have this co-operation because, given the chance, the British film industry can produce the finest films in the world. It has just made one which has not only won universal praise in this country but gained acceptance in America. All noble Lords who have seen Hamlet will, I think, agree with me. I am not sure that Hamlet in one of his soliloquys did not use a descriptive term which might aptly be applied to this film industry. I hope that your Lordships will agree to accept this quota, and if there is any question that it is proper for me to answer, I will gladly do so. I beg to move.

Moved, That the Special Order as reported from the Special Orders Committee yesterday be approved.—(Lord Lucas of Chilworth.)

3.30 p.m.

VISCOUNT SWINTON

My Lords your Lordships will be obliged to the noble Lord, Lord Lucas, for his exposition of a rather curious Order. He has displayed his characteristic courtesy and clarity, and I must say that on this occasion he has displayed an unusual amount of ingenuity and imagination. Ingenuity, indeed, is required to defend this Order, and he has drawn on his imagination, perhaps wisely, because I certainly could not find that his arguments were based on premises which bore any near relation to the facts. He has obviously taken to heart the maxim: Never make a mistake in your logic, the facts remain at your disposal. If I may be allowed to follow his example, I will go back a little into the history of the past, because I agree with him that it is only against the background of the past history and experience of this industry that we can judge the present situation and decide what it is wise to do.

Under the Cinematograph Films Act, as the noble Lord has said, the President of the Board of Trade is empowered, by means of a Special Order approved by Parliament to fix a film quota for six months or longer. Your Lordships will remember that last June this House approved, I think with great hesitation, a quota for feature films of 45 per cent. On that occasion there was a great deal of informed criticism that that quota was too high. Indeed, I think the only person who defended it was the spokesman for the Government, Lord Chorley. Under the old Act, it had been the practice to fix a progressively advancing quota which was always lower, and was intended to be lower, than the number of films which the British industry, with the studio space at its disposal, could produce. That practice had a twofold object. In the first place, it ensured that there was an ample supply of British films to enable the exhibitors, large and small—and the small are just as important as the large—to comply with their statutory quota. In the second place, it was intended to, and did, encourage British producers to produce good films which would show not under a compulsory quota but upon merit.

That system was completely successful. Within a few years of the passage of the original Act, which I had the pleasure of piloting, British cinemas were showing nearly three times as many British films as they were compelled to show under their statutory quota. Last year, when the President of the Board of Trade fixed the quota at 45 per cent., certain criticisms were made, and I think every single point of criticism has been justified by events. It was said that it was doubtful whether British producers would produce sufficient films. We now know that they have not. It was said that even if they did produce the physical number, the quality would suffer, and that would be bad for the producers as well as for the exhibitors. I do not think there is the least doubt that that is true. Of course, some magnificent films have been made. Whether too much money was spent on, them or not, I do not know, but they were first-class films. There was nothing new in that, of course. British films always have maintained a high place in quality. But I do not think it will be denied that at the other end of the scale, under this "hot-house" protection, some extraordinarily bad films were produced.

It was said that if sufficient British films were not available, the exhibitors would have to obtain exemption or relief from the Board of Trade; but it was always intended under the Act that that should not be the rule but the exception. And it was said, I think with truth, as figures have shown now, that an excessive quota would work more hardly against the independent exhibitors. Finally, it was said that an excessive quota would undermine the willing co-operation of exhibitors, on which the success of the Act must depend and on which we were able to rely for the twenty years during which the two preceding Acts were working. The Government would not have any of those arguments. They brushed them aside. They said that the 45 per cent. quota was well within the capacity of producers. It now transpires that the Board of Trade were wrong, and the critics were right. And so we have the present proposal to reduce the quota to 40 per cent. Probably nearly every member of your Lordships' House thinks that this is too high, but we are working in a difficult position—indeed, I would almost say in an impossible position. When you have a thoroughly bad proposal put before you, the natural thing to do is to reject it; but if we reject this Order, what would be the result? We should be still worse off, because the Order fixing the quota at 45 per cent. would remain. Therefore, we have to accept the 40 per cent. in order to get rid of the 45 per cent. That shows how unfortunate it is to legislate in this way—because this amounts to legislation.

This Order is presented to us at twenty-four hours' notice. The noble Lord, Lord Lucas, very courteously spoke to me last week. He told me that if we did not take the Order to-day, which was the earliest day upon which we could take it and pass it, then the excessive quota of 45 per cent. would run for another six months after October. Therefore he had to bring the Order before the House to-day. The most that he could do was to inform Parliament, in answer to a Question, what the Order proposed to do. If this matter is to be dealt with properly and in order, it would be much more appropriate, and in the long run much more convenient for the Board of Trade as well as all sections of the industry, if a draft order could be presented to us and debated. Then, if the opinion of Parliament was that the quota was too high, the President of the Board of Trade could take it back and make an order more in conformity with the informed opinion of the House. This is particularly a case where that might be done, because it involves no Party issues. We all want to do what is right by this industry. I think the President would serve the interests of the industry and his own Department better if he had a little less autarchy in this business and invited a little more co-operation. However, that is the position, and unless we pass this order the 45 per cent. quota goes on. If the 40 per cent. is excessive—and I shall show the House why I think it is—then all the criticisms which events have justified will apply with renewed force.

Let us see how this is likely to affect the exhibitor, because, after all, the exhibitor does matter. There is a tendency to talk as if the exhibitor was brought in only as an afterthought. Perhaps he is the most important person in this industry. He is the man who caters for the public and who suffers if the public is not satisfied, because we cannot impose a compulsory quota on cinema audiences and compel them to see films which they do not want to see! The loss falls on the cinema proprietor, and the aggregate capital invested in cinema theatres must be far greater than the aggregate capital invested in distribution and production. The good will of the exhibitor is essential.

Under the original Act the exhibitor had a double safeguard. It was most carefully worked out. First of all, his quota was a reasonable one; and secondly, there was a renter's quota—the renter being the wholesaler who distributes the films to the exhibitors. The renter's quota was always higher than the exhibitor's quota, so that the renter had a financial stake and interest in placing with the exhibitors a margin of British films in excess of the exhibitors' quotas because they were good films and the exhibitors were prepared to take them on their merits. That worked very well. The renter's quota was dropped in the new Act, and I have never understood why. We were told by the Minister that it was done for a good reason; but I was never able to get at what the reason was. I think the House would be greatly interested to know the reason.

I see that there is great and growing support for a return to the renter's quota. I believe all the exhibitors are in favour of it—certainly all except those who have a dual interest and are probably more concerned in production and distribution than in exhibition, or who have a firm and sure market for their own wares. I think I am right in saying that every exhibitor who is not a tied house is anxious for a return to the renter's quota. I do not think that will be denied. I see that recently the trade unions have taken the same view. Mr. O'Brien, a Member of another place, who I understand is the General Secretary of one of the unions concerned, has been strongly advocating a return to the renter's quota. It certainly worked very well. It would probably be a wise thing, by a small piece of amending legislation which I am sure would go rapidly through both Houses, by common consent, to return to a renter's quota.

I said—and I was not the only one—that if the Government insisted on an excessive quota there would have to be a great amount of relief given to the exhibitors. I would like to remind your Lordships of what I said in the debate on June 29, 1948: I know I shall be told that if an exhibitor can show that he cannot fill his quota, the President of the Board of Trade may excuse him. That is not very satisfactory, though it is absolutely necessary to have that provision. If the quota is fixed so high that nearly every exhibitor comes along and claims to be excused, it means that a great burden is placed upon the Board of Trade who will be almost driven to decide it by rule of thumb. That was never the intention of Parliament when this Bill was passed. The intention of Parliament was that the application for exemption should be the exception, and not the rule; that the exhibitor should prove his case, and that each case should be decided upon its merits. If the President of the Board of Trade finds himself faced with hundreds of applications for exemption, he will not then be able to decide them on their merits and he will be driven to decide them by rule of thumb. On that occasion the noble Lord, Lord Chorley (he has disappeared; he is very wise) pooh-poohed my arguments and said they were all nonsense. This is what the noble Lord said: There is no reason to suppose that there will be wholesale exemptions such as the noble Viscount envisaged. I said: "hundreds"; we now know that it is nearly 2,000. He continued: It is quite true, of course, that what might be called block exemptions, if handed out, would stultify the object of the Act. Obviously, there will be, here and there, cases in connection with the small towns, especially over the initial period, where there may be difficulties; but these can be dealt with by my honourable friend under what might be called the escape clause of the Act. Let us see who was right. I asked the noble Lord, Lord Lucas, to give us the figures, and he has given them to us today. He said there were over 4,700 cinemas. According to the noble Lord, Lord Chorley, there was to be an odd case here and there. As the noble Lord has just told us, the Board of Trade have been compelled to grant relief in no fewer than 1,770 cases; 1,471, he told us, were granted from 40 per cent. to 10 per cent. relief, and 300 or more were excluded altogether, as there were not enough films for them to do anything under the Act. Was my estimate of "hundreds" so wide of the mark? Does that not show that the quota was excessive? Does it not show that the effect has been, as the noble Lord, Lord Chorley said, to "stultify the object of the Act"?

I am sure that this quota will also prove excessive; indeed, the noble Lord, Lord Lucas, has not denied it. What was intended to be an exceptional escape clause is to continue. The noble Lord says: "We are going to fix a quota at 40 per cent., but we know that a large number of cinemas will have to apply for relief this year, as they did last year, and there will be so many of them that it will reduce the effective quota to 33⅓ per cent." But why should those cinemas be put to all this trouble and inconvenience; and why should you stultify the Act in this way? If 1,700 cinemas cannot fulfil this quota, why cannot there be a quota which they can fulfil? That, surely, is the sensible way of doing business. As we now know, on the Minister's own statement, that 1,700 or more will be unable to comply with this quota, I ask the Govern ment to give the House in terms the assurance that those cinemas will be accorded as generous relief in the coming year as the Board of Trade have had to concede to them in the past. I sincerely hope that that undertaking will be quite unequivocally given.

What prospect is there that this quota will be fulfilled? It is surely unnecessary to argue it, because the Minister has said that in the case of these hundreds of cinemas there cannot be enough British films. The industry is in great difficulty; many studios have closed down. I see that Mr. O'Brien said last December, I think in another place: In the country at the present time there are about 27 studios, large and small. Of those 27 studios, 16 are closed. Another studio will be closing next January…. In the face of that, what is the sense of fixing this quota at 40 per cent.? The noble Lord said that the President of the Board of Trade had to decide on his own, because he had such a lot of conflicting advice. It will always be found that the producers ask for a high quota and the exhibitors for a lower quota. It is perfectly natural that that should be so. If one man is a seller and another a buyer, the seller wants to get as high a price as he can and the buyer wants to buy at as low a price as he can. That happens even in a nationalised industry, except that the buyer has no chance of getting it at the lower price. That is why the independents were put on to the Films Council. The noble Earl the Chairman of Committees is one. I was sorry that the noble Lord, Lord Lucas, slurred over what was the view of the independents.

THE EARL OF DROGHEDA

My Lords, may I intervene to say that the noble Viscount was right in his figure of four. Including myself, it was four independents in favour of the 33⅓ per cent., and one against.

LORD LUCAS OF CHILWORTH

I think the noble Viscount is less than his usual courteous self in saying that I attempted to slur over anything. I never slur over anything in your Lordships' House.

VISCOUNT SWINTON

When the noble Lord reads his speech, I think he will see that he inadvertently gave that impression. I certainly withdraw any such suggestion. But I do say that the noble Lord should have been given that information perfectly clearly by the Department. What is more, I say that that is vital information for Parliament to have in deciding this matter, because upon whose judgment would you naturally rely? Not upon the two conflicting parties, if I may so call them, but upon the judgment of the independents who are put there just because they are wholly independent and can exercise an independent and judicial opinion. We now know that so far as the independents were concerned, four of them were in favour of the 33⅓ per cent. quota and one was against. On the face of that we can say, and, indeed, we must say, that the President of the Board of Trade has completely disregarded the considered opinion of the independent members of the Film Council. I should have thought that after their recent experience the Board of Trade would be wise to fix a lower quota which would carry the good will of the exhibitors and encourage the production of good films.

I want to add one other thing. I have spoken of the importance of the co-operation of the exhibitors. There is another co-operation which is equally desirable, and that is the co-operation of the American film industry. I cannot but agree with the criticism in another place that the handling of the American industry has been singularly inept. I had a good deal to do with the American industry when I was preparing and piloting the original Bill. Quite naturally, there was opposition initially. They would much rather not have had a quota Bill at all. But there is one thing about all my discussions with them—I was always absolutely frank as to what was my intention. When it was clear that the legislation would go through and that it would be reasonable in its terms and in its administration, then, in fairness, I must say that I had a large measure of help and co-operation from the American industry.

Looking at the situation to-day, I cannot resist the conclusion that the combination of the way in which these American negotiations have been handled and the excessive quota has had, and will continue to have, two results, both of them injurious to British film production. In the first place, British films are obstructed to-day in the United States. I am afraid there is no doubt about that. In the second place, American producers of films are not using their blocked sterling to produce here to anything like the extent they could. I regret that situation. I do not say that there are not faults on both sides, but the sooner it is remedied the better. What is the result? We must accept this Order because if we do not the position will be still worse. But I do hope that the Board of Trade will learn from experience and be more realistic, and if at any time they come to Parliament with revised legislation or amended Orders which are more in tune with reality, I am sure they will find Parliament only too anxious to help.

3.56 p.m.

THE EARL OF ROSEBERY

My Lords, I will detain your Lordships for only a few moments in order to say something on the Scottish aspect of this Order. When the noble Lord, Lord Lucas, started he began to apolise for the 40 per cent. quota he had to produce. I was under the impression that he was going on to apologise for it not being lower, because he will of course remember that on February 1 of this year he himself said: But the sad story is that to-day the British film industry cannot even satisfy that quota, still less exceed it in any progressive measure. I was hoping that he was going to apologise that the new quota is to be as high as 40 per cent. because, as my noble friend Lord Swinton has said, it is quite impossible for a very large number of producers to fulfil the Order. I shall not go further into that argument because the noble Viscount has dealt with it already. I would point out that under a 40 per cent. quota, with two cinemas changing their programme twice a week—which is not uncommon in Scotland—eightyfour British first-features would be required. As the noble Lord, Cord Lucas, says, there will be eighty produced for this next year, so it is obvious from the start that a considerable number of producers will not be able even to attempt to fulfil the Order.

Your Lordships may remember that over a year ago the quota was 22½ per cent. At that time all the studios were working, and the pictures were good, because they had more time to make good pictures. This year we have had seventy odd pictures made, with the result that we have had quantity before quality, and our producers have been obliged to make some very moderate pictures. When this Order came up before, I protested to your Lordships that there were films which we would be compelled to have in Scotland which were totally unsuitable for Scotland, and which were made in England for England. I have been making inquiries, and I will enumerate a few of the British films which we have been ordered to, exhibit in Scotland—I use the word "we," but I need hardly say that I have nothing whatever to do with the film business. The names are as follows: Saraband for Dead Lovers, Anna Karenina, Mine Own Executioner, London Belongs To Me, It's Hard To Be Good, Easy Money, Esther Waters and Third Time Lucky. I have no doubt they were very popular in England, but I can assure your Lordships that they were an absolute flop in Scotland. Now we have been ordered to exhibit The Bad Lord Byron and Warning To Wantons. Neither of these films has any great appeal to either the Highlands or the Lowlands of Scotland, but the Order in London has ordained that those who go to the films will have to see them.

Now let me say one word about a person who has not so far been mentioned, and that is the poor consumer. We hear a great deal about the producer and the exhibitor, but the person with whom I, for my part, am concerned is the consumer. In the country districts in Scotland, and probably in England—certainly in Scotland—the only means of entertainment is really the films. The wife of the farmer or the farm labourer goes into the local town or village to do her shopping, and her one entertainment of the week is to go to see the films. What we in Scotland like is an amusing or uplifting film—but surely Warning To Wantons would hardly be described as an uplifting film!

That is one aspect. There is another and I feel, as we all do North of the Border, very strongly about it. This Order is not to be applied in Northern Ireland. We know it is unsuitable for Scotland, but we have to take it; but Northern Ireland have been strong enough to resist this Order and be excluded from it. I should very much like to know what the Secretary of State for Scotland has been doing in not putting forward the Scottish case with greater cogency and ability than he has shown, so that we in Scotland might be excluded in the same way as Northern Ireland has been. Why should an Order be made for Glasgow which was not considered good enough for Belfast? I can assure your Lordships that in Scotland it is very much resented. Those of us who go to see films have to see films that we do not want. This Order is very much on the same lines as the Catering Wages Act. Your Lordships may remember that under the Catering Wages Act the smallest inn in the Orkneys, the smallest public house in the Shetlands, was put on exactly the same footing as the Ritz and the Carlton. Many prominent Labour protagonists in Scotland were equally opposed to it at the time, but we and the tourists have had to suffer under that Act. We seem to have no one who will put. Scotland's point of view as it should have been put. I hope that when next an Order of this nature is made, Scotland will be excluded in the same way as is Northern Ireland.

4.3 p.m.

THE EARL OF DROGHEDA

My Lords, the present stringency in which the cinematograph industry finds itself has already caused a great deal of unemployment, and must have caused considerable suffering amongst technicians and others who cannot all readily be absorbed into other work. Against this background it is not surprising that some sections of the industry take the view that the present quota should not only be maintained but should even be increased. Other sections hold equally strongly that it should be reduced. I feel, therefore, that your Lordships may like me to tell you why I personally wish to see a reduction in the quota and, indeed, wish that the present Order had gone even further than it has.

There are two considerations that should always be borne in mind when considering the quota. One is that if it should, unfortunately, happen that a series of indifferent British films were made, and if it were possible by law to compel their exhibition, to do so would be the greatest possible disservice to the British film industry, because people would either give up going to see films altogether or, at any rate, would give up going to see British films. Another consideration is that exhibitors should, I think, have a reasonably wide choice of films from which to select their quota, partly because by no means every film is a success and partly because different films appeal to audiences in different parts of the country.

The present quota of 45 per cent.—one has to face the fact—followed a recommendation by the Films Council last year that it should be 50 per cent. I think there were two reasons for that recommendation. One was that, owing to illness and various other causes, few independent members of the Council were able to be present when the quota was under discussion—I do not mean to imply that they would necessarily all have voted for a lower figure, but I think that certainly many of them would have done so. The other consideration was that the recommendation was based on the producers' estimate of the number of films that could fairly be ranked as first-feature films which would be produced during the year. If their estimate had been realised, there would have been a wide enough choice for exhibitors; but in fact an appreciably smaller number of pictures were produced, and by no means all of them were successful box office propositions.

I do not want to be misunderstood. I do not mean to say that, compared with the total number of pictures produced in every country, the percentage of poor or mediocre British films is greater than that of indifferent American films. I do not think that is the case. But so many more American films are produced every year that exhibitors have a far wider choice when they are selecting them; and for some reason that I have never quite fathomed, audiences here seem to stand a bad American film more easily than a bad British film—and I think that that is even truer in Scotland. There have, of course, been one or two outstanding films made here during the last year. There was Hamlet which has been widely acclaimed, even, I think, by Hollywood, as the best film of the year. There was The Red Shoes and a number of other films that challenge comparison with anything from America. If anything like half of the films produced here had been of that quality, I doubt whether we should have had this crisis with which we are faced to-day. It is a fact, I fear, that many British films produced this year have been very disappointing.

I feel now, as I felt at the time, that last year we tried to go too far and too fast, and that the present quantity can be produced only at the expense of quality. I think the experience of this past year goes to show that the industry is not at present geared to support a high quota. When it is so geared, then our problems will largely disappear. There may be no need for a quota, because British films will sell themselves—and surely that must be our long-term aim: that British films should be able to stand on their own feet without need of protection. I am convinced that at present we should not try to set too high a numerical target, and that we should concentrate on quality. I do not think that the solution of our troubles lies in producing more quickly or more cheaply British films of the average type made this year. I do not feel the same difficulty that the noble Viscount, Lord Swinton, feels about granting relief to a number of cinemas. If we set a lower target, so that all cinemas can comply with it, then the ones that show a much higher percentage tend to take the quota as being the maximum and not the minimum and, therefore, show far less than they could and should show. My view is that in this industry, in which competition varies so greatly, a sliding scale, as we have at present, is the fairest and best system. What I object to most is to have, not relief beforehand but defaults afterwards.

VISCOUNT SWINTON

My Lords, may I make this clear? I have not the least objection to setting out in an Act of Parliament or an Order that the quota for certain houses in large places (whatever is the right way of describing them) shall be x per cent., and the quota for other houses shall be y per cent. I think that would be most reasonable. What I object to is passing a law which says to every cinema: "You shall show this and this," making them show cause why they should not.

THE EARL OF DROGHEDA

To have the whole sliding scale set out in an Act would be extremely difficult, because conditions vary so tremendously. What will happen each year under the new procedure is that a sub-committee of the Films Council, composed of trade members, will go with a fine comb through the whole of the cinemas in the country and make their recommendations as to what the relief should be. That will have to be done every year for changing conditions. Therefore, it would be difficult to lay them all down in an Act of Parliament. The relief for the cinemas that change their programmes twice a week is difficult, because those cinemas cannot have relief if they belong to the large circuits or if they cannot show that there is competition from two other theatres in the same locality. So some hundreds of those cinemas which cannot be given relief under Section 4 of the Act will have to default, and it will be impossible in most of those cases to prosecute. I think that it is bad legislation to have hundreds of defaults. I hope that the Government may find it possible at sonic stage to introduce amending legislation on that point.

I do not feel that there is any easy or short way out of our difficulties. I wish I could think so. How far we succeed in surmounting them will depend largely on the work of the Film Finance Corporation. That is a most important body which will have to work with speed, vigour and imagination. They are bound to make some mistakes. Unfortunately, none of us of this world can find winners all the time, and in the cinema industry it is easy to pick losers. I hope that the Film Finance Corporation do make mistakes. They cannot be too much criticised because, if they do not make mistakes, they cannot make anything. I think that their success will depend largely upon their finding new talent, more script writers, more artists and more directors, because those will never be in too great supply in the cinema industry. I do not think it is a bad thing that the Corporation should have come into being with the sellers' market coming to an end; I believe their work will be based on a firmer foundation now that the public are much more critical about the film which they go to see. I am sure that we shall all wish the Corporation the very best of luck in their most difficult work. Those are the reasons for which I support this Order.

4.14 p.m.

VISCOUNT BRIDGEMAN

My Lords, I think this debate has been about as gloomy a debate as we have heard in your Lordships' House for a long time, and the words which fell from the noble Earl who has just sat down did nothing to relieve the gloom which surrounds the present situation of the film industry. It is a very sad state of affairs. The new Act was passed only last year, and our hopes were all high that it would herald the revival of the British film industry, but on almost the first occasion on which it is possible to change the Order, we are asked to reduce the quota by 5 per cent. Even so, we are not certain by exactly what percentage we are reducing the quota, because the noble Lord opposite, in moving the adoption of the Order, told us that the Board of Trade exemptions would reduce the quota to 33⅓ per cent., which was one of the figures originally recommended. It looks very much as if those exemptions will have to be used in even greater measure during the period for which this Order will be in force. If that is so, then we are rapidly approaching a position where the figures in the Order placed before Parliament have relatively little meaning. At the moment, however, the terms of the Order give us only the choice of either approving the figure of 45 per cent., which everybody knows from experience has proved too high, or taking the figure of 40 per cent. which, as the noble Lord opposite has said, will probably be 33⅓ per cent., and may even be something different. That is not a cheerful choice to place before your Lordships.

But, assuming that this Order is confirmed and we have no other choice, as the noble Viscount, Lord Swinton, said, how much nearer shall we be to establishing a better state of affairs in the cinema industry? Not very much nearer, I think, on the face of it. Whatever benefit may result from the Film Finance Corporation, it will not go all the way. The noble Earl, Lord Drogheda, had a good word to say for that Corporation. The noble Lord, Lord Lucas, told us that they had already started to finance films. But there is a danger that the Film Finance Corporation will provide too easy money and, if they provide too easy money, we shall still be as far as ever we were from raising the standard of British films to the point where they can look after themselves. The noble Lord, Lord Lucas, told us that the "angels" had fled, and the Film Finance Corporation have apparently stepped in where the angels are fearing to tread. I wonder. But, so far as I understand the position, there has never been any real difficulty in getting capital for a film which was likely to make a profit. The difficulty came when the "angels" retreated because it was found that, what with one thing and another, the rising costs of production and the uncertainty of the estimates which film producers and film directors gave, no one really knew whether the money he was investing in a film was going to make a profit or result in a loss. The traditions of the film producing industry are not strong enough to enable the investor to tell that. The mere fact of turning on the tap of Government money will not by itself alter that state of affairs. I think we ought to be clear about that.

On the other hand, Government money plus an artificially high quota may easily result in our continuing for the next six months in a fools' paradise, where British films are not better and not more economically produced, where unemployment in the film industry may be reduced, but artificially reduced, and where, sooner or later, someone in another place—for instance the Select Committee on National Expenditure—may in years to come point out that a great deal of money has been spent by the Film Finance Corporation and that we are still no nearer than we were to the point which we all wish to reach. We want the film industry to be economically sound, to stand on its own feet and to attract ordinary capital by its own merits. The real judge of that position is not the producer or the exhibitor, but the ordinary man or woman who goes to the pictures; they are the people who decide. If we are to have a sound film industry, it is impossible in the long run for anybody like the Board of Trade, the producers, the renters, the exhibitors or anybody else to try and keep the public content with something they do not want. In theory we might reach a state of affairs where the film industry was in such a bad condition that there was nothing to show the public but documentaries sponsored by the Ministry of Food and paid for by the Film Finance Corporation. Thank goodness we are a long way from that!

But let me return for a moment to the question of employment. Unemployment in the film industry is very bad, and I feel sorry for those people who have to deal with labour conditions in that industry. They must be having a bad time, and I only hope that they have not made it rather worse for themselves than it might have been by indulging in too many restrictive practices. I mention that matter because I think that, if any progress is to be made, this period of six months during which the Order will be in force must be used by everybody concerned in a real overhaul of the conditions of production by the two cinema unions, by the producers and by everybody else, not excepting the film directors. I venture to think that one of the troubles in the film industry at present is that there are not enough film directors and people of that sort sufficiently expert and experienced to be able to produce the films up to the numbers required by this quota at a figure which will show a profit, whether it is to the Finance Corporation or to the private investor.

My Lords, let us leave it there. If we pass this Order, let us see that the time is used in a real effort by all concerned to put the film industry on a proper economic basis. If we fail in our efforts in the face of the Americans, then no doubt a change will have to be made and we shall have to go back to the original plan—not a satisfactory one from every point of view but producing a much better state of affairs than the present—when films were made, not in spite of the Americans but sometimes because of them.

4.23 p.m.

LORD LUCAS OF CHILWORTH

My Lords, through the helpful contribution to the debate by the noble Earl, Lord Drogheda, it will not be necessary for me to detain your Lordships for more than a minute or two, as he answered all the main points made by the noble Earl, Lord Rosebery, regarding the eighty-four films for Scotland. I would, however, add one point: that the relief which the noble Earl, Lord Drogheda, said could not be given, can be given by the last section, which relates to cases where it is not commercially practicable to fulfil the quota.

THE EARL OF ROSEBERY

May I ask the noble Lord one question: Has there ever been a prosecution under this Order?

LORD LUCAS OF CHILWORTH

I do not know of one. Although I expected the noble Viscount, Lord Swinton, to say almost what he did say, I think he was not quite fair to my right honourable friend, the President of the Board of Trade. The 45 per cent. quota was fixed by the Board of Trade after consultation with the producers and, as the noble Earl has said, after they had said that they could produce the films. So if we erred we erred in good company, and the reason for our erring was because we adopted the principle of consulting the industry and taking their advice. The noble Viscount asked: Why not have a draft Order? If a draft Order were prepared putting down proposals for an industry like the film industry, controversy would rage even more than it has done when no draft Order has been produced, and the whole thing would be be-devilled. I am sure that the noble Viscount and I, in our experience of industry and its troubles, have been accustomed to dealing with businesses where logic has more meaning than it has in the film industry. The noble Viscount should really take to heart what the noble Earl said. The fixing of quotas is a very difficult task. To take care of the circuits in the big towns a high quota must be fixed, and there is only one way to see that that is done. These circuits control a third of the seating capacity of the country in all the large towns, and when a quota is fixed to take care of that we have to make certain that the quota is not injurious to the smaller man. That is why relief is proposed—not by the escape clause but by Section 4 of the Act of 1948.

The noble Viscount wanted me to give an undertaking. I should have thought that what I have already said was a sufficient undertaking—namely, that I do not anticipate that there will be any fewer reservations in toto. I can give the noble Viscount only this undertaking: that every case will be reviewed on its merit. The noble Viscount also asked me about the renter's quota. The renter's quota was given up at the behest of the pro ducers of the country because they thought that any films produced under compulsion would lose merit. It is impossible to reintroduce the renter's quota because of our obligations under the Geneva Agreement.

VISCOUNT SWINTON

This is really most important and has never before been said—that another of the things of which Geneva has deprived us is the power to restore the renter's quota. I think this is the first time that that has been said in Parliament.

LORD LUCAS OF CHILWORTH

My instructions are that the Geneva Agreement on tariffs and trade would prevent us from reimposing the renter's quota.

VISCOUNT SWINTON

For how long? This is very important. We have had many discussions on Geneva, and to my knowledge—the Leader of the House knows that august document nearly as well as I do—this is the first time that it has ever been announced in either House of Parliament that by the Geneva Convention we have fettered our power to continue the renter's quota. If the noble Lord cannot say now, perhaps if I put down a Question I could be told specifically whether we are bound; if so, by what instrument; in what circumstances we were so bound, and for how long we will remain bound.

LORD LUCAS OF CHILWORTH

I am much obliged to the noble Viscount. If he will do that, I will endeavour to obtain fuller instructions. I do not want, and I am sure the noble Viscount does not want, to raise the whole position of the American Dollar Agreement, but in passing I think I can say that if that were done away with (and here I think the noble Viscount will agree with me) it would not do the British producer any good. I will take great notice of what the noble Viscount, Lord Bridgeman, has said. I will look at it and examine it. I think I had better leave the noble Earl, Lord Rosebery, to the tender mercies of my noble friend Lord Morrison—who perhaps will undertake to produce a realistic film, such as, London Belongs to Scotland—and beg all noble Lords who come from Scotland to see the film A Warning to Wantons. If they did that I am sure it would give us a very great deal of pleasure!

On Question, Motion agreed to.