§ 3.52 p.m.
§ Order of the Day for the Second Reading read.
§ LORD MANCROFT
My Lords, it is some time now since we last discussed the film industry in your Lordships' House and certain noble Lords opposite have suggested that it might be desirable to extend the scope of the debate this afternoon to cover a little wider field than might normally be the case in discussing the Cinematograph Films Bill itself. I think this will be an agreeable course to your Lordships. In any case, it is almost impossible to discuss this Bill without covering the fortunes or misfortunes of the film industry. Therefore I will take advantage of the suggestion which the noble Lord, Lord Lucas of Chilworth, and his friends have made, and open the debate by covering a little wider ground than I would normally do in introducing such a Bill.
The film production industry, despite the ever-present competition from overseas and the increased competition from other forms of entertainment in this country, is, I am glad to say, pursuing a fairly steady course, steadied, of course, by the supports which have been available to it. In this respect, we meet perhaps in a slightly easier atmosphere than when we last discussed films in your Lordships' House. We are not met to discuss a film production crisis, but how best to maintain and strengthen those supports which have proved their worth and enabled the industry to cope with the difficulties which beset it and to enable 1332 it to face the future with confidence. Complete confidence, of course, can be enjoyed only by an industry which stands completely on its own feet, and the Government hope that over the next decade the industry will achieve this.
Let me begin by discussing production and distribution. In an industry which has the nature of a creative art and in which the production of a feature film takes a full year, it is not to be expected that the flow of production would be as steady as in some other industries where the output is governed by more mechanical considerations. None the less, the number of British films registered in any particular year remains something of a yardstick by which to measure the health of production. The number of feature-length films—that is to say, major films registered for the year ended September 30, 1956, is 82, and that is very close to the average for the past five years, which is, I believe, about 84. That figure should be borne in mind in comparison with the equivalent American figure, which is more like 250.
Another modestly encouraging feature of the situation is that the National Film Finance Corporation was able to record for the year to March 31, 1956, a modest surplus of about £80,000. I do not attach too much significance to this, as the fluctuation in the fortunes of those who finance films are both spectacular and notorious; but, at least, it does not suggest a deteriorating situation. The Corporation, your Lordships will remember, was restricted in its lending powers to companies who were not able to obtain adequate financial facilities on reasonable terms elsewhere, and it is significant that, at a time when, as I say, film production is proceeding on a fairly steady course, the number of films which have been partially financed by the Corporation has shown a marked reduction. But this does not mean that the work of the Corporation has become superfluous. Film production is by no means on so secure a footing as that, and the Corporation recorded in its last report that of the 33 major films released in 1955, which it had helped to finance, the latest revenue estimates indicated that only 15 were likely to be profitable, even with the aid of the Eady levy. Your Lordships will remember that the Eady levy is the present trade-operated levy on the 1333 number of seats sold—but more of that anon. Without the support of the Eady levy, only 7 films were likely to be profitable. It is clear that, so long as that state of affairs continues, the industry is not able to rely on attracting from the normal financial sources the capital it requires to maintain production.
I would now say a word or two about the British Film Production Fund, more familiarly known as the Eady levy. The Eady levy plays a big part in enabling films to recover their cost. At present, some 20 per cent. of the film producers' revenues comes from this fund, and it is not surprising, therefore, that the Bill which we are considering this afternoon provides statutory form for a device which, in its trade-operated form, has proved so valuable a pillar of production. Without the third leg of the stool on which film production rests—and I refer, of course, to the quota leg—production would he most precariously balanced. Chronologically, this was the first leg of the stool; tit was, I believe, introduced by the Act of 1927. This method of protecting the domestic market has now been recognised in international agreements as the proper method for the film industry.
While there will be agreement on all sides that the quota leg should be retained as a guarantee that British films will receive a fair showing, I am glad to say that experience indicates that British films are taking their place, not only here, but overseas, as the equal of any in the world. Your Lordships will have seen that the film, Reach for the Sky, which is based on Douglas Bader's adventures, has topped the box office poll in the United Kingdom and is earning prestige for British films round the world, as well as Valuable foreign currency. Renewed efforts are being made to enlarge our foreign markets with some success. Your Lordships will welcome the news that producers are looking to their own efforts to an increasing degree to maintain their financial stability, rather than relying on supports at home. The enterprise showed by the J. Arthur Rank Organisation in North America is particularly welcome in this connection. The number of exhibitors who, with or without due cause, have failed to show the prescribed quotas of British films has dropped rapidly during the past few years, and this, too, is an 1334 indication that British films can fully hold their own.
Perhaps during the last two years public attention has been directed less towards the plight of producers and more towards that of exhibitors. Public references to the closure of cinemas have been more numerous, and the reasons for these have been variously ascribed to a change in the habits of cinema patrons, the competition from T.V. programmes, the scarcity of good films and, your Lordships will not be surprised to hear, the incidence of entertainments duty. In many localities, the curious phenomenon has been observed of what I may describe as deflationary spirals caused by too many cinema seats chasing too few cinema patrols. Perhaps this is even an example of economic phenomena—a disinflationary parabola.
The number of cinema seats per 1,000 inhabitants in the United Kingdom is about eighty as compared with only fifty-five in America, sixty-two in France and seventy-three in Italy. We all know places in which there seem to he competing cinemas on every corner, and it is little wonder that in times of declining cinema attendance some of these must of necessity close their doors. But it would be quite wrong, I think, to see in this a calamitous situation. Cinema attendances at 1,100 million a year are still much higher than they were pre-war, when the number of cinemas was even larger—4,900 then, as against 4,400 today and more visits to the cinema are paid per head of the population in this country than anywhere else in the world.
It was in this climate in which producers, whilst optimistic, were concerned about the continuation of existing arrangements, and exhibitors were anxious about falling attendance, that the Government invited earlier this year the views of the various sections of the film industry on future film policy. Your Lordships will not, I imagine, be surprised to know that the consensus of opinion expressed to the Board of Trade from many quarters was that the three measures of support I have described already, and which are dealt with in the Bill before us this afternoon, should continue to be made available to film producers.
Let me turn to Part 1, the provisions relating to the exhibitors' levy. I think I am safe in taking it for granted that for 1335 prestige, balance of payments and social reasons, we all consider it important that our cinema screens should not be monopolised by foreign products. But the question that presents itself is why should producers be given the help they need by means of a statutory levy on exhibitors. It has been suggested that a more convenient and equitable method of giving the producers more assistance would be by way of a straight subsidy. This would certainly have administrative advantages, but noble Lords, certainly on this side of the House, and, I think, the public at large, would, I believe, give a very old-fashioned look at a subsidy for film producers. Certainly, many other candidates and aspirants for subsidy would find it hard to understand how an industry which could provide all the glitter and glamour, the swimming baths and the mink bathing suits, that have conic to be associated with the film industry, could be more worthy of help than they themselves.
On the other hand, the Eady levy offered an alternative solution which was not open to the objections of a subsidy. Here was a scheme, operated with considerable success by the trade for a number of years, and which had proved well adapted to the peculiarities of the industry. I know it has been said that to take money from retailers and give it to producers might form an undesirable precedent which would spread to other industries. To this, I can only turn upon the film industry its own well known slogan, "There's no business like show business"—and it is a very remarkable business indeed. This scheme, then is not an innovation or some new imposition on the exhibitors, but rather the statutory form of a well-tried expedient.
Turning now to the details of the Bill, your Lordships will observe that it is an enabling measure designed to give flexibility to the methods of collection and distribution of the levy in order to meet the changing needs of the industry. The regulations are, of course, subject to Affirmative Resolution procedure, which will safeguard the interests of all concerned. Clause 2 provides that in the first year the levy shall be fixed at a rate estimated to yield £3¾million, and subsequently not less than £2 million nor more than £5 million per year. This, I appreciate, is a higher figure than under 1336 the voluntary scheme, but not much higher than the one-time target figure of £3½ million under that scheme. I do not pretend for one moment that the figure of £.3¾ million is a precise calculation. No one can provide a standard measurement of what a film should cost, not even expert noble Lords like the two who are to follow me in this debate. We all know examples of films that have been made on a shoe string and have proved world beaters, and we all know films that have cost £1 million or 1 million dollars and proved cataclysmic flops. Certainly there is no reason why, if the film is a failure, the Government should guarantee to film producers the return of their costs. The figure represents the amount by which Her Majesty's Government consider it would be sensible to increase the revenues of producers to maintain production at a reasonable rate. The figures, based on the experience of the National Film Finance Corporation, to which I have already referred, show the financial difficulties which still exist.
Now we come to a very important point. Exhibitors, naturally, are asking how they are to be expected to pay £3¾ million when, even with the levy at its present lower rate, some cinemas are having to close their doors. This, not surprisingly, has led to renewed references to the burdens of entertainments duty. Your Lordships will, I hope, not expect me to say much on a taxation point of this kind, but I can and do say that the provisions of the Cinematograph Films Bill are amongst the various factors which are being taken into consideration in the review of entertainments duty which has been promised by Her Majesty's Government and which is now in active progress.
§ LORD LUCAS OF CHILWORTH
My Lords, would the noble Lord repeat his last sentence about entertainments duty as I could not quite understand it?
§ LORD MANCROFT
What I was saying to the noble Lord was that I hoped he would not press me too hard on a pure taxation point of this kind. What I was saying was that the Government have made a promise that they will review the entertainments duty, and they will take this particular grievance into consideration when carrying out the review which has been promised and which is, in fact, actually in progress.
§ LORD MANCROFT
My Lords, I should like also to reassure your Lordships that, under the regulations to be made in accordance with Clause 2 of the Bill, there will be provision to exempt exhibitors, in suitable cases, from the burden of the levy.
Turning now to outgoing payments, the intention is to depart as little as possible from the present arrangements, whereby the fund is distributed in proportion to the box office success of the films concerned in the, home market. This is administratively simple. It has been worked already under the voluntary scheme. Few of your Lordships will quarrel with the general concept that the levy should go to support the successful producer, rather than the less successful. Payments will, of course, be made only to British films, tile definition of which is set out in the Act of 1938, which, I expect, is familiar to most of your Lordships. I feel sure that there will be a general welcome for the Government's decision to continue payments out of the levy to the Children's Film Foundation. These were made with the approval of the exhibitors, and the Children's Film Foundation was an experiment which has achieved, and rightly so, I think, wide acclaim.
Your Lordships will expect me to say a word about the new British Film Fund Agency. This is to be a small independent body, without any direct interest in the film industry. It has been suggested, I know, that the trade should be represented on the Agency, but I think your Lordships will recognise that the Agency is not a policy-making body, and it will be to the Board of Trade, who will make the regulations, that the film industry should make their representations.
I must say a word about the extension of the powers of the National Film Finance Corporation. Clause 10 of the Bill not only extends the life of the Corporation for ten years, but will enable the Corporation to assist any persons who have reasonable expectation of being able to produce or distribute cinematograph films on a commercially successful basis, and not merely those who cannot get finance elsewhere. This will, I 1338 hope, commend itself to your Lordships as a measure calculated to assist the Corporation to avoid further erosion of their loan capital which, your Lordships will note, there is no intention to increase. It should also go a little way to help the Corporation to shoulder the obligation now explicitly laid upon them in Clause 11, to operate in such a way as appears to them best calculated to avoid losses.
The power sought in Clause 12 of the Bill to dispose of the Corporation to a person willing and able to provide similar facilities to those of the Corporation may possibly have caught your Lordships' eyes. I am able to assure the House that there are no immediate plans in mind for the disposal of the Corporation. It was, nevertheless, thought prudent to make provision for the possibility than with the aid of the three measures proposed in the Bill, film production might improve to the point where financing film production would become a fully commercial proposition. Should that stage be reached, there would be no justification for leaving public funds committed in this way.
Part III of the Bill deals with the extension of the quota provisions of the 1948 Act. I do not doubt that the proposal to continue the quota protection for British film production for a further ten years will command general approval, though I understand that the film industry is disappointed that no immediate opportunity is to be afforded to overhaul the 1948 Act. I believe that I shall find amongst your Lordships this afternoon a. ready acceptance of the broad principle that the British film industry will continue for sonic time to need the sure support which this Bill will give. But one thing is certain: no amount of Government aid will turn bad films into good ones. The long-term salvation for producer and exhibitor alike is that more good films should be available—and by "good films" I mean better entertainment on ordinary commercial terms. I commend this Bill to your Lordships as a sensible, straightforward measure which offers a reasonable method of putting British film producers in the financial position to make the sort of films which will bring back the cash customers, in their old numbers and with their old 1339 enthusiasm. I beg to move that this Bill be read a second time.
§ Moved, That the Bill be now read 2ª.—(Lord Mancroft.)
§ 4.12 p.m.
§ LORD LUCAS OF CHILWORTH
My Lords, I feel sure that all your Lordships are grateful to the noble Lord for the comprehensive review he has given us of the provisions of this Bill. Before I come to the direct provisions of the Bill, upon which I shall have some criticism to make, I should like to take the opportunity of following his lead, and of making some general observations on the British film industry, because in my view the British film industry to-day is in a far healthier state than it has been for many years. In fairness, I think that must be said to be due to the influence of the legislation which was passed by a Labour Government and which, in point of fact, is being followed in this Bill by the present Government, to their credit.
One of the reasons for the health of the British film industry is that it has gone in for quality and not quantity. I think—and I agree with the noble Lord—that what I call "well-acted" British films of good stories are as good as any in this world, and better than most. That is because we got away from that terrible era of the British film industry which the noble Lord will remember, the era of the "quota quickie" when any rubbish was good enough so long as it could scramble into the quota. To-day, the British film industry, in good pictures, leads the world. That was brought home to me during a recent visit that I paid to America, when I had the opportunity of discussing films in Hollywood with some of the foremost film producers there. I am delighted to think that the British film industry has not followed the unfortunate course of the American film industry, although the British film industry has had the same conditions—it has had to fight a very powerful competitor in television.
In my view, where the American industry went wrong and the British industry were right is that the American film industry attempted to meet vulgarity with vulgarity. I consider that some of the television programmes presented as entertainment are beneath contempt and consideration, whereas the British film 1340 industry sought to meet their competition with quality. There is a lot in this, because to-day the noble Lord has mentioned the cinema attendances. The British public are discerning; they do not just "go to the pictures"; they go to see a picture. And unless it is a good picture they will not go. That is one great mark in favour of the ultimate discrimination of the British public. The had entertainment that the British public will put up with for a certain length of time, if it is cheap, has always surprised me. To-day, they sit with their eyes glued to a television screen absorbing a mass of advertising with a nonsense background just because they imagine that it is cheap. Thank goodness! that phase will soon go, and I think there is great advantage going to come to the British cinema industry, if only it will pursue its present policy.
I should like to say one thing which your Lordships may think is a slight digression. I feel that the British film industry needs to do something—I have no "bright idea" to give it. One of the sad things is that it has not attracted what I may call first-class script-writers in sufficient number. In my view, stories are the basis of the British film industry's future success. I remember, when I was in America, talking to the chief production executive of Paramount Studios in Hollywood. I had lunch with him there. He said to me, "Do you know, for the first time in our history we are not at the present time making a picture?" There was not one. He said, "The reason is that we cannot get the good scriptwriters: there are not the stories worth the huge amount of capital that we have to find." From then onwards, I could see that the lack of good stories and the desperate efforts made by some of the American producers to produce films have led to a very sharp decline in the quality.
I want to say a word to the noble Lord on that particular subject before I come to this Bill. I am sorry that the noble Earl the Chancellor of the Duchy of Lancaster is not here, although he listened to the noble Lord's speech, because we have had debates recently in this House, and it has been borne in on us that one of our greatest problems as a country in this next month or two—perhaps a year—will be the question of dollars. I am going to ask the noble Lord whether he 1341 will convey to his right honourable friend the President of the Board of Trade the advantage of reviewing some of the dollar expenditure that we make on the imports of American films. The Chancellor of the Exchequer has said that the import of American films into this country cost us 20 million dollars in the last nine months of 1955, and some of these films are really not fit to be shown on the screens of any country.
My Lords, there is a poster being plastered over the West End of London today which is supposed to advertise a film which has not yet been shown, but the premiere of which is expected shortly, In my view, this poster is bordering on the obscene. It is the reclining figure, so scantily clad as really to be vulgar, of a lady named Miss Anita Ekberg, an American film star. I do not know whether your Lordships have seen this particular poster, but if that is the kind of entertainment, and if that is the kind of poster that is advertising that entertainment, which is causing us to spend our very short dollars, then I think we might do something better. If the noble Lord cannot persuade his right honourable friend the President of the Board of Trade to take remedial action by stopping dollars for such purchases, perhaps he might consult his immediate superior at the Home Office as to whether the Home Secretary has net the power, on grounds of public taste and public decency, to have these posters removed. I am delighted to be able to say, here and now, as I have in the past criticised the publicity methods of the British film industry, that I think their publicity on films in recent years has been beyond reproach. It is to their great credit that they consider us a country with at least some moral standards.
I come now to the Bill. The noble Lord, in his introduction, said (I noted his words) that it was an enabling measure. That is the first of my complaints. In this Bill there is far too much legislation by regulation. It is one of those exercises in modern legislation which is to be deplored. Nearly everything in this Bill is subject to regulations being made by the President of the Board of Trade. I might tell the noble Lord that on the Committee stage we shall attempt to write some of the more important matters into this Bill, instead of leaving them to be dealt 1342 with by regulations which will come before the House. Most of the regulations will be subject to the Affirmative Resolution procedure. That is an advance; it is generally the Negative Resolution procedure that is adopted. But even with the Affirmative Resolution procedure the noble Lord knows that there is no chance, either in your Lordships' House or in another place, of altering any one of these regulations—they have to be either accepted or rejected as they stand. I thought it only fair to tell the noble Lord that on the Committee stage we shall attempt to put down some Amendments which will remedy that unfortunate state of affairs.
In Part I of the Bill the principal matter is, of course, the levy, or what is known as the Production. Fund. I would ask your Lordships to bear in mind that in all my criticism of this Bill I. have this background—I was going to say before me, but at least to look forward to; namely, that in this Bill we are legislating for the next decade of one of the most important industries in this country. It is not only one of the main industries from the point of view of entertainment, it is one of the main industries from an employment angle; and it is one of the main industries from the point of view of showing, what is so important, the British way of life, as far over the world as we possibly can. Therefore it is in no light manner that I approach the task of criticism. But I noticed that the noble Lord put on his skates and skated away with that delightful ease with which I knew he would, when, having given us some figures, he said: "I cannot say much about it, of course, owing to considerations that are operating in the minds of the Treasury experts at the present time."
I should like to put a few figures to the noble Lord, and I hope that when he comes to reply he will give the answers to my questions. The simple arithmetic of the proposals in this Bill is this The present levy is producing £2½ million a year on a voluntary basis. The minimum sum aimed at under this Bill for the first year is £3¾ million. That means an increase of £l¼ million, which has to be found from the box office takings of the cinemas of this country. I should like the noble Lord to give us some more 1343 precise details of just how that figure of £3¾ million was arrived at—by what method of calculation? How did they arrive at that figure, in view of the fact that it has never been reached in the past? The noble Lord said that "everything in the garden is going to be quite nice" when this Bill comes into operation. I cannot really see anything in this Bill that is going to increase the earning capacity of the cinema industry. I can see only that it will take more money out of the pockets of those who go to cinemas.
The other figures are these: that the minimum in subsequent years is £2 million and the maximum is £5 million. I should like to know how those figures have been arrived at. Have the Board of Trade made any calculations upon this £5 million based upon the all-industry representations that were made to them some time ago—that the right amount of levy which would be any use to the producers of this country would be £5 million per annum? Therefore, is the £3¾ million enough? Even if the £3¾ million is enough, can it be found out of the existing prices paid at the box offices of the cinemas? I believe that 142 cinemas in this country have closed in the last twelve months. Can the box offices find £1¼: million out of the pockets of their present patrons?
The noble Lord has said that there will be exemptions or reductions in regard to the payment of levy. But the more the number who will contribute to the levy is reduced, the more it increases the amount the others have to find. Let us be realistic about this matter. Is not this proposal for a £3¾ million levy inextricably tied to an alleviation of entertainments duty? Do not let us burke the issue on this. Do not forget that the Chancellor of the Exchequer takes £30 million a year in entertainments duty through the box offices of the cinema industry in this country, which I understand is computed to be 30 per cent. of their total takings. One of the unfortunate things about this matter (though I have not the slightest doubt that the noble Lord, Lord Mancroft, said this in all good faith) is that while the Treasury are experts, after they have finished with the arithmetic of the petrol tax and its inflationary tendencies, in giving their attention to see if they can implement the 1344 undertaking given by the Chancellor of the Exchequer that something will be done about the entertainments duty in the cinemas in this country, if we pass this Bill it will become law before the Finance Bill comes into force. The result, of course, is that we shall have saddled the cinemas of this country with an extra levy payment and a total disbursement of £3¾ million without knowing whether or not the Chancellor of the Exchequer is going to do anything. Not even he would say that he would do this before the Budget has been announced.
The noble Lord must consider that fact. I should like him to tell us, when he replies, how these calculations have been made. Have they been made upon the assumption that there will be no alleviation of entertainments duty, because it seems to me that they must have been? If they have, how does he think that this £3¾ million can be found from the patrons and from the box offices without increasing the admission charges to the cinemas of this country? If they are increased shall we not then have arrived at that delightful stage of "diminishing returns." If you cannot, upon this basis, collect even your £3¾ million what are you going to do?
Now, my Lords, this is where I raise my second serious point. In Part Clause 8 gives the word "film" the interpretation adopted in the 1948 Act. Subsection (1) says:In this Part of this Act the expression 'film' means a cinematograph filmas defined in the 1948 Act, which is the subject of Part III in that Act. If that Act is to continue in force, since it also gives the definition of what constitutes a British film, it gives a definition of the participants of the proceeds of the levy. It is in this regard that I think the cinematograph industry as a whole has a very just complaint about this matter and against the Government. In spite of implied assurances, and in spite of the fact that Her Majesty's Government knew the film industry as a whole had some very serious representations to make regarding the definition of a British film, which governs who is to be the beneficiary of this levy, this matter has not been discussed with the film industry at all.
I am going to put this point to the noble Lord, Lord Mancroft, so that he 1345 can have it in his mind. The matter must be very closely argued, and I should have thought it would have been far better to argue it with experts of the Board of Trade and the film industry than to argue it across the Floor of a House of Parliament. The definition of a British film could mean that the American-financed and owned company which operates in this country is a participator in the levy. If there is one place where the British film industry is fighting—not an unavailing fight but a bitter fight—it is in the markets of the world and in the markets of South America and North America. Under the present definition, a film produced in this country, admittedly employing 80 per cent. British labour and British studio facilities, but American financed and owned, can have part of this Fund to cover its expenses, and can find an easy access into America, owing to its American connections, where a British film can hardly get in at all. That is one case which I think is due for consideration.
Take another case of the same type—let us call it the Anglo-American film. That is financed in this way and goes into the quota for export as a British film; but when it goes abroad, having displaced a 100 per cent. British film in the export quota, it comes out in all its glory as an American film with no British credit at all. That is another case.
We see in subsection (2) of Clause 3 the regulations which the Board of Trade may make under the clause. They candefine the class of British film in respect of which payments may be made.There is one class of film which I should think the cinema industry would vehemently protest should not participate in this levy, and that is the film made essentially for its chief competitor, television. When one looks at some of these really serious objections, I think the noble Lord will have to express regret that the cinematograph industry, in all its branches, was not consulted more than they have been about the provisions of the Bill.
I want now to come to this Film Fund Agency. What does it do? The noble Lord said that it will be drawn on an independent basis, but would he mind telling the House what are the precise 1346 qualifications? Is it just an academic body to do what a few accountants and a clerk could do? It has no powers. It is told precisely what to do by regulations made by the Board of Trade. Cannot the Board of Trade themselves do it? Then, of course, the Agency will cost something, and I suppose the cost will come out of the levy. The levy is to be collected by the Customs and Excise, and the Customs and Excise will charge for collecting the levy. At the present time, the levy is collected on a very small cost basis by the industry itself. Would the noble Lord think it highly improper, or not quite "playing the game," if, on the Committee stage, I put down an Amendment to say that, since the Customs and Excise are to make a charge for collecting the levy, the industry itself should make a charge for collecting the entertainments tax? It appears to me that that would be a fair thing to do. An industry collects, or the box offices of the exhibitors collect, entertainments tax, but as soon as the Customs and Excise have to collect something they are going to make a charge against this fund for so doing. What is the cost going to be? What is the inroad that is going to be made? Will it be so much per cent. on the money collected, or what will it be?
I come now to Part II of the Bill, which think is good. I believe we can say that the National Film Finance Corporation has done a remarkably good job of work. I am very glad that it is to continue. There are two questions I should like to ask about Part II. One relates to Clause 11, and concerns a matter which is rather dear to my heart. We are now going to have a statutory definition of how to make a profit. I hope that the noble Lord can enlarge upon this. We are now going to have it made a duty of the National Film Finance Corporation to pay its way. What has it been trying to do all these years? What was its object? I suppose that it has done its best to pay its way. But if it does not make a profit, what are you going to do? Is this just a pious hope, or is there anything behind it? Now a word on Clause 12. The noble Lord, Lord Mancroft, has said that the National Film Finance Corporation can sell itself to any person. The noble Lord will forgive me for saying so, but I am rather sceptical; I am very 1347 suspicious when a Government wants to sell taxpayers' assets. Our experience in that direction has not been very encouraging. Can the Corporation sell itself to an American concern, or what? Perhaps the noble Lord will tell us something about that.
I now come to Part III. Here, in my view, we have to do something quite serious. What are we doing by this Part of the Bill? We are perpetuating the Act of 1948 for ten years and—mark these words—in its present form. I think that the quota is good, but we have to see that the quota provisions are maintained. I have no grumble about the quota provisions relating to the home showing. I consider that thirty is a very fair quota, and I do not think I should wish for any alteration to be made in that connection. But I certainly do wish to see the definition of what is a British film lined up more to modern requirements. We shall try to see that no foreign film (I use the word "foreign" in no offensive sense) is carried to success in the markets of this world on the backs of the British producers. I believe that if the provisions of the Bill go through unchanged, then in the next ten years that may be something we shall regret. So we shall give this Bill a Second Reading, but, on the Committee stage, we shall attempt to make, by amendment, those alterations that I have outlined.
§ 4.44 p.m.
§ THE EARL OF ROSEBERY
My Lords, I have listened with the greatest interest to the speeches of the two noble Lords who have already spoken. Lord Mancroft, in a very able speech, told us of benefits that would be received by the film industry, but he skated over—or, at any rate, I could not have heard him if he did not—what would have been the great benefits to the cinema industry. I listened to the speech of the noble Lord, Lord Lucas of Chilworth, with great interest because of the accounts he gave of the films. I am ashamed to say that I never go to see a film, so the noble Lord educated me to a considerable extent. And may I add that I have no interest at all in cinemas. But I feel great apprehension about the policy of this Bill in its present form, for various reasons, and unless it is considerably amended I, for one, would feel strongly 1348 inclined to oppose it. I do not intend this evening to occupy much of your Lordships' time. There are several points on which I am in cordial agreement with Lord Lucas of Chilworth and he has expounded them much more ably than I could do; but there are one or two facts which I feel I should bring forward.
The first, and to my mind the most important, objection to this Bill is that it introduces a thoroughly unsound and unjust principle. It is absolutely wrong to force one trade by law to pay a levy to another, and this proposal is totally opposed to this country's ideas of justice and trading freedom. We have, I know, been told that the cinema industry has made a voluntary contribution so far; but we were never told that this voluntary contribution was almost exacted and that there was a quid pro quo from the Chancellor of the Exchequer before the cinema industry accepted the voluntary proposal. What is to happen now is that this voluntary proposal is to be made an Act of Parliament, and the word "voluntary" is taken out for the next ten years. You all know as well as I do that when a tax is put on for ten years it is put on for ever. I do not remember a tax which was put on for ten years ever being taken off. Indeed I cannot think, off hand, of a tax put on for two years that has been taken off. So, in my opinion, this is a tax that is going on for ever.
It is not for that reason, however, that I object to the tax. I object to it for the reason I have given—that it is making one trade pay a levy to another. It means that the Government are benefiting one trade at the financial expense of another. We are told that a very large sum, starting with £3,750,000 a year and ending with £5 million, is being taken for the benefit of the film producers. Those are two sums out of the blue and they are very considerable. Lord Lucas of Chilworth has already asked Lord Mancroft to explain this matter in his subsequent speech, and I hope that he will do so. But this money is being taken from the cinematograph exhibitors for the entire benefit of the film producers. The Government is, in fact, robbing Peter to pay Paul, and I do not think that anyone can controvert that statement, even if I have put it somewhat bluntly. I am not suggesting that there is not good 1349 cause why the film industry should have this money. As I just said, I never go to the films, but I understand from Lord Lucas of Chilworth that some of them are not very good, and no doubt £3 million to £5 million would benefit them very much indeed. But, if that is the case, if there is to be a statutory benefit to the films, it should be made by the Government and not by another trade.
At the present moment the Government take £30 million-odd from the cinemas. If they wish film production to benefit by £3 million to £4 million, surely They could get that from entertainments tax. They have chosen a most unfortunate moment for this increased levy, when the cinemas are going through a time of hard competition with television. I understand that approximately 200 cinemas have been closed this year. The noble Lord, Lord Mancroft, gave me the impression that he thought there was no harm in that; but I take it that the owners of those cinemas are not best pleased. I understand that more cinemas are being closed every week. They are not closed for fun, but because the owners cannot afford to go on. And on top of their hardships is placed this additional and very large burden by an Act of Parliament.
Moreover, so far as I can make out, the film producing industry have not to prove the need for this money. They do not have to prove that they need assistance, and, so far as I can see in the Bill, after they have received it, there is no necessity for them to give an account of how they have spent the money. I think that a Bill of such a controversial nature as this should be referred to a Select Committee after the Second Reading has been taken to-day. I think that it would be only fair to the public, to the cinema owners and to the film producers, to go into the Bill with greater thoroughness than would be done on an ordinary Committee stage.
§ 4.52 p.m.
§ LORD WESTWOOD
My Lords, it is with considerable diffidence that I arise to address your Lordships for the first time, but as this Bill is of intense importance to me, I would ask your Lordships to bear with me in a spirit of patience and forbearance. May I say at the outset 1350 that I have a personal interest in this Bill, as I have been associated with the cinematograph industry for over twenty-five years, and I should like to submit some practical points to my noble friend Lord Mancroft, not with a view of criticising but of helping, or trying to help, him. I thank him for his clear explanation of the Bill this afternoon and also the noble Lord, Lord Lucas of Chilworth, for the points which he mentioned, because they simplify my task enormously.
For the benefit of noble Lords who may not be fully conversant with the different branches of the cinema industry, may I say that the industry is operated on similar lines to those of any other industry. First, we have the producer, who is the manufacturer of the product; secondly, there is the film renter, who corresponds with the wholesaler; and thirdly, we have the cinema exhibitor, who is the retailer of the product. It is his job to show the finished product to the public. Like all forms of business or trade, each branch is fully dependent on the other two branches. The producer, when he completes his film, passes it over to the renter, who in turn hires it out to the exhibitor on a percentage basis. The exhibitor then shows the film to the public, with some varying degrees of success and in many cases, I am sorry to say, at some financial loss. That is the method by which the cinema industry carries on its trade, and this should be borne in mind during the passage of the Bill through your Lordships' House.
My noble friend Lord Mancroft touched on the Eady levy, which started in 1950, but there was one important point which he omitted to tell your Lordships—that was, that the British Film Production Fund has received the sum of £14,790,451 up to July 23, 1956. That is a very large sum of money, and it all came from the cinema exhibitors of this country. In addition, the cinema owners in Britain paid out over £33 million in entertainments duty last year—a duty, incidentally, which was shouldered by the industry in 1916, when a promise was given that it would be abolished at the end of the First World War. During the six years of this levy, the highest amount collected in any one year was £2,971,910, in the year ended August 2, 1952. This 1351 sum was a great deal less than the £3¾million which it is intended shall be collected under the Bill which is before your Lordships' House to-day.
The cinema exhibitors in this country realise and appreciate the need for a healthy British film production industry, and they will do all in their power to help and support such production, as has been amply proved by the vast amount of money which they have paid into the present British Film Production Fund during the past six years. The Government, too, realise that we must have a healthy and prosperous production. But, my Lords, we cannot have a healthy and prosperous production unless we have a healthy and prosperous exhibition, too. If there has to be a levy, the cinema exhibitors must be put into a position to pay it to help subsidise production, although I am not aware of any other trade or industry in the country where a levy or tax is imposed on the retailer in order to subsidise the manufacturer. In my opinion, the principle is bad. My noble friend Lord Mancroft mentioned the old saying, "There's no business like show business". The way things are going on it will be "There's no business" —full stop.
There is a solution, and only one solution, to the problem, and that is, a drastic slashing of the present heavy and crippling entertainments duty as it applies to cinemas. Unless some very substantial relief is given to cinemas by the Chancellor of the Exchequer in his next Budget, this industry, which brings so much happiness and enjoyment to so many of our people, is heading for disaster and destruction—it cannot survive. It is common knowledge that cinemas are closing down all over the country—25 closed down in 1954, 53 shut down in the year 1955, and there will be approximately between 250 and 300 closed during this year. There are hundreds of owners of small cinemas who are just hanging on to learn what their fate is going to be when the next Budget is presented. I mention all these dismal facts to your Lordships to enable you to appreciate the present position of the cinema owners who, by this Bill, are being asked to find £3¾ million a year, a figure which can be increased, if need be, to £5 million a year, within the next ten years. Practically every cinema in 1352 the country to-day needs money to be spent on it. Exhibitors have been faced with ever-increasing costs—increased wages, increased rates, higher charges for heating, lighting, and so on. Refurnishing of cinemas has been kept to the absolute minimum, due to the economic position and the high costs and to the fact that most of the exhibitors' bank accounts are in the red.
It is against this background that the Government has introduced the Cinematograph Films Bill which proposes that a statutory levy be imposed on exhibitors for the next ten years. I can say quite emphatically that unless the entertainments duty is drastically slashed, there will be very few cinemas open in the year 1967, when the period of this Bill ends. There are hundreds of little fellows who have sunk all their capital into their village or small town cinema, and although I am aware that exemption has been promised for them in this Bill, the prospects for them are far from bright.
I now turn to the Bill itself, to deal with some of the provisions in it. In Part I of the Bill it is stated that a British Film Fund Agency will be established; that the members of that Agency shall be appointed by the Board of Trade and shall be not less than three nor more than five in number, and the members so appointed shall have no financial or industrial interest in the cinema trade. This Agency will be dealing with a complex and involved industry, and I suggest to my noble friend that perhaps he should look into the possibility of increasing the number of Agency members from five to seven, and that the two additional members be cinema trade representatives. The Cinematograph Films Council, which advises the Board of Trade, has cinema representatives on it, and I think that the people who have to make this levy work should be allowed to have some representation in an advisory capacity. I am confident that the non-trade members of the Agency would welcome their presence and advice.
In Clause 2 of the Bill it is stated that provisions for exemption will be made. Can my noble friend say what the exemption will be? Will a cinema which is losing money be exempt from paying the levy? Will the present exemption of £150 gross per week be increased to help the small owner pay his way and make some 1353 profit, as he is entitled to do? Throughout the whole of Part I of this Bill there is a definite obligation for the exhibitors to pay whatever levy is imposed, but there is no obligation whatsoever on the producers to make the films. Surely there should be some obligation on the film makers to produce the films which the exhibitors need and which they have helped to subsidise. Have we any guarantee that producers will now increase production of good British pictures; or will they decrease output in order to obtain a larger return from each film they make? I suggest that some obligation should be inserted in the Bill to cover this point.
In Clause 3 it is stated that the regulationsmay define the classes of British films in respect of which payments may be made.I sincerely trust that financial help will not be given to a British film producer who makes films for the television media, and I would therefore ask that some form of wording be inserted whereby financial aid would be given only to films exclusively made for commercial cinemas. I am also presuming, I hope rightly, that there will be no discrimination whatsoever against films which are made in this country by American producers. The exhibitors in Britain are already far too short of product, and they want good pictures, no matter where they come from.
Clause 4, in Part I states that the Customs and Excise authorities will be given power to require exhibitors to supply information and keep records as may he required, and the Customs and Excise officials may enter an exhibitor's premises and call for the books. Failure to comply with this requirement can involve a fine not exceeding £100. My Lords, the exhibitors are not afraid of this clause, as most of the cinemas are visited regularly by Customs officers when checking entertainments duty records. But should not the books and records of the film producers, as well, be open for inspection? How can the Agency assess and verify the needs of the producers? How can the producers prove their need for a subsidy from the Agency? Why cannot the exhibitor who is losing money participate in the subsidy too? Regarding Part II of the Bill, the exhibitors welcome any provision which will assist 1354 film production in this country and will ensure an adequate supply of good British films.
I now come to Part III of the Bill, and by Clause 14 it is intended to extend the existing quota obligations of the exhibitors by which they must exhibit a percentage of British films each year. The clause extends the quota obligations for a period of ten years from the present Quota Act, which does not expire until 1958. This clause has come as a great surprise to the whole of the film industry, as the various sections were given to understand by the Board of Trade that they would have consultations with them and would consider the matter at matter date. The trade welcomed this assurance, and it was felt that it would afford an opportunity to submit suggestions to obviate many of the problems and anomalies now existing. The present Quota Act is most unsatisfactory, and the number of defaulters grows year by year. Out of some 4,500 cinemas, the defaults number approximately 1,000 per year. I hope that my noble friend will make representations to the President of the Board of Trade with a view to the holding of early consultations, as I am informed that all the information has been collated with this in view.
Finally, my Lords, in Clause 15 it is the exhibitor who is again in trouble. The licence fee is increased from two guineas to five guineas. Up to 1948 the fee was only one guinea per year, and it is now proposed that it should go up to five guineas, an increase of 400 per cent. In addition to the Board of Trade licence, however, the exhibitor must pay for his Sunday licence, his cinematograph licence, his music, singing and dancing licence, and his children's matinee licence; and if he opens his cinema on Good Friday and Christmas Day, as many exhibitors do, then another licence has to be obtained and paid for. It also seems to me to be unfair that the small cinema which seats 300 patrons pays the same licence fees as a theatre which can hold 3,000 patrons and upwards. The increase of three guineas per year may appear a small item to your Lordships, but unless the Government can give some help to all branches of the cinema industry, and not only the producers, then I am afraid that the number of applications for licences will diminish. 1355 year by year, as the neon signs of the cinemas are switched off, one by one, for the very last time.
§ 5.8 p.m.
§ LORD JESSEL
My Lords, it is my pleasant task to congratulate the noble Lord, Lord Westwood, on his maiden speech. He is obviously a master of the subject, and he has presented his views with clarity and force. The only thing I have against him is that he has completely ruined my own speech. Many noble Lords will remember his father, who was a popular Member of this House and who sat on the other side. I am sure the noble Lord, Lord Westwood, sitting on this side, if he comes here more often, will be an equally popular Member of the House.
Before turning to the Bill itself, may I say that I was glad to hear the noble Lord, Lord Lucas of Chilworth, make the comment that he thought things were rosy in the cinema industry now, because he is usually a prophet of gloom. It was a nice change. I must also take up the noble Lord on one point, because he is a stickler for accuracy. When referring to Miss Anita Ekberg, whose figure he so much admires, he said she was an American actress. I do not think she is. In the film in which I saw her the other day, she speaks with a strong Swedish accent, and I believe she is married to an Englishman.
§ LORD LUCAS OF CHILWORTH
The noble Lord is quite right technically. The lady was born in Sweden, but she is an American actress.
§ LORD JESSEL
That depends on what you mean by "American". To turn to the Bill, I think it is fair to say that this is a producers' Bill at the expense of the exhibitors. The noble Lord, Lord Westwood, has brought that out in all his arguments, although he admitted that he was interested chiefly from the exhibitors' point of view. I think it is arguable, looking at the industry as a whole, that the exhibitors, if they want films and in present circumstances films cannot be produced economically, should be called upon to pay something towards the production. The only question is: what is the figure they can reasonably be asked to contribute? They have their difficulties, and we have heard a great many of 1356 them. In regard to entertainments duty, I think a good way of looking at the burden of the duty is to take just one instance. A seat that sells for 2s. 9d. pays a duty of just over 1s.; therefore the exhibitor is getting only 1s. 9d., although the public pay 2s. 9d. As the noble Lord, Lord Lucas of Chilworth, said, the levy is producing approximately £2½ million a year. That was in the first year of the levy. Under this Bill £3¾ million has to be raised. Where is it coming from? My noble friend Lord Westwood talked about television. Television is a dead loss to the exhibitors, but it is a considerable help to the producers.
§ LORD LUCAS OF CHILWORTH
Would the noble Lord forgive me for one moment, because I know he likes accuracy as much as I do? Would he not agree with me that to say that the exhibitors pay this levy is wrong? It is the cinema-going public who pay it. Admittedly, if the exhibitors have to increase the price of the seats, that may have a deleterious effect upon their attendances. But it comes out of the pockets of those who go to the cinema, like the entertainments tax.
§ LORD JESSEL
I see the noble Lord's point, but my point is that, with cinemas closing at the rate they are, it is a little difficult for them to get it back. That is all I said.
May I return to the subject of the competition of television? Film corn-panics make films for television screens, so that is new business for the producers. They are also able to sell old films for television screens. One or two actors have told me that they have had great pleasure in seeing themselves once again in their old films, which they had thought were dead and buried for years.
§ LORD JESSEL
Maybe. Dealing with Part I of the Bill, again I must refer to my noble friend Lord Westwood. As he said, under this Bill the exhibitors are asked to make payments and supply information; yet the film producers, who have the benefit of this money, seem to be under no obligation actually to produce the films. Finally, turning to Part III, Clause 14, I may say that this came as a tremendous shock to the film 1357 trade, because they had no hint that this quota arrangement, without consultation, was going to be prolonged as it is for another ten years. The exhibitors feel that the existing quota procedure is working unsatisfactorily. For some time they have had suggestions ready for some amendment of the 1948 Act, yet they have not been consulted at all, and this Bill is suddenly presented, giving the impression that Her Majesty's Government are going to rush it through with indecent haste. The exhibitors would prefer a separate Bill to be presented later on this aspect, which deals solely with the problem of quota. But if Her Majesty's Government cannot see their way to fall in with this suggestion, it leaves the exhibitors no other alternative but to try to get their suggestions for alteration put right by Amendment on the Committee stage.
§ 5.15 p.m.
§ LORD STRABOLGI
My Lords, on behalf of my noble friends on this side of the House, I should like to add my congratulations to the noble Lord, Lord Westwood, for his most interesting maiden speech. He has spoken with a most profound knowledge of his subject. Indeed, as the noble Lord, Lord Jessel, has said, he has taken most of the points that subsequent speakers would have made. We on this side of the House hope very much that we shall have the pleasure of hearing the noble Lord on many future occasions.
Practically every noble Lord who has spoken has voiced his grave disquiet about this Bill. On the other hand, as the noble Lord, Lord Lucas of Chilworth, has said, we do not propose to oppose the Second Reading, although we shall try to amend it in Committee. I should therefore like to mention one or two matters on which I should be glad to hear the reply of the noble Lord, Lord Mancroft. First of all, in Clause 2 (2) (a) and (b) the regulations may provide for the exemption of any exhibitor or classes of exhibitor, and may make different provisions in relation to different exhibitors. I should like to ask the noble Lord whether this implies that an exhibitor who is not a producer may be exempt. I am thinking particularly of the independent exhibitor who does not himself produce films and yet is contributing to this levy and is not able to get the films which are produced 1358 because they are going into the big circuit houses owned by the main producers of films in this country. In actual fact, the effect is that the independent exhibitor is being made to contribute to making films which he will not have a chance to show. I shall be glad to know from the noble Lord whether such an exhibitor may be exempt under this clause.
Under Clause 4, the Customs and Excise have the right to enter premises and demand books for examination. As the noble Earl, Lord Rosebery, said, why are not similar powers taken vis-á-vis the producers? After all, they are benefiting from the money which is being given to them under this levy, and which is coming from the exhibitors. I cannot see any reason why the same powers should not be taken ?vis-á-vis the film producers. In the past, of course, there was a great deal of extravagance in the film industry. I do not think that is so to-day, although the noble Lord, Lord Mancroft, with his customary wit, referred to swimming baths and mink bathing dresses. Possibly the noble Lord did not intend his remarks to be taken seriously, and they were possibly an exaggeration. At any rate, I can see no reason why, in fairness, under this Bill the producers also should not be required to have their books available for examination. Perusing Part I of the Bill, I note there is no obligation on the producers to make the films that the exhibitors want and need—indeed, so far as I can see, there is no obligation on the producers to produce any films at all. There is also no indication whatsoever of the level of production that is contemplated.
Another point is the question of the figure of £3¾ million for the first year and a sum of from £2 million to £5 million in any subsequent year. On the other hand, there appears to be no provision in the Bill to reduce the levy to below £2 million if the existing production gap can be met from the exports, say, of British films to the United States, a point which the noble Lord, Lord Mancroft, mentioned. I shall be glad to hear from the noble Lord whether any provision can be made for this clause to be amended at the Committee stage so that the sum may be less than £2 million if, in some future year, a lesser sum is adequate. After all, we are passing legislation for a period of ten years. 1359 Another question I would ask is whether these exhibitors are being asked to contribute to making films that will be shown on television, and Independent Television too, in rivalry with their own cinema houses? What protection will there be in this Bill for exhibitors against this growing menace to their trade? There is also the question of the quota system and the extension for ten years, which the noble Lord, Lord Westwood, mentioned. I must say that the exhibitors feel that there has been a breach of faith on the part of the Board of Trade. We very much hope that some amendment will be made at the Committee stage.
I should also like to refer briefly to the question of entertainments tax. I admit that in 1954 the Chancellor of the Exchequer gave concessions amounting to £3½ million. On the other hand, as other noble Lords have pointed out, these concessions have been largely nullified by decreased attendances and rising overhead costs. As the noble Lord, Lord Lucas of Chilworth, has pointed out, cinema admissions have declined by, I think, 22 per cent. since 1946. During this year, nearly 150 cinemas have closed, and 10 per cent. of all cinemas are making trading losses. This voluntary levy produced in the past, I think, £2½ million a year. Under this Bill, this sum is now to be increased to £3¾ million. The old voluntary levy was heavy enough, but this vastly increased sum will be acceptable only if it is balanced by the Government by some very substantial—and I underline the word "very"—relief on entertainments tax. Otherwise, I feel sure that the figure will not be attained. It will defeat its own object as more and more cinemas will close.
The noble Lord, Lord Mancroft, said that the matter was being gone into by the Treasury. We on this side of the House are glad to hear that. I know that the noble Lord will not be able to anticipate the Budget—it always seems 1360 to be the case of either not being able to anticipate the Budget or of recovering from the Budget. But, as we are now at a period of not being able to anticipate the Budget, I hope that, when the Budget itself is presented, we shall not be disappointed in this respect. As your Lordships are no doubt aware, this entertainments tax is taking, I think, 32 per cent. of the gross takings and 50 per cent. of the net admission receipts. It totals nearly £33 million a year. I hope that in the next Budget there will be some substantial relief amounting to at least a half of this sum, and not just one or two million pounds. There are also one or two suggestions that I should like to make about the whole question of this levy collection.
THE EARL OF ONSLOW
My Lords, may I intervene? Of course, the noble Lord is fully entitled to continue speaking later, but I would point out to your Lordships' House that there is to be a Royal Commission at 5.30 p.m. As your Lordships know, it takes a minute or two to assemble, so I would suggest that the House do now adjourn the debate during pleasure for the Royal Commission at 5.30 p.m. and then carry on afterwards.
§ House adjourned during pleasure.
§ House resumed.