Lords Sitting of 14 February 1957

Preamble
The House met at three of the clock, The EARL OF DROGHEDA on the Woolsack.
Prayers

CINEMATOGRAPH FILMS BILL
3.5 p.m.
Amendments reported (according to Order).
Clause 2:
Levy on exhibitors
(3) The Board of Trade shall discharge the duty imposed on them by subsection (1) of this section in such manner as will secure—
(b) that the amount to be so yielded in respect of each such period after the first will, in their estimation, be neither less than two million pounds nor more than five million pounds.
LORD LUCAS OF CHILWORTH LORD LUCAS OF CHILWORTH moved, in subsection (3) (b), to leave out "five" and insert "seven" [million pounds]. The noble Lord said: My Lords, I have placed this Amendment on the Marshalled List not with any great hope that the noble Lord, Lord Mancroft, will accept it, but to illustrate to him the fluidity, if I may use that expression, of this particular problem. Noble Lords will remember that upon the Committee stage I sought to remove from the Bill the minimum and the maximum figure which is inserted in Clause 2 (3). Your Lordships will see that paragraph (a) of that subsection reads:
"that the amount to be yielded by way of the levy in respect of the first period in respect of which it is imposed will, in their estimation, he approximately three million seven hundred and fifty thousand pounds."
The next paragraph in the subsection states:
"that the amount to be so yielded in respect of each such period after the first will, in their estimation, be neither less than two million pounds nor more than five million pounds."
I argued that to have a limit either one way or the other was completely wrong, because the economic circumstances of those who have to pay the levy, the exhibitors, and the economic requirements of those who will receive the levy,
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the makers, will be outside the range of either £2 million or £5 million. I thought that my suggestion was eminently sensible. I thought that the Government's reply was non-sensible. But that is the ordinary way of argument, and I do not suppose that the noble Lord, Lord Mancroft, will agree with me.
But it has transpired, oven since we debated this matter in your Lordships' House, that the all-industry committee which was set up, charged with co-relating the information that will enable the industry to present its case to the Chancellor of the Exchequer for a remission of the excessive burden of entertainments tax, now says that the minimum requirement of the producing side of the industry will be really £7 million, not less. So I sock to put in here the figure of £7 million I want the noble Lord to be aware—if he expects any further Amendment of mine, in which economic circumstances are taken into account—that£2 million will not come into any sensible calculation; that£5 million will take the place of £2 million, and the maximum figure will be something which I cannot really estimate, and no one in the industry can estimate, at the present time. That is the reason why I am putting forward this Amendment at this stage of the Bill. I shall be very happy if the noble Lord will accept it. I shall not be disappointed if he does not, because I am certain that the battleground of this particular subject will move from your Lordships' House to the confines of the consultations which will take place between the film industry, the Chancellor of the Exchequer and the President of the Board of Trade in the not-too-distant future. I beg to move.
Amendment moved—
Page 3, line 4, leave out (" five") and insert ("seven").—(Lord Lucas of Chilworth.)
THE PARLIAMENTARY SECRETARY, MINISTRY OF DEFENCE (LORD MANCROFT): My Lords, like so many of the arguments which the noble Lord, Lord Lucas of Chilworth, has advanced with regard to this Bill, this argument is superficially attractive, and one which, at first blush, it is not easy to discountenance. There is, of course, no magic about these figures of£2 million at one end, £3¾ million in the middle and £5 million at the other end. I have not tried to justify them actuarially, nor

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would I try to argue against the noble Lord's £7 million as a mathematical or business forecast. But why stop at £7 million? I can make a good case for £9 million. And since, on the Report stage, we are not allowed to make more than one speech, I could leave my noble friend Lord Fairfax of Cameron to make an admirable speech for £11 million. But we have to draw the line somewhere. We have to fix some sort of a scale. I argued this point both at Second Reading stage and at the Committee stage.
LORD LUCAS OF CHILWORTH: The noble Lord is quite right in saying that we are not allowed to make more than one speech but that does not prevent my asking a question. So may I ask the noble Lord this? Suppose, in the discussions which are to ensue, the industry makes a cast-iron case for the £11 million which he has just mentioned. What happens then? Do the Board of Trade have to go to Parliament with an amending Bill, or do the Board of Trade have to say to the industry: "Well, we admit your case; it is absolutely cast-iron, but the Statute says five so you must go hungry away"
LORD MANCROFT: I think the answer is perfectly clear. In those circumstances, we should require an amending Bill. I think that must be so. I will try to answer the noble Lord's question further in a few moments, but let me now come back to the reasons why we are trying to stick to the £2 million and the £5 million.
The arguments which we advanced, on Second Reading and at the Committee stage were, broadly, that the producers need to know what the lower limit may be, in order that they can foresee reasonably stable conditions in which to work some time ahead; and exhibitors, who, after all, have to pay, want to be reassured about the total amount they may be expected to contribute. I think I expressed the hope—which I trust was not merely a pious one—that both sides would recognise the need of the other for having an upper and lower limit; and I may add that both these limits in our opinion appear to be reasonable. Is an upper limit of £5 million reasonable? I suppose the producers' arguments against it could be that such a limit fixed for
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the next ten years takes no account of a possible increase in the number of films produced, nor of a possible increase in costs; nor, I suppose, of a possible change in the value of money. The exhibitors—and possibly the Chancellor of the Exchequer would march with them on this point—would be bound to ask where the money was to come from, however desirable and justifiable it might be to provide it. The economic circumstances of the producers, the exhibitors, and indeed the country as a whole, have to be considered and balanced against each other; and, if we did not know it before, after the passage of this Bill we shall be well aware that that is extremely complicated.
I concede to the noble Lord that in five years' time a sum of £7 million, and possibly even £10 or £11 million, might be both justifiable and possible; but—and this is where we part completely I—do not think it is either of these things in present circumstances. I agree that we are legislating for the future, but we must not lose sight of the fact that £7 million for this fund represents an amount considerably more than the present earnings of producers from showings in the United Kingdom; we cannot get over that mathematical fact. If I were pro posing this Amendment, instead of the noble Lord, it would be hard for me to stand here and justify a fund and form of financial assistance of the order he proposes. The noble Lord asked what would happen if the Government's prognostications proved false, and the fund was not enough to be able to do the job Parliament wants it to do. All I can say is that, taking all the circumstances into account, the upper limit of £5 million at the moment seems to be reasonable and one which may command acceptance from the people who, after all, have to pay. But if in three or five years' time it should prove that the noble Lord is right, though I hope not, and that that amount is unreasonable, I am certain that the right thing to do would be to have it considered and debated afresh by both Houses of Parliament and amended, upwards or downwards, by fresh legislation.
We must face the fact that writing into the Bill a limit of £7 million would immediately give rise in the minds of those concerned to the thought: why stop at

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£7 million; why not £9 million, or £10 million, or £11 million? We have calculated a figure of £5 million as the right upper limit. We may be wrong, but I think that it is financially sound and desirable to limit the amount to that sum. I do not want to tell the noble Lord that his calculations are wrong, because he may be right and I may be wrong, but we have calculated this figure very carefully, though admittedly not on an actuarial basis, as the top limit to which producers may look with hope and exhibitors with fear, I think that it is the right figure to fix, though I do not say that one day we may not have to reconsider it; but the time is not now, in this Bill.
LORD ARCHIBALD: My Lords, as usual, the noble Lord, Lord Mancroft, has made a most persuasive defence of the Government proposal, but he will not be surprised that I do not find it entirely convincing. His argument that £5 million is calculated by the Board of Trade as being a reasonable upper limit would have been more convincing if he had given some idea of the factors which they took into account in their calculation. He has completely failed to refer to the point which my noble friend made and which, by the way, I made on Second Reading: that the all-industry tax committee, having got out voluminous figures, unanimously agreed that £5 million is the amount required at present, not the amount that may be required in a few years' time, when, possibly, more films are being made or when costs have gone up. Therefore, it is somewhat extraordinary to find £5 million being defended as a reasonable upper limit to put into a Bill which is to operate for a period of ten years.
I think the noble Lord will agree that if, in a few years' time, the producers find, and the Board of Trade consent, that the upper limit of £5 million is completely inadequate, it will be poor consolation to them to know that it can be changed by new legislation. We are all familiar with the plea "We are in complete sympathy with you. We agree that this should be done, but there just is not any Parliamentary time available for new legislation." And on that plea, the industry may drift along for years on what is acknowledged to be an inadequate basis. It is easy to ridicule £7 million as the
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figure and say, "Why not £9 million or £11 million?"—or £13 million or £15 million? That simply emphasises the logic of our earlier Amendment, which was rejected, to take out the limit altogether and leave it to the good sense of the Board of Trade, which we appear to trust more than the noble Lord who speaks for it.
LORD MANCROFT: Make it a straightforward subsidy, in fact.
LORD ARCHIBALD: It is no more a subsidy in tie one case than in the other. If there is no limit in the Bill and next year the Board of Trade fix the amount, not at £3¾million, but at £4 million, that £4 million is no more a subsidy if there is no limit than it is when there is a limit of million.
The £4 million will be paid under the same principle, under the same legislation, and it is really too bad for the noble Lord to suggest that merely taking away the upper limit changes the method of payment. It does not do anything of the kind. In any case, it is not a subsidy. The noble Lord knows as well as I do that this is merely a transfer of entertainments tax from the Treasury to the producers, using the exhibitors as the mechanism of transfer. It has been that since the Eady plan was first adopted, and that it is going to be that in future is indicated by the reference of the noble Lord to the fact that the Chancellor of the Exchequer, who marches with the exhibitors on this, would also have to look twice at it. I do not think there is any doubt that the upper limit of £5 million is completely unrealistic. An upper limit of £7 million would make it only a little more realistic, but it certainly would be better. It would be best to have no limit at all and leave it to the good sense of the Board of Trade, but if we are not to have that I support £7 million as being a more reasonable figure than £5 million to have in the Bill.
LORD LUCAS OF CHILWORTH: My Lords, still keeping within the rules of order of Report stage, I can reply to the noble Lord, Lord Mancroft. Unlike my noble friend, I find the noble Lord's argument absolutely convincing—but not against this Amendment. The noble -Lord used precisely the same argument against this Amendment as I used on Committee stage in support of my noble

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friend's Amendment to leave out the figure altogether. The figure might be £9 million or £11 million.
LORD ARCHIBALD: It might be £1 million.
LORD MANCROFT: Is the noble Lord leaving out of his calculations the fact that the producers may hit upon greater efficiency and greater production and bring down the figure?
LORD LUCAS OF CHILWORTH: No, certainly not. The £7 million is only the top limit. At the end of the period you could give the producers 2½d.; that would not affect the figure of £7 million which I seek to put in the Bill. The Bill would then say that "it shall not be more than £7 million." What the noble Lord and I should do is periodically to change sides, because the noble Lord can put up a better argument in support of my Amendments when he replies on one date, and I am certain that I could put up a better defence than he puts up on another date. However, we cannot work Parliamentary procedure like that. Nevertheless, my object has been achieved, because the noble Lord has admitted to the industry—and I hope the industry will read it with great interest—that the figures in this Bill are completely meaningless.
LORD MANCROFT: No.
LORD LUCAS OF CHILWORTH: Yes; the noble Lord has said that, if he will forgive my saying so. He has said that it is not £2 million, it is not £5 million, and it may be £11 million—and if the industry want £11 million and they make a case for that amount, there will, of course, have to be an amending Bill. Why put in any figure at all? However, so long as the industry now know that they need have no inhibitions at all when they discuss this matter with the right honourable gentlemen the Chancellor of the Exchequer and the President of the Board of Trade, and need not be guided by these figures but can talk about any figure so long as they can justify it with fact, figures and argument, that is all I want. I now have not the slightest objection to asking your Lordships' leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD LUCAS OF CHILWORTH LORD LUCAS OF CHILWORTH moved to add to subsection (3):
"and, in determining the amount referred to in paragraph (b) of this subsection, regard shall be paid to the prevailing economic circumstances of both exhibitors and makers of British films as well as the prevailing level of production of such films."
The noble Lord said: My Lords. I hope that what I have already said to your Lordships may be the basis upon which the noble Lord, Lord Mancroft, can accept this Amendment. Subsection (3) (b) of Clause 2 says:
"that the amount to be so yielded in respect of such period "—
that is, the period of one year for the next ten years—
"after the first will, in their estimation "—
that is, the estimation of the Board of Trade—
"be neither less than two million pounds nor more than five million pounds."
I then seek to add to that the words given in my Amendment. I attach great importance to this Amendment, and I hope to convince the noble Lord, Lord Man-croft, that it is right that Parliament should lay down to the Board of Trade, in this new departure—because this statutory levy is a completely new departure—the principles which shall be followed in arriving at the amount of the levy upon the exhibitors.
The argument that I should have advanced against my previous Amendment, if I had been the noble Lord, would have been this. The one thing we have got to guard against in the British film industry is the production of bad films. We have been through that phase in the British film industry. The level of production must be the level of good production. As the noble Lord, Lord Mancroft, said—and I pray in aid of my Amendment his own words—there are two vital factors. The first is the economic circumstances of those who have to find the money—that is, the exhibitors. I am not going over the old argument of the number of cinemas that are shut—179, I believe, last year—the number that are operating at a loss, in dire distress, clinging only to the slender hope—I think slender, though they may not think so slender—that they are going to have a substantial contribution from the Chancellor of the Exchequer in reduction of entertainments tax.
I have heard it argued, quite logically, that the minimum amount of relief of entertainments tax to make the exhibitor's business of opening his cinema a profitable proposition has to be in the region of £20 million to £21 million. One of the economic circumstances that the Board of Trade must consider is how much effect this levy is going to have on the price of admission, because I am told that the prices of admission to the cinemas of this country to-day are, by and large, at top level. As a matter of fact, they have gone over top dead centre, and it is now a case of diminishing returns; and any addition to the price of admission to the cinemas of this country will mean lower attendances, more closings, less entertainments tax and more cases of hardship in the industry. So that if the nearly £1 million that is going to be piled on the top of the expenses of this industry immediately this Bill comes into operation as an Act is not recouped out of entertainments tax, it will undoubtedly mean that cinema prices in this country, by and large, will have to go up. Neither the noble Lord nor the President of the Board of Trade has yet found a way of getting blood out of a stone or money out of a bankrupt cinema. That is one of the economic circumstances that must be taken into consideration at one end of the scale.
The economic circumstance to be taken into consideration at the other end of the scale is the amount of money that must be ploughed back into production because of the necessity to keep the British producer in existence. As I have said before, it is impossible for him to see any further profitable outlet in his home market in this country, because it represents only 15 per cent. of the total market of the world. Those are dire circumstances which those in the industry have battled against ever since it has been an industry and successive Governments have recognised, not, only by quota but by the inception of the Film Finance Corporation which we shall discuss upon another Amendment. So I feel it is vitally important, in view of the rapidly changing circumstances, that Parliament should, in this Bill, which sets up this statutory levy, lay down the broad principles upon which the amount to be levied shall be considered and the amount the producer will get at the beginning of every year. I hope, with the noble Lord, that not
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only will the exhibiting side of this industry have a more prosperous time, but that the production side will, too, and that this basis will prove to be of lasting good to both. I beg to move.
Amendment moved—
Page 3, line 4, at end insert the said words.—(Lord Lucas of Chilworth.)
3.30 p.m.
LORD MANCROFT: My Lords, I must confess to the noble Lord. Lord Lucas of Chilworth, that when I first saw his Amendment on the Order Paper a day or two ago I was not inclined to accept it. It struck me as being, to say the least, redundant. I thought it would occur to everybody that it would be only natural that the considerations which the noble Lord has put into his Amendment would, of course, be uppermost in the minds of those who were determining the amount. Now that I have had a moment or two to think it over, and having listened to his persuasive argument, I think there is a great deal more in it than at first occurred to me. We have spent a long time on this Bill, and there is one point which I have already made once or twice, but which I wish to make again. It does not matter how many levies or loans you have, or how many tax remissions—none of those will turn a bad film into a good film. By and large, good films make money and bad films lose money. I say, "by and large" advisedly, because we all know atrocious films that have coined money, and we all know films which we have admired immensely but which have been serious "flops" at the box office. But, by and large, it is the good film which makes money. It is the efficiently produced and skilfully made film that we are trying to encourage by this Bill, and if the insertion of these words will shine a spotlight on to that need, then I shall certainly be prepared to accept them. They may to a purist appear redundant, but if they will help the producer to realise that that is what is in Parliament's mind—to produce good and economic films in front of all the loans and tax remissions we are talking about —it will be all to the good. As I am certain that I and the noble Lord are at one over those sentiments, I shall be happy to accept his Amendment.
LORD LUCAS OF CHILWORTH: My Lords, I will not aid one word in case I spoil the most excellent case that I have put up—so excellent that it has convinced the noble Lord. My only words are going to be words of gratitude. I can tell him that what he has said will give great satisfaction to all sides of the industry.
On Question, Amendment agreed to.
LORD MANCROFT LORD MANCROFT moved, after subsection (5) to insert:
"(6) When the Board of Trade propose to make regulations under this section, they shall, before making the regulations, consult with the Cinematograph Films Council."
The noble Lord said: My Lords, this Amendment and Amendment No. 4 standing in my name are an attempt on the part of the Government to meet a point made by noble Lords opposite on previous stages of the Bill, and to honour an obligation which I gave during the Committee stage. It does not, I readily admit, go as far as noble Lords opposite would want. They wanted to make it a statutory obligation upon the Government to consult producers and exhibitors upon various matters raised in the Bill.
We argued—and I will not repeat the arguments—against them. We said that once you provide for statutory consultation with one professional body or another, you open wide the gates, and you could make a perfectly good case for statutory consultation with, I think it was, eleven accredited bodies which might well claim to have their views sought on this, that or the other point in the Bill. I think that would be wrong. It would cause interminable delay, and it would cause quarrels and arguments. I think it would place upon the Board of Trade, in certain circumstances, an undesirable burden, and therefore we rejected those Amendments. We thought it was perfectly right that there should be put into the Bill the obligation to consult the Cinematograph Films Council, which in any case the Board of Trade would have consulted, but the statutory consultation with which would do no harm and might well go into the Bill. So that is what we do by these two Amendments. We are making it obligatory for the Board of Trade to consult the Cinematograph Films Council upon
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all those points on which, during Committee stage, your Lordships decided consultation with this outside body was desirable, if not necessary.
Just so that I may try to put at rest the minds of noble Lords who feel that we have not gone far enough, I should like to remind your Lordships of the constitution of the Films Council in respect of which we are now placing a statutory obligation in this Bill. If anyone should think that all interests would not be properly represented and all views put to the Board of Trade, I think the composition of the Council, if it is not already familiar to your Lordships, will set your minds at rest—I will mention only one or two people whose names will be familiar to your Lordships. From the producers' side there is Mr. Arthur Rank from the distributors' side, Sir Arthur Jarratt and Mr. S. Eckman; on the exhibitors' side, Mr. Cecil Bernstein, Sir Alexander King and Sir Philip Warter. Among the trade union representatives we find Sir Tom O'Brien and Mr. G. H. Elvin, and among the independent members there is Mrs. Eirene White, M.P., all sitting under the chairmanship of the Master of Pembroke College, Cambridge.
I have picked out only a few names as those being more familiar to your Lordships. This is a highly representative and highly competent Council. It is perfectly competent to give the Board of Trade all the information they could possibly require, being fully in touch with all branches of the industry. If that Council is not capable of giving the Board of Trade the advice they want or, indeed, advice which they do not want and do not like—hostile advice, if need be—then I think it should be abolished. But I do not think it ought to be abolished. I think it is doing a first-class job of work. In inserting this statutory obligation into the Bill, I think we shall be enhancing its reputation, and that it will be an advantage to the Bill, an advantage to the Board of Trade and, indeed, an advantage to the Council. I hope that I have now persuaded noble Lords opposite that it would also be an advantage to the films industry as a whole. Therefore, I hope that your Lordships will agree to these two Amendments, the first of which I now move. I trust that I have persuaded noble Lords that there is no necessity to increase the number of people whom the

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Board of Trade should consult. I beg to move.
Amendment moved—
Page 3, line 11 at end insert the said subsection.—(Lord Mancroft.)
LORD ARCHIBALD: My Lords, I am sure that I am speaking for others besides myself when I say that naturally we welcome this Amendment, which certainly goes a certain way to meeting the arguments which we put forward during the Committee stage of the Bill. It is true that the Cinematograph Films Council is an excellent, well-qualified, and experienced body, and consultation with that Council can do nothing but good. There is a minor criticism perhaps: that the Films Council contains certain interests that need not be involved in the consultation. Bit that is, as I say, a minor point.
The noble Lord, Lord Mancroft, will remember, however, that during the Committee stage, when resisting the proposal that organisations of producers and exhibitors should be consulted, he said that it would be wrong to make the consultation with them a statutory obligation, but that they would in fact and in practice be consulted. His words on one occasion were [OFFICIAL REPORT, Vol. 201 (No. 27), col. 394]:
"I am sure that we shall consult everybody whom a reasonable person taking an objective view of the industry would say should be consulted."
If, therefore, the noble Lord can assure us that that position still stands, and. that without any statutory obligation the Board of Trade will, as a matter of practice, consult, shall I say, the obvious and relevant organisations, then from my point of view I shall be satisfied.
LORD MANCROFT: I willingly give the noble Lord that assurance.
LORD LUCAS OF CHILWORTH: My Lords, I should indeed be churlish if I raised any great objection to what the noble Lord wants to put into this Bill, but may I just say that one of my objections to the Films Council, which is not entirely taken out of my mind, is this. My experience of consultative bodies on purely trade matters of this description which contained independent members has been indeed sad, because, time without number, perhaps the two sides of the industry—in this case, the producers and the exhibitors—have not found it possible
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to agree and the independent members have made a decision upon a subject of which apparently they know nothing. However, perhaps it will not happen in this case. The names which the noble Lord read out were, to me, impressive. Still, with the heat and burden of the debate of yesterday buzzing around my head, the Chairman of the Films Council would have carried more weight with me if he had come from Oxford and not from Cambridge—but I suppose that is only a very biased personal view. I thank the noble Lord for going as far as he has. So far as I am concerned. I wish the Council the best of good fortune in their deliberations. May they serve the cinema industry in this capacity as well as they have served it in the capacity which they have enjoyed up to the present.
On Question, Amendment agreed to.
Clause 3 [Payments by Agency to makers of British films]:
3.42 p.m.
LORD MANCROFT: My Lords, this is exactly the same point as was contained in the previous Amendment, beg to move.
Amendment moved—
Page 3, line 38, at end insert—
("(3) When the Board of Trade propose to, make regulations under this section, they shall, before making the regulations, consult with the Cinematograph Films Council.")—(Lord Mancroft.)
On Question, Amendment agreed to.
Clause 4:
Power of Commissioners of Customs and Excise and their officers to obtain information.
4.—(1) The Commissioners of Customs and Excise shall have power, for the purpose of enabling them properly to perform their functions tinder this Part of this Act, by notice in writing served on an exhibitor, to require him—

(a) to furnish to such person as may be specified in the notice such returns or other informatics as may be so specified;

(b)to keep such records as may be so specified;

and any officer of theirs may at all reasonable hours enter any premises occupied for the purposes of his business by an exhibitor and may require him or any person employed by him in connection with his business to produce for examination by the officer such hooks or other documents relating to the exhibitor's business as the officer may specify.
(2) If any person on or to whom a notice or requisition is duly served or made under the foregoing subsection fails to comply will

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the notice or requisition, he shall, unless he proves that he had reasonable excuse for the failure, be guilty of an offence under this subsection and be liable, on summary conviction thereof, to a fine not exceeding one hundred pounds.
(3) If any person in purported compliance with the requirements of a notice under subsection (1) of this section to furnish returns or other information makes a statement or furnishes a document, which he knows to be false in a material particular or recklessly makes a statement, or furnishes a document, which is false in a material particular he shall be guilty of an offence and shall be liable, on summary conviction, to imprisonment for a term not exceeding three months or to a fine not exceeding one hundred pounds, or to both such imprisonment and such a fine.
(4) An offence under this section may be tried by a court having jurisdiction either in the county or place in which the offence was actually committed or in any county or place in which the alleged offender resides or carries on business.
(5) For the purposes of section three hundred and one of the Customs and Excise Act, 1952 (which penalises the delivery of false documents and the making of false statements to the Commissioners of Customs and Excise or their officers), the collection of the levy imposed by virtue of this Part of this Act shall be deemed not to be an assigned matter.
LORD LUCAS OF CHILWORTH LORD LUCAS OF CHILWORTH moved, in subsection (1), to leave out all words from "power" down to "Act" and to insert instead:
", so far only as it may be required to enable them to discharge their duty of collecting or recovering the levy from exhibitors,"
The noble Lord said: My Lords, noble Lords will, I think, remember the long and protracted argument we had on the Committee stage upon Clause 4 of this Bill, especially upon subsection (1) which I think on reflection I perhaps rather harshly criticised as a "snoopers' charter". It gives unlimited powers to any officer of the Commissioners of Customs and Excise to enter premises and to do anything according to the whim or the will that came into his head. After a long and protracted argument, the noble Lord admitted the justice of our complaint, which I thought was very gallant of him. Both he and I have tried to overcome it. I have tried to make it specific beyond any doubt whatsoever that the Customs and Excise shall have the power
"so far only as it may be required to enable them to discharge their duty of collecting or recovering the levy from exhibitors, by notice in writing served on an exhibitor, to require him"
and so on.
May I say at once that, after I had put this Amendment upon the Order Paper, the noble Lord, Lord Mancroft, to honour the undertaking he gave your Lordships to have another look at the matter, put down an Amendment to page 4, line 9. After the word "and" he wishes to insert ", for that purpose, any officer of theirs may" et cetera. I thought that that was a valuable addition to my Amendment. I thought that he had just covered the last possible loophole that I might have left uncovered. I want to ask the noble Lord whether he will accept my Amendment, and I will readily agree to his Amendment, so that we can go forward and say jointly: "We have really removed the last vestige of doubt that he and I have been trying to overcome."
I like my Amendment. I think it is eminently sensible to put in these words, because that is what their only function can possibly be—to collect or recover the levy. If that, and only that, is what we mean them to do, then I cannot see that there can be the slightest argument against putting them in the Bill. We have all had experience of the exuberance of Government inspectors and I think they should have shackles and halters put upon them, allowing them only the powers for carrying out the function it is intended that they shall carry out. I have one other Amendment to the clause later on, as the noble Lord will see, but I will leave comment upon that until then. I hope that the noble Lord may, in the course of his remarks, accept my Amendment in conjunction with his. Then we shall have made this clause really tight. I beg to move.
Amendment moved—
Page 4, line 2, leave out from ("power") to ("Act") in line 3 and insert the said new words.—(Lord Lucas of Chilworth.)
LORD MANCROFT: My Lords, the two Amendments on the Order Paper—the one which the noble Lord is now moving, and the one standing in my name—both seek to do the same thing. Your Lordships will remember that we were worried lest we were giving a charter to snoopers. There is certainly no reason at all why some officer of the Customs and Excise who is seeking to look at the books of a cinema proprietor to decide what is the proper sum for him to pay should, to use the simile of the noble Lord, Lord Lucas of Chilworth, have the

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right to examine the proprietor's marriage lines. I agree with him entirely. The only point where we parted at all was that he argued that one could not tell whether the ledger actually did contain the proprietor's marriage lines or whether it was only a little hit of book "cooking".
I agree with the noble Lord that we should not turn this Bill into a "snoopers' charter". We have both tried to meet this point. If I say that I think my Amendment is much better than his, I am not being boastful, because I did not draft mine—the draftsman did—whereas the noble Lord, Lord Lucas of Chilworth, had to wrestle with his own. I think he has dug a pit and fallen into it himself. 133 a pure piece of draftsmanship, he has perpetuated the fault that he wanted to get away from. The draftsman assures me that the words in my Amendment, which are "for that purpose", completely cover the point of the noble Lord. He also advises me that the words that the noble Lord has put down, by a matter of draftsmanship, I am sure accidentally, merely perpetuate the very thing that the noble Lord is trying to do away with.
LORD LUCAS OF CHILWORTH: Would the noble Lord tell me why?
LORD MANCROFT: One would merely substitute for my draft a lengthier form of words. The purpose of Clause 4 is to give the Commissioners of Customs and Excise certain powers. The Bill, as now drafted, suggests that these powers should be
"for the purpose of enabling them properly to perform their functions under this part of this Act."
The noble Lord's Amendment would give them power
"so far only as it may be required to enable them to discharge their duty of collecting or recovering the levy from exhibitors."
The draftsman tells me that that is merely saying the same thing but at slightly greater length. If the noble Lord looks at it again, the draftsman's alternative covers the point about which the noble Lord is worried. I am assured that that is so.
LORD LUCAS OF CHILWORTH: I do not agree with the draftsman at all.
LORD MANCROFT: Well, I have looked at it very carefully. What I would
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suggest to the noble Lord is that he should accept my Amendment and I will reason it out with him by writing it out at full length. Draftsmanship is not an easy task to undertake across the Floor of the House, and if, by any chance, he should prove right and I am proved wrong, we will certainly undertake to put the matter right at a later stage in the Bill in another place. I am advised—and I must take the advice I am given—that on this point the noble Lord is wrong and that the words put into my mouth are correct. Perhaps the noble Lord will be good enough to withdraw his Amendment and to accept mine, on condition that I will look at it again to make quite certain that we are right.
LORD ARCHIBALD: My Lords, I think it may be convenient if we took the two Amendments together, as has already been done. I should like to put to the noble Lord, Lord Mancroft, the suggestion that his Amendment is not quite so good as he thinks it is, and that in fact it may be in the wrong place. When we were discussing this subject we did not object, to empowering the officer to enter at all reasonable hours. What we did object to was that the officer should have power to require the production of books and documents, and so on, on too great a scale. I am not a lawyer and I may be corrected on this point. Unless the noble Lord can assure me that the words "for that purpose," which are to be put in after "and" in line 9, will also qualify "may" in line I would suggest to him—I hope that he will look at this carefully, as this is not a partisan suggestion but a purely practical one—that instead of putting in the words "for that purpose" after "and" in line 9, it would be better in fact to put them in line 11. The entry of the premises is not the point; the limitation "for that purpose" relates to his requiting the production of books.
LORD LUCAS OF CHILWORTH: My Lords. I am grateful to the noble Lord, Lord Mancroft, because I know that he is genuinely trying to meet us in this matter. But I must argue with his friend —his learned friend, I expect—the draftsman, because I have not dug any pit. All I want to do is this. Instead of the words
"The Commissioners of Customs and Excise shall have power, for the purpose of enabling them properly to perform their functions under this Part of this…"

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I want to put in the words
"The Commissioners of Customs and Excise shall have power, so far only as it may be required to enable them to discharge their duty of collecting or recovering a levy from exhibitors."
There is no difference in intent, as I quite agree with the noble Lord; but it is more specific. The only function of these inspectors will be to collect or recover the levy. But I am going to accept the noble Lord's offer, because I know that he is making a genuine attempt to meet the point. If, on the next stage of the Bill, he comes to your Lordships and says that the best advice open to Her Majesty's Government is that he is right and that I am wrong, I shall, of course, accept it, because, after all, they, and not I, have the responsibility.
I think there is something in what my noble friend says. What my noble friend is getting at is that we do not say that any officer for that purpose may not at all reasonable hours enter any premises. We do not mind his entering the premises; what we object to is the fact that the Commissioners of Customs and Excise are to
"have power, for the purpose of enabling them properly to perform their functions under this Part of this Act, by notice in writing served on an exhibitor, to require him"—
to do two things: to furnish returns and to keep records. The noble Lord, Lord Mancroft, wants to say "and for that purpose any officer may" do any one of these things. My noble friend suggests—and I think there is something in his suggestion—that the clause should read in this way:
"and for that purpose may require him or any person employed by him in connection with his business to produce for examination by the officer such books or other documents relating to the exhibitor's business as the officer may specify."
That is where I want the noble Lord to see the sense of my first Amendment. It is not for the purpose of the exhibitor's business. His business is to open a cinema, to show films, to sell tobacco, chocolates and ice-cream, and to do things like that. I say that it is nothing to do with the Customs and Excise officials how much profit he makes on ice-cream. But that is the purpose of his business. I say the only thing that the Customs and Excise officials have the right to do is to examine his books in relation to the amount of the levy he has
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to pay. He does not pay levy upon his ice-cream sales or his chocolate sales or on his revenue from advertising on the screen. Why should be allow his books to be examined for that purpose? That is the argument we had before and where we parted company.
If the noble Lord will look at this clause again, he will see—if I may say so with the greatest respect to his friend, the draftsman—that it is a badly drafted clause from beginning to end. What we are trying to do is to make it read as the noble Lord and, I have not the slightest doubt, the draftsman intend it to read. The first part of this clause reads in this way:
"The Commissioners of Customs and Excise shall have power, for the purpose of enabling them properly to perform their functions under this Part of this Act, by notice in writing served on an exhibitor to require him"—
to keep records and to furnish returns. Then it goes on to an entirely different subject—namely,
"and any officer of theirs may at all reasonable hours enter any premises occupied for the purposes of his business by an exhibitor and may require him or any person employed by him in connection with his business to produce for examination by the officer such books or other documents relating to the exhibitor's business as the officer may specify."
That is not the purpose of Part I of this Bill at all; it is not the purpose of this Bill at all, and from first to last it has nothing whatsoever to do with the Customs and Excise people. I hope I have made myself abundantly clear to the noble Lord. The only object is to examine the exhibitor's books in so far as they relate to the amount of levy which he pays upon what he has collected for selling his seats. Any other account in connection with his business has nothing to do with the Customs and Excise, and we object to giving to any of their inspectors the right to go into a man's place of business and to examine his books for that purpose. I am quite willing to rest on that argument, because we cannot re-draft this clause across the Floor of the House on Report stage. I am willing to leave myself with the noble Lord. After his distinguished career at the Bar I am certain that he could pull this clause to pieces in a court of law. I am not a barrister but I have done my best to tear it to pieces. I hope that now the noble Lord and his learned friend the draftsman will produce a better clause than this at the next stage of the Bill.

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If it will help the noble Lord, I do not mind accepting his Amendment and withdrawing mine if we may return to the matter between now and the next stage of the Bill. Perhaps the noble Lord would care to follow the same excellent practice as he has hitherto followed so that we might have consultations on the matter between now and the next stage to see whether we can agree, so that we do not have a lengthy argument across the Floor of the House on Third Reading. With your Lordships permission, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
LORD MANCROFT: My Lords, the late Lord Badeley gave us all some good advice when we came back after the war and started to learn the Rules of your Lordships' House. One piece that has always stuck in my mind was this: "Never hunt south of the Thames, and never try to redraft a Bill on your feet." I have always tried to carry out both pieces of that excellent advice. The noble Lord, Leal Lucas of Chiltworth, has for the last ten minutes been cheerfully and eloquently barking up the wrong tree. I have been following his argument as best I can, and I am wholly unconvinced; but we will certainly look at the point again. If the noble Lord accepts this Amendment I believe that it can do no harm and believe, although he does not agree, that it will meet his point. We will certainly look again and have consultations, if that will please him, because on this point we both want to do the same thing. I ask your Lordships to accept this Amendment on that condition. I beg to move.
Amendment moved—
Page 4, line 9, after ("and") insert (", for that purpose,").—(Lord Mancroft.)
On Question, Amendment agreed to.
LORD LUCAS OF CHILWORTH LORD LUCAS OF CHILWORTH moved, in subsection (1), after the last word "may" to insert "reasonably". The noble Lord said: My Lords, when the noble Lord is looking at this draft would he give careful consideration to this Amendment. If accepted, it would mean that subsection (1) would read that any officer of the Customs and Excise:
"may at all reasonable hours enter any premises occupied for the purposes of his business by an exhibitor and may require him or any person employed by him in connection with his business to produce for examination
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by the officer such books or other documents relating to the exhibitor's business as the officer may reasonably specify."
I will quote the best case that I can think of quickly, though I know the noble Lord may say that what I am doing is perhaps putting thousands of pounds into the pockets of the poor lawyers through argument over the interpretation of the word "reasonably."
Would it be reasonable for an inspector who is going through the books of this cinema proprietor to see that his returns are correct, and that his payment of levy is as much as it should be, to demand the production of the exhibitors bank pass-book? Would that be a reasonable request? I do not think it would be, yet under this Bill the officer could do so. He could ask the exhibitor to produce for examination:
"such books or other documents relating to the exhibitor's business as the officer may specify."
The officer can demand production of any document. He can demand to see the private arrangement of the exhibitors finance; he can demand to see who has loaned him money and on what terms. Is that reasonable? Does the noble Lord not think it would be a good idea to put in the word "reasonably"? Would the noble Lord consider that when he is considering the other points? I beg to move.
Amendment moved—
Page 4, line 14, after ("may") insert ("reasonably").—(Lord Lucas of Chilworth.)
LORD MANCROFT: We are now back again to the old problem, the "marriage lines." The trouble with the word "reasonably" is that though it is a very reasonable word no one knows what it means.
LORD LUCAS OF CHILWORTH: A reasonable man does.
LORD MANCROFT: But who is a reasonable man? We know that a reasonable man is defined in various Statutes (though, so far as I know, "a reasonable woman" never has been), and how are we going to see that what the noble Lord wants to do is carried into the Act? I have explained to the Committee several times that the difficulty is that the officer is not going to demand to look at the "marriage lines" and should be prevented from doing so, for they have no relevance whatever to

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the task he has in hand. But how does he know, unless he is able to pull down a ledger and examine it or to look at a bank account, whether or not it is a document which it is reasonable to look at? If the noble Lord thinks that the Bill as drafted gives an officer the right to pry into wholly irrelevant matters, we will certainly meet him, and try to do away with that; but we must not deny the officer the right, within reason, to look at a document to see whether or not it is relevant to the matter he is then investigating. It is there that the noble Lord and I possibly part company.
I was going to suggest that it was not necessary to accept this Amendment because my previous Amendment, Amendment No. 6, covered the point. I still think so. Since we have agreed between us to reject the Amendment of the noble Lord, Lord Lucas of Chilworth, and to accept my Amendment, on condition that we look at the whole point again, we will include in our investigation an examination into the point about inserting here the word "reasonably." We do not for a moment want to suggest that an officer should pry into a cinema proprietor's private affairs, but by putting in the word "reasonably" one rather suggests that he might otherwise act unreasonably, which I am quite sure is the last thing that any officer would dream of doing. I cannot accept this Amendment, but if the noble Lord will withdraw it we will certainly look at the point again in the light of the other Amendment we have discussed.
LORD LUCAS OF CHILWORTH: I am very grateful to the noble Lord. He has a simple faith in inspectors. I hold them in abhorrence.
LORD REA: Hear, hear!
LORD LUCAS OF CHILWORTH: I do not trust inspectors as the noble Lord, Lord Mancroft, does, because I believe that anybody who has the slightest qualification to be an inspector has an inquiring mind.
LORD MANCROFT: That is what he is there for.
LORD LUCAS OF CHILWORTH: And he is apt to overstep discretion. One thing I was always taught when I occupied a position similar to that which the
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noble Lord now occupies was that when a Government Department, "go to town" to put powers into a Bill, believe me! they "go to town." This clause as it now stands would appear to any intelligent person to give an inspector the right to enter premises and play plain, merry havoc, and do just precisely what he liked, under the guise that this was to enable those august gentlemen, the Commissioners of Customs and Excise, to carry out their duties under Part I of the Bill.
LORD MANCROFT: Why would he want to do that?
LORD LUCAS OF CHILWORTH: Can the noble Lord answer the question: Why do Government inspectors want to pry into a lot of things? If so, he will answer a question which thousands of people have asked for thousands of years. I have never yet had the answer, and I do not suppose that anybody will ever find it. It may be natural inquisitiveness and over-exuberance of enthusiasm for their trade or calling; but I wish at all times to curtail their activities for that purpose. The only reason why we have this clause in the Bill at all is to track down the rogue and the crook, not to annoy and persecute the honest man. It is the task of the noble Lord, Lord Man-croft, to draw the line between those two classes. Here he invites the inspector to say that everybody is a crook and a rogue—
LORD MANCROFT: Oh, no.
LORD LUCAS OF CHILWORTH:—until he has satisfied himself that they are not.
LORD MANCROFT: Oh, no.
LORD LUCAS OF CHILWORTH: Oh, yes. So let the noble Lord take it back and look at it again, and I feel certain that in the end we shall obey the dictum which the noble Lord has attributed to the late Lord Badeley: we will not try to do this on our feet; we will try to do it on some other occasion. I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
4.10 p.m.
LORD LUCAS OF CHILWORTH LORD LUCAS OF CHILWORTH moved to leave out Clause 4. The noble Lord said: My Lords, I have put down this Amendment for the purpose of getting an explanation from the noble Lord,

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Lord Mancroft. Naturally, I do not wish to leave out the clause, but on the Report stage the only way I can interrogate the noble Lord on a point which I wish to have cleared up, is by putting down an Amendment. Your Lordships will remember the excellent dictum expressed by the noble Lord, Lord Fairfax of Cameron, during the Committee stage of the Bill, when he laid it down on behalf of Her Majesty's Government—quite wisely, I thought—that what is sauce for the goose is sauce for the gander. So I put in a clause, precisely similar to Clause 4, which gave the Agency the same powers of investigation in order to see that the producer who wished to be not so honest as Lord Mancroft wished him to be with his returns for claiming on the levy did, in fact, put in returns which were as accurate and as honest as those of the exhibitor were required to be under this clause.
The noble Lord, who was in his most convincing form, quite convinced me that my Amendment was not necessary. After all, he said, unless the Agency were satisfied beyond any argument or doubt that a man did deserve the money, he would not get it. I bought at the time that that was reasonable. But, like all those very persuasive arguments coming from those who have practised for long at the Bar, this did not seem so persuasive on later study. When I came to study, in Hansard, what the noble Lord said, his agreements did not convince me as much as they had formerly done. I wonder whether he will now tell me what would happen in this sort of case. A producer submits his returns and his figures, and he makes a claim to have a share of the levy as a film of his has passed its registration test and grossed the requisite amount. He is then paid money from the levy. But after he has been paid, some doubt arises as to the accuracy of information which he gave—perhaps the inaccuracy was inadvertent; or it may have been due to the fact that produce's, like exhibitors, are only human. It may even have been due to "malice aforethought"—in other words, the producer was a crook. But he has got the money. How do the Agency recover it?
The Customs and Excise have a power of recovery. They can sue in the courts to recover money as a civil debt. But
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the Agency cannot get money back. What do they do? Does not the noble Lord think that they should have power to recover money that has been improperly obtained? If the noble Lord will satisfy me that under the terms of the Bill they have the power to do what the Customs and Excise have power to do, I shall be perfectly satisfied. Frankly, however, I cannot find it, and that is the reason why I have put down this Amendment. Does not the noble Lord agree that there should be provided in this Bill power to sue for and recover levy money improperly procured or obtained from the Fund in precisely the same way as the Customs and Excise can sue for the recovery of a civil debt which has not been paid? I beg to move.
Amendment moved—
Leave out Clause 4.—(Lord Lucas of Chilworth.)
LORD MANCROFT: My Lords, the noble Lord, Lord Lucas of Chilworth, has now raised quite a different point from the one which he argued at the Committee stage. His original point, which caused him to observe that what is sauce for the goose is sauce for the gander, was over a comparison between the obligation upon the cinema proprietor to produce books and figures and the obligation upon the producer to do the same. The point I was making, in answering the noble Lord on the Committee stage, was this. The cinema proprietor, somewhat naturally, does not want to make a payment unless he has to. He does not want to pay a penny more than he is statutorily bound to do. So a dishonest cinema proprietor—presumably there may be dishonest cinema proprietors, though I very much doubt it—tries to "cook" the books. This Bill gives the officer the right to look at the relevant books. Exactly how relevant they are is the point we have been arguing.
LORD LUCAS OF CHILWORTH: If the noble Lord will look at Clause 4, he will see that it gives the officer the right not only to examine the books but also to take proceedings. Subsection (4) states:
"An offence under this section may be tried by a court having jurisdiction either in the county or place in which the offence was actually committed…"
and so on. The purpose of this subsection is to enable the Commissioners

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of Customs and Excise to sue. They can do anything. I think the noble Lord will appreciate that it is a bit wide.
LORD MANCROFT: I appreciate what are the powers that are laid down in that clause. But let us compare them with the obligations of the producer. He wants his share of the fund to repay him upon the success (we hope), or otherwise, of a film which has been the rounds and has shown results at the box offices. He goes to the Agency and he says: "It appears that my rights under the Bill are to have £x." Before that money is paid out, the Agency are clearly going to satisfy themselves that this is as the producer says; otherwise they will not pay out the money. Therefore, there is no need, I maintain, to put into the Bill a right for the Agency to demand any particular ledger, for fear it contains the producer's marriage lines, because, clearly, they will not pay the money unless they are satisfied. Putting it bluntly: "No ledger, no 'lolly'."
The noble Lord says: supposing a dishonest producer cooks his books, how are the Agency going to put matters right? I should have thought that a criminal action could be brought on the grounds of fraud, if it were a case of deliberate "cooking" of the books. Or a criminal action might be brought for obtaining money by false pretences. I should not like, at the moment, to give the noble Lord a definite ruling upon that. If the noble Lord will look at Clause 3 (2) (e), he will see that it states that Regulations under the section may:
"Provide for the making of provisional payments and the recovery of overpayments."
Does that not cover innocent overpayments—the case of a wrong claim that was perfectly innocent? Surely the ordinary criminal law will cover a criminally wrong claim. I should have thought that these two cover the noble Lord's points completely.
LORD LUCAS OF CHILWORTH: My Lords, I can only address your Lordships again with your Lordships' permission, which I hope you will grant. I do not think that what the noble Lord has said does cover my points. I do not think it meets the points at all. The case is not one of overpayment; it is a case of a wrongful act. If your Lordships will look
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at Clause 4 (3), you will see the penalty on the exhibitor:
"If any person in purported compliance with the requirements of a notice under subsection (1) of this section to furnish returns or other information make a statement, or furnishes a document, which he knows to be false in a material particular or recklessly makes a statement, or furnishes a document, which is false in a material particular he shall be guilty of an offence and shall be liable, on summary conviction, to imprisonment for a term not exceeding three months or to a fine not exceeding one hundred pounds, or to both such imprisonment and such a fine."
The exhibitor may go to prison. The qualification for receiving a Levy payment under this Bill is the same as the qualification for registration as a British film, as laid down in the Cinematograph Films Act, 1948. It is extremely complicated: there are nice calculations of employment ratios; salaries of two stars of foreign nationality may be deducted from the cost of production, and so on. These were the qualifications for the purposes of the film quota, which were transferred to registration as a British film under the voluntary levy. Now we are making them a legal obligation, punishable with fines and imprisonment.
If this Levy is worthwhile, there are heaps of opportunities for false statements to be made and for Levy grants to be obtained by those not entitled to them. It is not a case of overpayment, or of a mistake. And as such grants may run into millions of pounds, I should have thought the noble Lord would be willing to consider that the Board of Trade owe it to the exhibitors, who have to find this money, to safeguard them, so far as possible, by seeing that the money does not find its way into the pockets of those not entitled to it. If the noble Lord says that this already is covered under the law as it stands outside the Bill, I think I might be satisfied.
LORD MANCROFT: That must be so if a statement is fraudulent.
LORD LUCAS OF CHILWORTH: Sauce for the goose and sauce for the gander! Why have in this Bill the penalties for a fraudulent statement by an exhibitor and not the penalties for a fraudulent statement by a producer?
LORD MANCROFT: They are two entirely different offences. They are technically different.
LORD LUCAS OF
CHILWORTH: I see; it is not so fraudulent for a producer to make a false statement to obtain Levy grant as it is for an exhibitor to make a false statement to prevent his having to pay it.
LORD MANCROFT: it is not a difference in morals; they are different in law.
LORD LUCAS OF CHILWORTH: I know something about morals, but I confess that I know very little about the law. Perhaps the noble Lord will consider what I have said before the next stage so that I can have his answer. With your Lordships' permission, and with my thanks far allowing me to speak for a second time to put my case, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 10:
Extension of time within which, and purposes for which, loans may be made by Corporation
10.—(1) For paragraph (b) of subsection (1) of section one of the Cinematograph Film Production (Special Loans) Act, 1949 (which. as amended by the Cinematograph Film Production (Special Leans) Act, 1954, empowers the National Film Finance Corporation to make, during the eight years beginning with the passing of the first-mentioned Act, loans to be employed in financing the production or distribution of cinematograph films to persons who in the judgment of the Corporation, while having reasonable expectations of being able to arrange for the production or distribution of cinematograph films on a commercially successful basis, are not for the time being in a position otherwise to obtain adequate financial facilities for the purpose on reasonable terms from an appropriate source) there shall be substituted the following paragraph:—
"(b) to make, during the period of eighteen years beginning with the passing of this Act, loans to be employed in financing the production or distribution of cinematograph films to persons who, in the judgment of the Corporation, have reasonable expectations of being able to arrange for the production or distribution of cinematograph films on a commercially successful basis ".
4.25 p.m.
LORD ARCHIBALD LORD ARCHIBALD moved to leave out subsection (1) and to insert:
"(1) In paragraph (b) of subsection (I) of section one of the Cinematograph Film Production (Special Loans) Act, 1949, as amended by the Cinematograph Film Production (Special Loans) Act, 1954, for the words 'eight years' there shall be substituted the words eighteen years'."
The noble Lord said: My Lords, in moving this Amendment I find myself in considerable difficulty. We have dealt with this clause both on Second Reading and on Committee stage and we have not yet heard any statement of the Government's case. It should be understood that the Government are really making the amendment in this case and I am moving the status quo: Our positions are reversed on this matter. Under the Act which set up the Film Finance Corporation it was clearly laid down that the Corporation should lend money to film producers who could not get their finance through normal sources. The Government are proposing to change that by making an amendment to the present position. They are going to give the Corporation power to lend money to any film producer, whether he has difficulty in getting his finance from other sources or not, and that is such a radical change that one would have expected that some very substantial and fundamental argument would have been put forward.
We might have been told, for example, in what respect the Act as it stood is working badly, but we have not been told that the Act is working badly. Therefore, we are bound to look round and try to imagine why the Government want to make this radical change. Is it that during the current financial year, which ends, I think, in April, the Film Finance Corporation, for the first time, is finding difficulty in putting its funds to a proper use? Is it not having a sufficient call on its resources to make its operation worth while? If that is the argument, and it means that there are not now so many producers requiring help from the Film Finance Corporation because they now find their finances elsewhere, that may be a reason for limiting the activities of the Corporation, but it would hardly be an argument for saying that in future the Corporation should lend to all and sundry.
The difficulty is that one has to try to imagine why this change is being made. Therefore, we have to look at Clause 10 along with Clauses 11 and 12, which we have not really discussed on any previous occasion. If we take them all together, it is possible that a pattern begins to emerge. I am putting this hypothetical case in the hope that it can be demolished and replaced by the Government's real

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case, which we have not heard yet. It has been suggested that what is behind this wholesale amendment of the present Cinematograph Loans Act is an intention that in future the Corporation should lend only to producers from whom it is sure of recovery of its loans. That does not mean that it should lend only on films which are sure to be profitable, because there is no one in the world who can say that; no one in Hollywood, London or elsewhere can prophesy which films are going to be profitable.
But it is possible to select the producing units of companies to which loans are made and to do so on the basis that it will be only companies which will be able to repay the loans, whether the films are profitable or not. In other words, it is loans to companies rather than loans on films. If the Corporation in the future is to operate on that basis—and I hope it will not—if it continues to take a share of the profits, and if there continue to be a number of profitable films, then the Corporation will become a most useful profit-making organisation and it will certainly be able to fulfil the obligations of Clause 11 and not default on its borrowings from the Board of Trade. It could then become, in fact, such a sort of profitable investment trust that it might be possible to sell its assets advantageously, as envisaged in a subsequent clause.
If that is the suggestion—and, as I say, I hope it is not—it would have nothing whatever to do with the functions for which the National Film Finance Corporation was originally set up. I cannot imaging that the Government propose such a radical alteration, although, in a situation where they have not put their reasons for making this drastic alteration in the law, they must not grumble if people seek interpretations which can be put on the amendments which they have put forward. So far, as I say, no justification has been given for any change. We have not been told that the old system has worked badly; it has not been argued that the new system would work better. Therefore, in the absence of any justification for the change, my Amendment would provide that the National Film Finance Corporation would carry on in the future as it has done in the past, with the same powers and the same limitations, but for an additional ten years. I hope that
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I have got that point technically correct on this occasion. As I have said, I am moving the Amendment mainly in the hope of extracting from the Government on this occasion some justification for the radical, fundamental amendment which they have put forward. I beg to move.
Amendment moved—
Page 7, line 6, leave out subsection (1) and insert the said new subsection.—(Lord Archibald.)
LORD FAIRFAX OF CAMERON: My Lords, the noble Lord, Lord Archibald, in his remarks conjured up an amusing picture of the Government's possible intention to fatten up the Corporation for market. I can assure him that that is certainly not their intention. I hope to give the noble Lord adequate reasons for this proposed change in the law, and I hope also that I may clear up some of the points he has raised. Clauses 10 and 11 are linked together in this matter and must be looked at together, although this Amendment and the Amendment on the next clause should be taken separately. The effect of this Amendment is to extend the lending powers of the National Film Finance Corporation for another ten years, while retaining the limitation in the existing legislation on their use. Existing legislation places on the Corporation the following obligation:
"Loans to be employed in financing the making and distribution of cinematograph films to persons who, in the judgment of the Corporation, while having reasonable expectations of being able to arrange for the production or distribution of a cinematograph film on a commercially successful basis…".
So far as we go there, the proposed new Bill and the Amendment would be the same; but from here on the noble Lord wants included what is the present legislation:
"…are not for the time being in a position otherwise to obtain adequate financial facilities for the purpose on reasonable terms from an appropriate source."
The Corporation, on the face of the present legislation, has therefore the somewhat anomalous obligation to lend only to those who cannot obtain money elsewhere—and I quote the conditions—
"on reasonable terms from an appropriate source",
—sit may not be entirely clear what that always means—and yet, at the same time,

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to limit themselves to films which are likely to be successful; in other words, films which might be expected to be credit-worthy.
The new provision is more straightforward, in that it puts only one limitation on the Corporation—namely, that the films financed are likely to be commercially successful. There is nothing in this Amendment which is going fundamentally to alter the character of the National Film Finance Corporation. In that connection, I would, in passing, refer to a remark of the noble Lord, Lord Archibald, on the Committee stage, when he said that the National Film Finance Corporation was introduced for a specific purpose—namely, to help those who could not get help elsewhere. I think he was, at the same time, indicating that he thought that might not be the case under the proposed legislation. The point on this—and it is rather a technical one—is that the banks do not finance the end or risk money for film production, but only the front money. In other words, they discount the distributor's guarantee for up to about 70 per cent. of the cost of the film. They are certainly not likely to start changing that now. Therefore, the Corporation will continue to do what it was introduced to do—namely, to find the risk money for producers. I want to make that quite clear. It may well be a long time before the film industry can do without the services of a special investment body such as the National Film Finance Corporation.
The revised clause which the Government have put forward gives just a little more flexibility to the Corporation and, while it certainly enables them to comply more easily with the terms of the legislation, it should also enable them in some cases to make a little more money. In connection with this point, I should like to say that the Government feel that they could not lay the duty on the Corporation which is contained in Clause 11, to pay their way, unless in Clause 10 we removed the restriction which prevents them from accepting profitable business if it offers itself. No one other than the Corporation is going to find the risk money for film production, and it will remain their first duty to supply this need of the production industry. But we need not, and should not, ask the Corporation
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to pay their way and yet, at the same time, turn away good business.
It may even be that, because of this fact, that we hope the Corporation will be financially solvent, they could sometimes take risks which they would not otherwise take. The National Film Finance Corporation have tried for the past eight years to steer a sensible middle course between their obligations (which are fairly numerous) to confine their loans to films likely to be commercially successful, to maintain a measure of British film production and to encourage a high level of quality and the emergence of independent producers. There is no reason for thinking that the present legislation will materially change this aim; indeed, it may well help in its achievement.
Finally, the relations between the Corporation and the Board of Trade have always been close and cordial. It is true that in the last resort there is a power of direction in the hand of the Board of Trade, but that this power will need to be used is almost unthinkable. The Corporation have built up a sound tradition, and if they think fit they will certainly be the first to consult the Government Department concerned. I am sure the noble Lord will appreciate that. I hope that those fairly full reasons for this change will be of some help to the noble Lord in understanding why we are doing it.
LORD LUCAS OF CHILWORTH: My Lords, would the noble Lord forgive me if I say that I have never heard such a weak argument in my life? I do not attribute it to him, although he had to say it. Will the noble Lord tell me this? Do the Film Finance Corporation require to have their whole status altered? Has this been done at their request?
LORD FAIRFAX OF CAMERON: Their status is not being altered.
LORD LUCAS OF CHILWORTH: Forgive me, I shall prove to your Lordships that it is. I conclude that the Film Finance Corporation have not made the request. If the noble Lord wants the Corporation to compete with the banks of the country, why does he not say so?
LORD FAIRFAX OF CAMERON: They are not competing with the banks.
LORD LUCAS OF CHILWORTH: Forgive me; they are competing with the banks. They are competing with the ordinary channels of finance, because what you are asking them to do, both in this clause and the next, is to conduct their business so that they shall make a profit, and they have not the obligation put upon them, which they had when the original Film Finance Corporation came into being, to help the industry produce films.
If, when I stood at that Dispatch Box, and introduced the Cinematograph Film Production (Special Loans) Act, 1949, I had made the speech which the noble Lord has just made on this Bill, I should have been torn limb from limb. I can just imagine the rhetorical heights to which the noble Earl, Lord Swinton, who in those days was leading for the Opposition on film matter's, would have soared: here was public money on risk competing with those pillars of private enterprise. What a shocking thing! Now the noble Lord comes here and says that, in spite of the fact that there is a clause in this Bill to tell the Film Finance Corporation that they can sell themselves at any time, this is not what he called a "fattening-up for the market" process.
LORD FAIRFAX OF CAMERON: I never called it that.
LORD LUCAS OF CHILWORTH: No I said that the noble Lord said my noble friend was accusing the Government of "fattening-up" the Film Finance Corporation for market. Those are the very words. I wrote them down as the noble Lord said them.
What are the Government doing with the Parcels Service of the British Transport Commission, and the meat company of the British Transport Commission? The Minister of Transport is at least honest. He says. "Of course, what I want these two companies to do now is to make good profits, and I shall get a better price for them when I want to sell them." Honesty sometimes comes out in some peculiar places. Let me read to the noble Lord, Lord Fairfax of Cameron, what Lord Swinton actually said when the Special Loans Act was before the House —I quote from Volume 160, column 432, of the OFFICIAL REPORT of February 1, 1949. These are the noble Earl's words:
"Here I come to what I consider is the crux of the matter. Even now it seems to me that
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the Government do not seem able to make up their minds whether the Corporation is to insist upon a safe security or whether it is to take a sporting risk. If it is going to rest upon security—' Safety first'—I think it will do very little business. If the Corporation is going to lend only where its risk is effectively underwritten by the distributors, then I do not think the distributors will take much risk, and I do not think the Bill will do the producers much good. If we are going into this business at all—and in the peculiar circumstances which are apparent from our discussion I think we ought to go into this business—then we have to take a risk. After all, as the noble Lord has frankly reminded us"—
I think that refers to myself, as moving the Second Reading—
"the Government take a great deal of money out of this business already; £38 million is going out of the industry, not to the producer but in entertainments tax. It is not unreasonable that a little of that money should be ventured back in a risk."
That was the real purpose of this Bill. That was why it was written into the Cinematograph Film Production (Special Loans) Act, 1949, that the whole object of the Film Finance Corporation was to find money for that class of independent producer who could not find money from the ordinary channels of finance.
I remember saying at that time that if the Government lost the whole £5 million they had put into this Film Finance Corporation and kept the industry alive, like the million cow, to produce over £30 million a year in entertainments tax. I thought it would be a jolly good business bargain—and I still think so. And they did lose quite a lot of it. If the day has arrived when you do not want special aid to the industry, why not say so? Has the day arrived when the British producer does not want and has no need to go to the Film Finance Corporation to borrow money on some peculiar methods —the Film Finance Corporation very likely take a share of the profits and offer a slightly lower interest? The noble Lord, Lord Fairfax of Cameron, must not shake his head at me and say that they do not. They do. Gracious me! I was brought up on this. The Film Finance Corporation had various arrangements with producers. They had loaned money for as low as 4½ per cent. Sometimes the grumble has been that they have taken too much of the profits where the collateral and security was not sufficient; where no bank or any other money-lending house would look at them, or the distributors

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would not take them. That is why there have been films made.
The Government are now saying, "Of course that is not necessary now"—the noble Lord will read it in Clause 10. They have taken out the words
"…to make during the eight years"—
this is now eighteen years—
"beginning with the passing of the first-mentioned Act, loans to be employed in financing the production or distribution of cinematograph films to persons who, in the judgment of the Corporation, while having reasonable expectations of being able to arrange for the production or distribution of cinematograph films on a commercially successful basis …"
and are substituting the new wording in subsection (1) (b). I should take that as a directive that the Corporation are not to lend money unless those conditions are fulfilled. What else can I do? When you come then to the next clause, which, as the noble Lord quite rightly says, has to be read in conjunction with this, it says:
"It shall be the duty of the National Film Finance Corporation to exercise and perform their functions in such manner as appears to them best calculated to secure the avoidance of default's being made in the discharge, as regards any loan made to them after the passing of this Act, of their obligations with respect to repayment of the principal of the loan and the payment of interest on any sum for the time being outstanding in respect of it."
I should take that as a directive that I have to make sure that I have guarantors and security; that I must eliminate, so far as I possibly can, every chance of risk.
If you say that, then the reason for bringing the Film Finance Corporation into existence has gone. Why not let the people go to the "angels"—the banks and the finance houses—to do the finance in the ordinary way of business? If the noble Lord says, "Now they have got to make a profit", he can put the State's money at risk to the first big producer who comes along, and whether it assists the production of the films by the independent producer for the good of the industry does not matter. The Corporation have only one thing to do; and that is to make money. There is no let or hindrance. They can put all this money into a big company. They can choose whom they like; there is no inhibition. They have not to take notice of the directive that was obtained in the original Act that loans shall be made to
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"persons who…are not for the time being in a position otherwise to obtain adequate financial facilities for the purpose on reasonable terms from an appropriate source."
I am not going to argue this matte any longer. You now want the Film Finance Corporation to run as an ordinary banking concern. You want the State's money invested up to £5 million and the Corporation have to show an adequate return. The Corporation can go to anybody who wants money and can adopt precisely the same attitude as a bank would adopt, requiring collateral security or guarantors. They can have a mortgage on the man's house, on his wife's jewellery and everything else—that is what you want them to do. That is the directive. They have to take every precaution to see that their principal and interest are fully secured.
That is entirely foreign to the original conception of the Film Finance Corporation. If the Government have made up their minds that there is no more room for this Corporation, I do not mind. Say so, and wind it up altogether. But do not put in one clause that they can sell themselves to any buyer and they have got to make a profit, so that they have to fatten themselves up for the market. It is so entirely different from the conception that the Government had in 1949 that, if my noble friend desires to ask your Lordships to express in the Division Lobbies your opinion as to whether we should revert to 1949 and keep the present Act in force for the next ten years, as I understand my noble friend's Amendment to read, I shall advise all my noble friends on this side of the House to join him, because we stand by the principle which we enunciated when we introduced the 1949 Act into Parliament.
4.55 p.m.
LORD ARCHIBALD: My Lords, I must join with my noble friend Lord Lucas of Chilworth in expressing again disappointment at the inadequacy of the reasons given for this change. A good deal of the argument which we heard from the noble Lord, Lord Fairfax of Cameron, was quite wide of the mark. When, for example, he told us about the 70 per cent. and the 30 per cent., I did not really see what relevance that had to the question of to whom the Corporation is to lend money. May I tell him that on that point I do not think he got his facts quite right? I do not blame him for

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that, because film finance is a very complicated matter, and those who have not had to deal with it may be forgiven if they do not follow it through all its various features. But I think it is true to say that the Film Finance Corporation has, in most cases, lent to 70 per cent.; in some cases it has lent to 100 per cent. but I doubt whether there are many cases in which it lends tie 30 per cent. which is most at risk.
In fact, if the noble Lord would make further inquiry, he would find that there is an increasing tendency on the part of the Corporation to insist that the producer should find same, if not all, of that risky 30 per cent., whether it be by deferring his own fee as a producer, director or script writer, by putting in some money that he may have earned on a previous film or by one means or another. The Film Finance Corporation is not, in fact, as the noble Lord led us to believe, carrying the whole of the 30 per cent. risk on the whole of the films that are being financed—far from it. I think we have got rather a mistaken picture of the situation there. But let us go back to what is really at issue here.
Under the Act of 1949 and under the Government amendment of that Act, the Corporation is still charged with the obligation of lending only on films which have reasonable expectations of being commercially successful. There is no change proposed in that. We know that the Corporation are doing a very fine job. I want to say that the Film Finance Corporation have, as he noble Lord, Lord Fairfax of Cameron, said, steered a fine middle course between all the difficulties with which they had to contend. But, in doing that, they have not been any more successful than the film industry in forecasting what is going to be a commercially successful film. That is something that nobody can do. Of course, it would be quite improper of an Act of Parliament to empower the Corporation to lend money on films which everybody thought were going to be commercially unsuccessful, so I think we are all at one on the need for having this provision in the legislation, even though we recognise that, in practice, it is asking them, in effect, to have a better crystal ball than the industry itself has.
But the change is only that they are in future to be empowered to lend money to
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people who could get their money elsewhere. We have not heard any argument which is worthwhile and substantial really directed to that point. The suggestion that it may enable the Corporation to operate more successfully—that is to say, to make more profit—will not really hold water. It is not a question of whether a film is likely to be commercially successful that determines whether or not a producer can get his money elsewhere; it is a question of what sort of company is he and what sort of assets has he got? There are just as many commercially unsuccessful films made by big corporations with substantial assets as by independent producers with no assets at all. Therefore, lending to these other people will not put the Finance Corporation in a better position, and it is quite mistaken to argue the matter in that way.
No answer has been given to the argument that people who can get their finance elsewhere may come along and use up an undue proportion of the Film Finance Corporation's resources and leave an insufficient amount available for lending to independent producers who cannot get their finance elsewhere and for whom the Bill is intended. I do not want to hold up the House unduly, but I feel strongly about this matter. I do not feel so strongly about the change as about the inadequacy of the reasons that we have been given for it. If we have heard the last word from the Government on this subject, then I shall have to ask the House to decide on it.
LORD MANCROFT: My Lords, if the noble Lord, Lord Archibald, puts it like that, I am in duty bound to say a few words, because my noble friend Lord Fairfax of Cameron has no right of reply. He has said almost all there is to be said about these two Amendments—as we know, they march closely together; in fact, we cannot consider Clause 10 without Clause 11. Would your Lordships be good enough to look at Clause 11 and see exactly what it is that the clause seeks to do? I beg your Lordships not to be misled by the rather harsh words in the margin of the print of the Bill—
"Duty of Corporation to pay their way."
What the clause actually says is—
"It shall be the duty of the National Film Finance Corporation to exercise and perform their functions in such manner as appears to them best calculated to secure the avoidance of default's being made in the discharge"—
LORD MATHERS: There is an apostrophe "s" in "default's."
LORD MANCROFT: I had not noticed that—
"as regards any loan made to them after the passing of this Act."
No vast and vital change is being made in the policy at the moment. I may tell the noble Lord that the policy which we are now advocating has been arrived at after full consultation with the Corporation.
The noble Lord, Lord Archibald, argued, I remember, on Second Reading, that the 1949 Act, which the noble Lord, Lord Lucas of Chilworth, has been discussing, would never have gone through if the Corporation had been entitled to lend to all and sundry and to compete with the banks. The answer to that is surely this: that when the 1949 Act went through there was no levy, and the Corporation were in a position in which it would surprise no one if they lost money. It was looked upon as a rescue operation, and as short-lived. To-day, as we have been arguing for several days on this Bill, the position is quite different. I think we all realise that if the Corporation do not raise money, it is just not going to be forthcoming to film production. The Corporation will be with us for a long time to come. The whole conception of a rescue operation has now gone, and instead we are giving producers not just a levy which they did not have when the 1949 Act was passed, but a much larger levy than they have ever had before. I am certain that it would be wrong in such circumstances to expect losses by the Corporation without inquiring into them pretty carefully, or to accept such losses with resignation.
LORD LUCAS OF CHILWORTH: The noble Lord has said that we are going to give the producers a larger levy
than ever they have had before. How do you know? Are you guaranteeing them? The levy is going to be got out of the exhibitors.
LORD MANCROFT: There is no guarantee, of course we have argued that at very great length, too. That is what we are trying to legislate for.
LORD LUCAS OF CHILWORTH: The noble Lord is arguing about Clause 11, not Clause 10.
LORD MANCROFT: Yes, I know. All we ask now is that the Corporation should try to set out, under this part of the Bill, to maintain their resources intact. We will not move backwards and forwards again over that. I believe that these new clauses in lie Bill—the new constitution and aims of the Corporation—are right when viewed in the light of the changed circumstances of the industry, and I do not believe that the alarming forecast of noble Lords opposite will really come about at all. It is not the aim and object of the Bill, and I can see no reason why it should happen. All we are doing in these clauses is to try to give the Corporation the chance to run themselves, if they possibly can, on a profitable basis. I am certain that that is a correct provision to put in the Bill. If the noble Lord thinks it is a wrong provision, then I am sorry we can convince him no further. There is no more subtlety in it, and there is no more in it than that. I believe it to be a fundamental point that we should put the Corporation in a position, if they can do it, to pay their way. If we have not convinced noble Lords opposite, then I am afraid we must challenge them in a Division.
On Question, Whether the said Amendment shall be agreed to?
Their Lordships divided: Contents, 10; Not-Contents, 40.

CONTENTS

Attlee, E.

Amulree, L.

Mathers, L.

Listowel, E.

Archibald, L.

Pakenham, L.

Lucan, E. [Teller.]

Lucas of Chilworth, L.

Rea, L.

Strabolgi, L. [Teller.]

NOT-CONTENTS

Salisbury, M. (L. President.)

Morley, E.

Davidson, V.

Munster, E.

De L'Isle, V.

Reading, M.

Onslow, E. [Teller.]

Falmouth, V.

Albemarle, E.

Perth, E.

Goschen, V.

Dundee, E.

Hailsham, V.

Gosford, E.

Cherwell, V.

Massereene and Ferrard, V.

Home, E.

Colville of Culross, V.

Stonehaven, V.

Amherst of Hackney, L.

Fairfax of Cameron, L.

Moyne, L.

Ashton of Hyde, L.

Hawke, L. [Teller.]

Remnant, L.

Baden-Powell, L.

Howard of Glossop, L.

Rennell, L.

Bennett of Edgbaston, L.

Kinnaird, L.

Rochdale, L.

Chesham, L.

Mancroft, L.

Rockley, L.

Conesford, L.

Merrivale, L.

Somers, L.

Derwent, L.

Milverton, L.

Waleran, L.

Resolved in the negative, and Amendment disagreed to accordingly.

Clause 11:
Duty of Corporation to pay their way
11. It shall be the duty of the National Film Finance Corporation to exercise and perform their functions in such manner as appears to them best calculated to secure the avoidance of default's being made in the discharge, as regards any loan made to them after the passing of this Act, of their obligations with respect to repayment of the principal of the loan and the payment of interest en any sum for the time being outstanding in respect of it.
5.11 p.m.
LORD ARCHIBALD LORD ARCHIBALD moved to omit Clause 11. The noble Lord said: My Lords, we have already been over a good deal of the ground on this Amendment and I am not going over it all again. As it is the last Amendment, may I express a personal view? I am sorry that on the Report stage, and very largely on the Committee stage, this Bill has seemed so much to be in the nature of a double duel between two noble Lords on this side of the House and two on the other side. For myself, I apologise for the amount of time that I have taken up, but this is a serious matter—
LORD MANCROFT: It is indeed—
LORD ARCHIBALD:—and one affecting an important industry. It is only proper that we should take adequate time to discuss a measure which affects that industry for ten years ahead. During the discussion we have had certain assurances from noble Lords who are speaking for Her Majesty's Government. Those assurances have been substantially that the provisions dealt with by the Amendment which has just been defeated and this present Amendment will not radically change the operation of the Film Finance Corporation; and I hope time will show that those statements are correct.
On this particular Amendment I want to make just one point. I have argued before that these provisions could be taken, let us say, by the managing director and directors of the Corporation, as a directive to be much more restrictive,
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rigid—savage almost—in the selection of the enterprises to which they make loans, so that they may not, in turn, default on their borrowings. I am told that I am wrong in that, but I hope that it may be possible for a spokesman for Her Majesty's Government to say something which will be in the nature of a directive to the directors of the Film Finance Corporation to tell them that I am wrong, and why. So that there may be a reply, I beg to move the Amendment.
Amendment moved—
Leave out Clause 11.—(Lord Archibald.)
LORD FAIRFAX OF CAMERON: My Lords, as the noble Lord has said, this is in fact the other half of the cherry—the first half we discussed on the previous clause. On the Committee stage, in recalling the origin of the Film Finance Corporation, the noble Lord, Lord Lucas of Chilworth, said that it existed to lose money, and he reminded the House of his earlier remarks that it would be a good day's work if they lost the whole lot, the £5 million, but kept the independent producer in business. No doubt the noble Lord will remember that.
LORD LUCAS OF CHILWORTH: I repeated it this afternoon.
LORD FAIRFAX OF CAMERON: Her Majesty's Government do not see the Corporation in this rôle at all. The House may remember that when the Corporation were set up, hopes were expressed that they would help to put the film industry back on its feet again and could then be dispensed with. But there is now general agreement within the industry that we cannot yet dispense with the Corporation. First, their powers were extended from five years to eight years, and now they are to be extended to a maximum of eighteen years. Her Majesty's Government could not contemplate with equanimity the prospect of the Corporation's continuing to make losses over that period of time, and the Corporation certainly could not do so on the old scale without considerable addition to their resources.

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These losses of the Corporation which have, at times in the past, been heavy are a form of hidden subsidy for the industry. We believe that any assistance given to the industry should be overt. What Her Majesty's Government aim to do by this Bill is to give film producers, by means of the levy, such overt assistance, to a degree which will, we hope, enable producers, taking the successful films with the unsuccessful films, to do much better. So long as film production, taken overall, is unprofitable, the Corporation are going to lose money, for they often bear the end risk; but as production with the aid of the Levy and with the growing efficiency of the industry becomes more profitable, so should the Corporation's activities become more profitable. It is a misrepresentation of the policy of Her Majesty's Government to say, as was said during the Committee stage, I believe by the noble Lord, Lord Archibald, that by this clause Her Majesty's Government are trying to take the element of risk out of film financing. That, alas! is beyond the capacity of any of us. What it does, however, is to require the Corporation, in the light of the improved position for film producers, to perform their functions, which are: to lend to films having reasonable prospect of commercial success, and to do so in a manner best calculated to avoid default in the discharge—and this is now important—not of the loan made by them to the producer, but of loans made to the Corporation from time to time from which they draw their resources.
Of course, sometimes the Corporation's "best calculation" may go wrong and several films may make a loss, part of which will fall upon the Corporation, but other films will do better than expected. Perhaps it would help noble Lords to understand the effect of this clause if I were to explain that the loans made by the Board of Trade to the Corporation are for periods not exceeding five years, and repayments are consequently being made at frequent intervals, and, of course, fresh borrowings may be made at the same time. The Corporation does not just turn over the money borrowed by them and then make fresh borrowings if they lose the earlier money. Consequently, there is nothing to prevent the Corporation from actually making a loss in any one year without infringing this
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clause. Noble Lords need not fear, therefore, that the effect of the clause would be to require the Corporation only to support gilt-edged propositions. There are no gilt-edged propositions, as noble Lords will know well, in film finance. The Corporation's functions are to finance films and that is to say that their functions are to take risks, though I hope that the business will be less risky in future. In short, Clause 11 makes explicit the desire of the Government that the Corporation shall over the extended period of its existence maintain its capital intact. It may not be able to do so, in view of the risky nature of its business; but at least it must try to do so.
LORD LUCAS OF CHILWORTH: My Lords, may I ask whether that long reading from a brief is supposed to be the answer to the one slight interrogation made by my noble friend Lord Archibald? My noble friend just asked for some assurance; he said he was not going to argue. If the noble Lord opposite, after the highly controversial statement he has made, wants to argue this all over again. I am prepared to accommodate him; but we did not wish to detain your Lordships by discussing the case all over again. This shows the disadvantage of reading a brief in answer to an argument. Perhaps I might ask Lord Mancroft whether he would reply to my noble friend's simple request, as we do not wish to put your Lordships to the trouble of dividing. If the noble Lord, Lord Fairfax of Cameron, wishes to quote what I said, may I advise him to quote a little more of the context and then he might get it accurate. What I said was this: if it should be necessary to save the industry, a loss of £5 million would be a good day's work—not that it would be a good day's work to lose £5 million. There is a vast difference. However, I have nothing to add to what I have said, and perhaps Lord Mancroft will now think it worth while to reply to the point raised by Lord Archibald.
LORD MANCROFT: The noble Lord, Lord Lucas of Chilworth, is being a little harsh, if I may say so. I am afraid my attention was a little distracted while Lord Archibald was speaking, but if I understood him aright he asked whether there was intended to be a change of policy; whether the Corporation are to

899
take a tougher attitude than in the past. But perhaps the noble Lord would not mind repeating his question.
LORD ARCHIBALD: What I said was that in the course of the discussion on the previous Amendment—I think I am right in this—Lord Fairfax of Cameron said that, although there were these changes, there would be no radical change in the operation of the Corporation and that it had been indicated that the Corporation would not take this as a directive to be harsh, rigid or savage in the scrutiny of their loans. If I could have some reassurance about that matter I should be grateful.
LORD MANCROFT: I had understood the noble Lord correctly. I can certainly give him the assurance for which he asks. It is not intended that the Corporation should adopt a policy of rigidity, toughness or harshness in the scrutiny of loans. But it is intended that they should so conduct their business that they will try, in accordance with the words of the clause, to
"perform their functions in such manner as appears to them best calculated to secure the avoidance of default's being made."
Trying to conduct themselves in ways "best calculated to secure the avoidance of default" does hot mean a radical change of policy. It means that there will undoubtedly be a very slightly different slant in the Corporation's mind. As I have explained at length before, it is only a directive to the Corporation that the time has come when they must try to avoid risks if they can. It is not an instruction to them to be harsh and brutal in the future conduct of their affairs. That assurance I can certainly give the noble Lord.
LORD ARCHIBALD: I thank the noble Lord very much.
On Question, Amendment negatived.

TRANSPORT (RAILWAY FINANCES) BILL
5.26 p.m.
Read 3a(according to Order), and passed.

CONSOLIDATED FUND BILL
Brought from the Commons, endorsed with a Certificate from the Speaker that the Bill is a Money Bill within the meaning of the Parliament Act, 1911 and read la.
HOUSE OF LORDS OFFICES
Second Report from the Select Committee: made, and to be printed.