Lords Sitting of 29 January 1957

Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers
The Viscount Mersey—Sat first in Parliament after the death of his father.

LONDON COUNTY COUNCIL (GENERAL POWERS) BILL [H.L.]
Read 2a.
MILFORD DOCKS BILL [H.L.]
Read 2a, and referred to the Examiners.

RECONSTRUCTION AT THE NATIONAL GALLERY
2.36 p.m.
THE EARL OF HADDINGTON: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether action is to be taken to carry out the plan of reconstruction, outlined in the report of the National Gallery Trustees January, 1955—June, 1956, in view of the serious and rapid deterioration of valuable works of art bequeathed to the nation.]
THE MINISTER WITHOUT PORTFOLIO (THE EARL OF MUNSTER): My Lords, the preliminary plans, referred to in the recent report of the Trustees, for the reconstruction of the West Wing of the National Gallery are now being developed, and, subject to the approval of Parliament, it is hoped to start the physical work in the early months of 1958.
THE EARL OF HADDINGTON: My Lords, I thank the noble Earl for his reply, which, to a certain extent, will give satisfaction. In view of the urgency of this whole matter, however, and the acute shortage of accommodation in the Gallery, may I ask him this supplementary question: when this work is
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definitely started, will the whole plan of reconstruction and air conditioning which has been outlined by the Ministry be carried through without intermission until the whole scheme is completed? That is what. I should very much like to know.
THE EARL OF MUNSTER: The general plan which I have announced will, subject to Parliamentary authority, be completed in the earliest possible time. The air conditioning of the remaining public exhibition rooms must, however, await the completion of the present scheme, which, I am informed, will absorb all the resources that can be devoted to the Gallery's needs.
THE EARL OF HADDINGTON: My Lords, I thank the noble Earl for that assurance.
LORD KINNAIRD: My Lords, in view of the risk of damage, to which the report has called our attention, may I ask whether by 1958 the Minister will have signed a contract for completing the work; and may I also ask the noble Earl whether he will use all his influence to get the whole of the work carried through to completion?
THE EARL OF MUNSTER: I think that by 1958 my right honourable friend will certainly have signed the contract, but, of course, it is subject to Parliamentary approval of the Vote of money concerned.
LORD KINNAIRD: I beg to thank the noble Earl.

ATOMIC POWER STATION SITES
LORD LAWSON: My Lords, I beg to ask the Question which stands in my name on the Order Paper, and may I, as it is the first Question he will answer, congratulate the noble Lord, Lord Mills, on his high appointment?
[The Question was as follows:
To ask Her Majesty's Government if they will state who, or what authority, decides the location of works established for the production of atomic power; and the grounds upon which such decisions are based.]
THE MINISTER OF POWER (LORD MILLS): My Lords, may I thank the noble Lord for his congratulations? It

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is a great pleasure to me, on the first occasion on which I have the privilege of addressing your Lordships' House, to answer a Question relating to a subject in which we lead the world, the development of atomic power for peaceful purposes. In the case of power stations for the public electricity supply, the selection of sites in England and Wales is a matter for the Central Electricity Authority. The criteria which the Authority adopt in selecting sites are well described in paragraph 89, and the following paragraphs, of the Central Electricity Authority's Eighth Annual Report, covering the year ended March 31, 1956. The most important of the criteria are large and readily available supplies of water for cooling purposes, and ground formation capable of bearing the extremely heavy reactors. Before proceeding with the construction of nuclear power stations on the sites selected, the Central Electricity Authority require my consent under Section 2 of the Electric Lighting Act, 1909, and deemed planning permission under Section 35 of the Town and Country Planning Act, 1947. In Scotland, corresponding arrangements apply, the responsible Minister being the Secretary of State.
LORD LAWSON: My Lords, may I thank the noble Lord for his answer? I read the first and second Reports, but is he aware that these matters are decided by people who are, on the whole, persons little known to the country and without any consultation at all with Parliament, which is doing a work that is practically directing the course of a new Industrial Revolution and is, therefore, a very important matter?
LORD MILLS: My Lords, the final decision, of course, rests with the Minister, and I think it is up to the Minister to see that he makes all proper inquiries to enable him to arrive at a right and wise decision.
LORD LAWSON: My Lords, I apologise for troubling the noble Lord in this matter, but the inquiries are not altogether of a nature that gives satisfaction. Considering the powerful change that is being made by the establishment of some of these works, may I ask the noble Lord whether he is aware that a Commission sat upon this matter for
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some years before the last war, and that practically every decision they arrived at is being ignored in the establishment of these stations?
LORD LUCAS OF CHILWORTH: My Lords, before the noble Lord replies to that question—I will not harass him upon this occasion, although I cannot promise that we shall not on another occasion—would he take into consideration that there is widespread disquiet in this country not only about the location of these stations but also about the action of the Central Electricity Authority in their present murdering of the countryside?
LORD MILLS: My Lords, in answer to the noble Lords. I think I should be lacking in my duty if I did not take into account any disquiet there might be on this subject. I am sure, even from my limited knowledge, that there are many criteria which must be taken into account. This is not an easy decision. The examination must be a long and far-reaching one, and, so far as lies in my power, I will do my best to carry it out conscientiously and thoroughly.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, before putting a supplementary question, I should like to congratulate the noble Lord upon his accession to high office and to say that some of my colleagues who remember his great service to a Coalition Government, of which we were members, in times of great danger, know full well that he will fulfil his duties to the satisfaction of the House.
The point I want to put to the noble Lord is this—and I am an interested party because I live within five miles, as the crow flies, from the site of the Bradwell Station. What I am concerned about is the inadequacy of the consideration given to people who raise objections and the imperfect machinery for holding a really judicial inquiry. Power is given to opposing parties to be legally represented. It may be that the Central Electricity Authority is legally represented. But you do not put a man really qualified in juridical procedure in the chair. No doubt from many points of view you appoint a competent officer. The last one I saw at Maldon, for the Bradwell site, was an engineer. We do not feel that our case was ever adequately considered—

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that is no fault of the noble Lord—and we consider that in matters of such grave importance, and in taking steps in what my noble friend says is an Industrial Revolution, the objectors should have the right to appear before a tribunal which is completely neutral in its chairmanship and legally qualified in the occupancy of the chair.
LORD MILLS: My Lords, I am sure that the noble Viscount's remarks will be of the greatest assistance to me in studying these problems. Of course there are many more atomic stations to be built, and I am impressed with the importance of preserving the amenities of our countryside, so far as may be possible, in developing those plans. I can only add my assurance that, for my part, it will receive careful attention.

TRADE WITH CHINA
2.42 p.m.
VISCOUNT ELIBANK: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether, as a preliminary step to initiating action for the rescinding of the 1951 U.N.O. resolution which recommended the China embargo as an additional measure to deny contributions to the military strength of the forces opposing the United Nations in Korea, they will (1) remove from the China embargo list all goods not embargoed for the U.S.S.R.; and (2) will abolish the practice of demanding the "end-use" of goods required for China which makes business between the British exporter and the prospective Chinese buyer of an unpredictable character and loses trade to British industry.]
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR FOREIGN AFFAIRS (THE EARL OF GOSFORD): My Lords, the China trade controls are applied not only by the United Kingdom but also by all the other members of the Consultative Group. Any action to relax those controls must therefore be taken in consultation with our friends and allies, not all of whom share our views. Meantime, as the noble Viscount is aware, the exceptions procedure gives us some latitude. As regards
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the last part of the Question, I cannot do better than to refer the noble Viscount to the answer given him on August 1, 1956, by my noble friend, Lord Mancroft, to which there is nothing I can usefully add.
VISCOUNT ELIBANK: I thank the noble Earl for his Answer. May I ask him this? Will he explain what justification there is for the maintenance of a far more sweeping and stringent application of the controls for the China embargo, as opposed to the Russian embargo?
THF EARL OF GOSFORD: My Lords, I can only answer the noble Viscount by reiterating what I have said in my initial statement—that any decision we come to must be with the agreement of the other members of the Consultative Group. Whether or not we agree with what the noble Viscount has already said, we must get the agreement of the other members. Therefore, I cannot go any further.
VISCOUNT ELIBANK: As the noble Earl knows, time and again in the last few years I have asked Her Majesty's Government whether they would lake the initiative in this respect. Will they do so?
LORD LUCAS OF CHILWORTH: My Lords, might I ask the noble Earl whether he will take into consideration the fact that, when we loyally abide by these undertakings, other countries in the world profit by our rectitude and—may I use the expression?—steal our legitimate markets?
LORD AILWYN: My Lords, whilst I strongly support the substance of the noble Viscount's Question, and greatly admire the persistence with which he pursues this important matter, may I ask whether it is not a fact that the value of the United Kingdom exports to China in 1956 was in the nature of £3 million more than it was in 1955?
THE EARL OF GOSFORD: I thank the noble Lord, Lord Ailwyn, for his intervention. What he said is, in fact, almost true: the exact figure is £2·9 million. In answer to the noble Viscount's last question, Her Majesty's Government have taken, and do take, the initiative in this matter; but, as I have already said, and as has been stated many times in the past, we must have the complete agreement of alt the other members of the Consultative Group before anything further can be done.

GOVERNMENT POLICY
2.47 p.m.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, may I ask the noble Marquess the Leader of the House the following Question: when he proposes to make a statement, on behalf of Her Majesty's Government, on the policy and legislative programme of the new Government?
THE LORD PRESIDENT OF THE COUNCIL (THE MARQUESS OF SALISBURY): My Lords, there does not appear to me to be any necessity for any special statement. The aims of the Government's policy differ in no way from those of the previous Administration, and we stand by the legislative programme set out in the gracious Speech which was delivered on Tuesday, 6th November last.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, I must say that not only some of us on this side of the House but millions throughout the country will be amazed at the complacency of Her Majesty's Government in dealing with this important question. On December 11 and 12 we had two days of debate to obtain a vote of confidence in the Government as it then existed. That Government resigned. There was a change of Prime Minister; seven new Cabinet Ministers have been appointed; there are fifty-two offices in the Government service which are now occupied by Ministers who did not occupy those particular chairs before. There never has been, in my long Parliamentary experience, such a situation arising, especially when it is remembered that the real cause of the resignation of the Government was not only what we all regretted, the health of the Prime Minister, but the breakdown of the Suez policy. There would not have been such a major reconstruction in the new Government of the offices concerned if that had not been the case. We feel, therefore, that it would have been wiser of the Government to remember the words of the noble Earl the Deputy Leader of the House on December 12, when he was rather—I will not say shocked at our suggestion for an Election at that time, but when he said that we ought to beware, because they might take us at our word. Well, it is not we who are running. We are waiting for the
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proper decision which ought to be taken in any democracy in such extraordinary circumstances—that is, to lay it before the court and the judgment of the people.
THE EARL OF SWINTON: My Lords, before the Leader of the House replies, I wonder whether one who perhaps has an even longer experience in both Houses than the noble Viscount the Leader of the Opposition might (I do not know whether it was a question he was putting) put a question to the Leader of the House. Is it not a fact that not only in all our political experience, but in the whole history of this country for at least 150 years, it has been a commonplace for Governments to change, for a new Prime Minister to take over, as in the case of Mr. Ramsay MacDonald, who took over, or continued, the noble Viscount's Government—I cannot remember whether in fact the noble Viscount was a member of that Government.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, I was.
THE EARL OF SWINTON: And was the noble Viscount a member of our National Government?
VISCOUNT ALEXANDER OF HILLSBOROUGH: No.
THE EARL OF SWINTON: The noble Viscount was defeated at the Election.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, will the noble Earl pardon an interruption? Perhaps he has forgotten that Mr. Ramsay MacDonald could not possibly have held down the job had he not gone to the country almost immediately.
THE EARL OF SWINTON: My Lords, on the contrary, with great respect, I will take the noble Viscount up on that point. The country fully endorsed him. He held the job down perfectly well and, as everyone will remember, we introduced a Budget.
Is it not a fact that these are matters not of Party politics but of constitutional importance, and that on successive occasions we see the pattern: in the resignation of Lord Salisbury and the succession of Mr. Balfour; in Mr. Bonar Law's resignation and his succession by Mr. Baldwin; then in the succession of Mr. Baldwin to Mr. MacDonald, and the

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succession of Mr. Chamberlain to Mr. Baldwin. I am not quite sure but I think the noble Earl, Lord Attlee, was lucky, and carried on: he is the one exception to the rule. Throughout the last century at least, that is the pattern. Her Majesty's Government are following what has become the absolutely normal course followed by all Governments and all Parliaments.
EARL ATTLEE: My Lords, may I adduce one or two instances against the noble Earl, Lord Swinton, as he has given us such a long statement. Your Lordships will remember that Mr. MacDonald's Government was formed to keep us on the gold standard; they promptly went off the gold standard and there was a General Election. Here vie have very much the same thing, because the aims of Her Majesty's Government have been completely frustrated. Her Majesty's Government having failed entirely to meet their aims by their methods, it is now presumed that, after the disasters we have already had, the newcomer will take some other method.
THE, MARQUESS OF SALISBURY: My Lords, I am sorry to disagree with almost everything that has been said by the noble Viscount, Lord Alexander of Hillsborough. First of all, Her Majesty's Government did not resign. What happened was that the Prime Minister became ill and had to tender his resignation, and in the ordinary constitutional method, the other Ministers tendered their resignations at the same time; but they did not resign on a question of policy. I am glad to have the opportunity of saying that it had nothing whatever to do with the Suez policy. I do not expect the noble Viscount to share cur view, but I can assure him that we do not accept his view on that particular point. Regarding his point that there were a great many new Ministers, that is quite true. That often happens when there is a readjustment of a Government, what is now called a "reshuffle", whether or not we have a new Prime Minister. But the subject of a statement in Parliament is not that of the Ministers; it is a matter of their policy, and the policy is the same as before.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, that only fills us with greater gloom than ever, because what we really need, in the present state
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of the country, is the possibility of moving forward in something like unity and confidence. Here we face an entirely new situation, as a result of a disastrous Suez policy which does not end merely with a loss of prestige in foreign and diplomatic circles but also confronts us with a very heavy bill and with a danger of growing unemployment, and which, it seems, is to lead to an entire readjustment of our defence measures. It seems to me to have been incumbent on Her Majesty's Government, in these circumstances, at least to make a statement to Parliament, which represents the people, as to what the situation is. That is why I was asking the Question to-day.
THE MARQUESS OF SALISBURY: My Lords, the noble Viscount says that we should move forward in unity. It is not the fault of Her Majesty's Government that there was no unity. The behaviour of the Leaders of the Opposition has shocked the whole country. That is certainly true.
SEVERAL NOBLE LORDS: Hear hear!
THE MARQUESS OF SALISBURY: My Lords, on other points I can only repeat that if a Government continues a policy on which it is already embarked there is no necessity for a special statement of policy. It has already been made. If the noble Viscount is dissatisfied on this or that aspect of policy, he and his Party can always put down a Motion upon it or, if they wish, a Motion of censure which we shall be very glad to face at any time. But certainly there is no obligation on Her Majesty's Government to make a statement; indeed, there would be no new statement that they could make.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, if we cannot get what we want here we must make our own appeal, as we shall almost every week, to the country, and there we shall find a different feeling, as we shall at the Election.

BUSINESS OF THE HOUSE
EARL FORTESCUE: My Lords, it has been agreed through the usual channels that if we do not finish the Committee stage of the Cinematograph Films Bill by 7 p.m. to-day we shall adjourn in any case at that hour, and shall continue the Committee stage on Thursday next.

TRIBUTES TO THE LATE LORD LLEWELLIN
2.56 p.m.
THE MARQUESS OF SALISBURY: My Lords, before we proceed to the full business of the day, there is a matter on which, whatever disagreement there may be between us on other subjects, all of your Lordships would wish me to speak and on which I am quite certain we shall all be in harmony. For the second time within a few days I have to rise to speak of one of our number whose death we mourn. Your Lordships will have heard of the death of Lord Llewellin, which occurred last week, with a sense of deep personal loss. I do not suppose any Member of this House had so many genuinely devoted friends, young and old, as he had and I believe I can count myself among the oldest. For we went to Eton in the same half, moved up to school together, went to Oxford in the same term, entered the House of Commons at the same General Election and, I believe, became members of the Government in the same year. Throughout, our lives have followed parallel courses; and so what I say, I can assure your Lordships, comes from the knowledge of a lifetime.
The thing which strikes me most as I recall Lord Llewellin is that in all that long time he never really changed; he merely matured. Those qualities that made him so valuable a Member of this House—his humour, his robust common sense, his tolerance for the views of others, his inflexible sense of duty for himself—were always in him. Whether he was a boy at Eton, leading his Dorset heavy battery to victory in the King's Cup, representing his country as Resident Minister of Supply in Washington during the last war, addressing your Lordships, as he did so often with such effect, or colloguing with the noble Viscount, Lord Malvern, and Sir Roy Welensky in Rhodesia during the last years of his life, he was always the same "Jay" that we had always known, the same good companion, the same wise counsellor. These pre-eminent qualities were never more evident than in that last task which he undertook, of lending his wisdom and experience to the new Federation of which he was the first Governor-General and whose welfare was so near to his heart.
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We in this House, our country, and the Commonwealth as a whole, have all suffered a grievous loss by his death. He was one of those men whom we can least afford to lose. I think it is fitting that we should to-day pay our tribute of gratitude and affection to one who never spared himself in the service of his country and who died as he would have wished, still in that service to the end. I am sure the heartfelt sympathy of your Lordships will go out to his sister and brother, whose sorrow we share.
3.0 p.m.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, I entirely share the view just expressed by the noble Marquess, Lord Salisbury, in such feeling terms, of what an enormous loss the passing of the late Lord Llewellin is to our country, to the whole of the Commonwealth and to all interested in the federation of the free interests of the free world. I had known him for a great number of years. As happened with so many of our friends in other Parties, we saw a great deal of each other right through the war, and I must say it would have been impossible to find anyone more easy to work with, yet so sincere and so conscientious in every detail which he had to handle.
If I may speak from the point of view of those interested in the food trades, may I say that probably no man who has held the position of Minister of Food had a more happy knack of dealing with the enormously complex and sometimes differing interests in that difficult field at that time. In the food trades he has left behind a host of friends who honour his memory. Apart from those qualities I have mentioned, he had great social and personal idealism. I often think of the talks I used to have with him, sometimes about the work of his brother in connection with Borstal institutions. That was a great piece of social work and reconstruction, inspired entirely by the highest Christian feeling. That was the feeling which dominated "Jay" as he was known, not only to the noble Marquess and Members of his Party, but certainly to more than half the members of the Party who sat opposite to him in another place. That was a mark to us of how affectionately he was regarded by opponents as well as by friends. His old political opponents will continuously mourn his loss.
3.2 p.m.
LORD REA: My Lords, if I do not add at length to the words which have fallen from the lips of the noble Marquess, the Leader of the House, and from those of the noble Viscount, the Leader of the Opposition, it will not, of course, be because we in this quarter of the House do not appreciate most deeply the great loss to the Commonwealth, to the nation and, in a very personal sense, to your Lordships' House which has resulted from the untimely death of Lord Llewellin. The large field of political experience through which he went seemed to us all to have opened rather than to have closed his mind to the political point of view of those who were not always in sympathy with his political Party. He was always approachable, always kind, always sincere. He belonged to that comparatively small corps of regular attenders of your Lordships' House who conferred unofficially outside this Chamber, with such pleasure and such usefulness, on the various matters of State which later came into the Chamber to be dealt with officially.
I think that all of us had two great hopes about Lord Llewellin recently. The first was that he would succeed in the great office that he took in Africa, the second, that we should see him back among us here. Our second hope, tragically, will not be fulfilled. The first one most emphatically has been. I think it is not out of place to recall that some of us had some misgivings about this great project of the Federation. I must say at the same time that it seemed to us that once it was a fait accompli it had to succeed, and should have our highest support. Its success depended very much on the personality and the activities of the first Governor-General, and I think that we can look back with real gratitude to the service of "Jay" Llewellin, as a great man coming to the flower of his greatness in that territory, which he looked after so well and to which he gave such a great start in its new form.
3.5 p.m.
THE EARL OF SWINTON: My Lords, as another very old friend who worked closely with Lord Llewellin, I should like to add a word or two of tribute to what has been so well and so understandingly said about him. He and I served together in the House of Commons and,
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incidentally, as members for neighbouring Divisions for a number of years. We worked together in the war. Immediately before the war, and particularly during the war, he held a number of Ministerial appointments which gave him experience which was to prove of very great value to the country. As the noble Viscount the Leader of the Opposition has said, it also gave him invaluable experience for what I shall always think was perhaps the greatest work he undertook.
When it came to the appointment of the first Governor-General of the Federation of Rhodesia it fell to me formally to make the recommendation. Naturally one took a great deal of consultation and advice, particularly with Sir Godfrey Huggins, as he then was—Lord Malvern, the Prime Minister of Southern Rhodesia and Prime Minister Designate of the Federation—with Lord Chandos, who was Secretary of State for the Colonies, and with the noble Marquess the Leader of the House, who had taken such a keen interest in the earlier stages of the Federation. It is always important that a new Dominion should start off with a good Governor-General, but in Rhodesia this was a particularly difficult appointment, because it so happened that he did not succeed, so to speak, to a fully-fledged Dominion and take office as a Constitutional Governor-General, a sort of Constitutional Monarch. He had the very difficult task, during the six or nine months of the transitional period when the Federation was coming into being, of being in effect the Government of the Federation. I can hardly imagine a more difficult or delicate task; and with that in our minds all four of us who consulted on this matter were unanimous that we could not do better than appoint Lord Llewellin, because he was a man well versed in administration and politics and also, as we all knew, so human.
So Lord Llewellin was the unanimous choice, and events have proved how wise that choice was. During that difficult initial period he worked in complete harmony with Lord Malvern and the Ministers-designate. In fact, then and afterwards, I think it is true to say that he never put a foot wrong—and there were plenty of pitfalls. I think he owed his success not only to his long experience but also to those personal qualities

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of which the Leader of the House has spoken—going back to the earliest days—those qualities of wisdom and sympathy and common sense.
I am not sure whether the House realises that during his term as Governor-General he became very seriously ill. Indeed, it was an even money chance—if I may so put it—whether he would come back here for his treatment in hospital and to convalesce. He did so and for many weeks he lay between life and death in hospital here. Gradually he recovered—certainly not complete health. If he had consulted his own interests and the interests of his health he ought never to have gone back to the climate of Salisbury. But he wanted to go back. If he had considered himself he would not have done so. But he was dedicated to that service and to that country which he loved. He died in that service, and his name will always be enshrined in the great University which is now being built and in which one of the great buildings will bear his name. But his name still more will live always with that great experiment—the greatest, I am sure, we have made in Africa. His name will be enshrined in the memory of every citizen of the Rhodesian Federation which he served so well.
LORD WOLVERTON: My Lords, I have been asked by a few friends to say a word to express their great sympathy, as well as my own, at the tragic death of the noble Lord, Lord Llewellin. I began to know him only after the war, but he was a great help to younger Members of your Lordships' House like myself. He was a man of great understanding and he took immense trouble to help younger Peers in their work. It was a privilege and honour for me to work so closely with him during the five years that he was chairman of the Home Affairs Committee of the Conservative Party when in Opposition. My Lords, I felt to-day that I had to say a few words on behalf of my noble friends on this side of the House, in sympathy to his family in their loss.

HOUSING BILL [H.L.]
THE LORD CHANCELLOR (VISCOUNT KILMUIR): My Lords, I beg leave to introduce a Bill to consolidate the enactments relating to housing, with the exception of certain provisions relating to financial matters. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a. (The Lord Chancellor.)
On Question, Bill read 1a; and to be printed.

PUBLIC TRUSTEE (FEES) BILL [H.L.]
3.13 p.m.
Order of the Day for the Second Reading read.
THE LORD CHANCELLOR: My Lords, in rising to move the Second Reading of this Bill, may I inform your Lordships that the Bill now confers the necessary powers to enable a new system of fees to be introduced in the Public Trustee's Office. It is just over fifty years since my predecessor, Lord Lore-burn, moved the Second Reading of the Public Trustee Bill which led to the establishment of the Public Trustee's Office. It is interesting to recall that Lord Loreburn was supported in this House by Lord Halsbury, who had occupied the Woolsack immediately before Lord Loreburn himself. The Public Trustee was needed because of the difficulty of finding private trustees, particularly for small trusts, and because, as was emphasised during the passage of the 1906 Act, enormous losses had been suffered, largely by the poorer classes of the community, owing to the dishonesty of some individual trustees.
Events soon justified the creation of the Public Trustee's Office, and his business grew rapidly in an era when trusts were fashionable and taxation low. In recent years, however, the situation has radically altered: higher taxation and reduced opportunities of handing down private fortunes have contributed to a decline in the number of trusts created. Moreover, the banks and other corporate trustees have, during the last thirty years, become competitors for this business. The Public Trustee's business has, in consequence, declined during a period when

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the expenses of his office have largely increased.
He is required by Statute to be financially self-supporting, and it was because of the unfavourable trend in recent years that my noble and learned predecessor, Lord Simonds, appointed a Committee, under the chairmanship of Sir Maurice Holmes, in March, 1954,
"to consider the work of the Public Trustee and to advise whether any changes should be made in his functions or methods of business, in the organisation of his office or in the financial conditions under which he operates"
In their Report, which was published in May of last year, the Committee stated that by the quality of the services which he has rendered the Public Trustee had been able to establish a substantial body of good will with the public and the legal profession. Assisted by an experienced staff, including professional advisers, the Public Trustee has justly earned a reputation as a skilful trustee, and I am sure that many people have reason to be grateful for his conduct of their affairs. The Holmes Committee concluded that the demand for the Public Trustee's services would continue, and the Government fully share that view.
It will, I think, be of convenience to your Lordships if I refer briefly to the Committee's main conclusions, even though they do not all bear directly on this Bill. Following their recommendations, first, the Public Trustee's Manchester Office has already been amalgamated with the London Office; secondly, the regulations governing the audit of trust accounts have been modified; and, thirdly, surplus accommodation in the London Office has been let. Each of these changes has been made to economise. On the other hand, the Committee recommended that the Public Trustee should have an Exchequer grant to cover the loss incurred in administering estates of low value which, by Statute, he, unlike his competitors, is not entitled to refuse. As was announced in another place last May, the Government cannot agree with that proposal.
One of the Committee's most important recommendations is that the method of charging fees in the Public Trustee's Office should be improved, first, by ensuring that the burden of fees is more equitably distributed, and secondly, by ensuring that the administrative work is simplified by eliminating fees which are
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complicated and expensive to assess and collect. The Committee proposed that there should be a composite management fee, payable out of capital, which would be fixed annually at a rate sufficient to meet the estimated expenses of the Office for the financial year. I have given very careful consideration to this proposal, and I am satisfied that this type of fee would be fair to beneficiaries as a whole and would result in substantial economies in administration.
At present, the fees charged by the Public Trustee are paid out of capital or income, and this is determined by him according to settled legal principles. If a fee such as the Committee recommend were now introduced under the existing statutory powers it would be necessary, as the law row stands, for the Public Trustee to determine its incidence as between capital and income in each individual case. He could not, as the Committee suggested, charge this fee to capital. The remedy which this Bill provides is to amplify the power of the Lords Commissioners of the Treasury, with the sanction of the Lord Chancellor, to fix the fees payable in the Public Trustee's Office. The Bill will enable a new Fees Order to be made authorising the imposition of a fee, payable out of capital, as contemplated by the Committee.
If your Lordships care to look at the Bill itself, you will see that Clause 1, which effects the main object of the Bill, provides that every Fees Order made after the passing of this Act must show whether each fee is payable out of capital or out of income. It also allows the Public Trustee, where a fee is payable out of capital, to direct that it shall, nevertheless, be paid out of income, with the consent of the beneficiary entitled to the income, if he is of full age. This power is necessary in a variety of circumstances with which I need not trouble your Lordships. Clause 2 (2) is transitional and requires the Public Trustee to continue to charge the existing fees in certain cases. This will be necessary, for instance, where the matter is governed by an Order of the court or the Public Trustee has entered into some agreement about the payment of fees.
Although a new fees structure is clearly required, my colleagues and I do not accept the recommendation to abolish the so-called withdrawal fee. Such a fee is, I believe, found by many other corporate

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trustees to be desirable, and it is proposed to retain this fee, but at a reduced rate, when the new fees structure is created. I see that the noble Lord, Lord Silkin, is here. He will observe that on this occasion we have not allowed a great deal of time to pass after the recommendations of the Committee, and I hope that he will note that we have taken due account of their proposals and brought them forward in a reasonable time for legislative approval. I beg to move.
Moved, That the Bill be now read 2a.—(The Lord Chancellor.)
3.20 p.m.
LORD SILKIN: My Lords, the noble and learned Viscount on the Woolsack has almost appealed to me to congratulate him on the speed with which this particular Report has been implemented, and I have the greatest pleasure in doing so. As I have often said in this House, the normal period between the date of publication of a Report and its implementation is something like seven to eight years. In this case, the period has been curtailed to one year and seven months, and I think that is a remarkable achievement. The Bill itself is quite unexceptionable. It was necessary to inquire into the working of the Public Trustee Office. The investigation has been done with great skill and efficiency, and the Committee, under the chairmanship of Sir Maurice Holmes, are entitled to be congratulated upon the work they have done and upon its outcome. I am sure they will not resent the fact that the Government have seen fit not to implement every one of their recommendations.
The noble and learned Viscount the Lord Chancellor was quite right to pay tribute to the Public Trustee Office. It is rendering a great service, particularly in cases where it is sometimes difficult to find a trustee, or where people are reluctant, possibly for good reasons, to entrust their affairs to one of the other institutions. I think we should all desire that the work of the Public Trustee should be continued. I fully agree that the Public Trustee does his work with great skill, ability and promptness, and also with sympathy for those on whose behalf he acts.
I should deplore any step that might be taken to reduce the importance of the
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Public Trustee Office or its efficacy. The noble and learned Viscount on the Woolsack has not given any details as to how the fees are to be calculated, but I should like an assurance from him that they will not be in the nature of a deterrent. I do not know if he can say this afternoon whether the fees that will be charged by the Public Trustee for administering an estate will be compatible with, say, what one of the big banks would charge, or whether by means of this reorganisation of fees it is contemplated that they will be higher. If they were to be higher, it would be a great pity, because it would detract from the amount of work they would get and would deter people from appointing the Public Trustee. If the noble and learned Viscount can give an assurance that the fees will be compatible with, and no higher than, those which other institutions would charge, then I think the whole House will be grateful for the introduction of this Bill.
3.26 p.m.
LORD KINNAIRD: My Lords, I have been connected with banks and insurance companies all my days, and I would ask your Lordships' leave to make a few comments, not as a banker or on behalf of banks but from the point of view of the public for whom the Public Trustee acts. There are two points which the noble and learned Viscount on the Woolsack mentioned that I think we must bear in mind. The first is the assurance given in 1906, when the Bill was brought in. that there would be no charge on the public funds, and secondly, that the Public Trustee is forbidden to decline any trust because of the small value of the estate.
I base my remarks mainly on the Report, and the first thing the Report refers to is the financial experience. The Report of the Public Trustee in 1954 says that in the first forty-eight years of the existence of the Public Trustee Office it has shown a net loss of £187,145, which is a considerable sum. They go on to refer to the fact that under the Administration of Justice Act, 1920, the Court was empowered to grant probate to banks and insurance companies. The Report of the Committee of Inquiry makes the gloomiest statement as to the future of the Office that I have ever

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read. They say that the competition with the banks is something the Office cannot face; and that this competition with the banks, with their thousands of offices all over the country, and their close touch with clients and solicitors, will increase. I think that is correct. The Committee point out that the Public Trustee Office have no control over the cost of salaries or overheads, and draw attention to the fact that, from now on, the Office will be saddled with the cost of having to pay equal wages to men and women. It is very hard on a body that has to compete with the banks and insurance companies, which have found as a matter of experience that this is not just, because they train vast numbers of women who, in a few years' time, leave them. It must be a great expense, and it does not seem just that these women should receive the same wage as men. Yet this body, the Public Trustee Office, are asked to compete on equal terms. They say that they have to produce their estimate of costs in an atmosphere of complete uncertainty as to what the future will bring forth.
I agree with what has been said about the value of the Public Trustee Office. find it difficult to believe that they are wise to try to increase their business for private trustees. The Committee come in paragraph 20 to a brighter side of the business. Here they mention that the Public Trustee acts for friendly societies' funds, trade union funds, national disaster funds and for the Government in various activities. They say that they think that side of the business can increase; and that, I feel, is something at which they should definitely aim.
When they come to remedies, in paragraphs 33 to 37, the first suggestion of the Committee is that the Public Trustee should advertise in the Press. It is interesting to note what they suggest should be spent on advertising. They suggest that the Office should advertise on comparable lines with their competitors. They do not say what the amount is, and in paragraph 37 they make the rather astonishing statement that the information as to the amount their competitors spend on Press advertising is not known to them. Yet they recommend that the Office should spend a sum that is limited only by what the banks and insurance companies spend on Press
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advertising. What would be the result of that sort of advertising? I cannot help thinking—as they have already found from experience—that it would attract a large number of small accounts. They tell us that any accounts up to £5,000 involve loss, and the one thing this must do is to increase the number of small accounts.
Who will pay the cost of all these small accounts? The people for whom the Public Trustee is working—the beneficiaries, the life tenants, the trust accounts. They will have to bear the cost of the advertising and the loss which is created. In the case of the bank and the insurance company, the position is quite different: if they make a loss on advertising, it is one of the losses made in business and comes in the profit and loss account. That loss is borne by the shareholder, and not by the people for whom they act as trustees. On that point, therefore, one should consider very carefully whether the Public Trustee is wise to advertise for this private trust business. With great respect, I should like to ask the noble and learned Viscount on the Woolsack whether he approves of these charges for advertising. If he does, may I suggest that the advertising should be limited to the second class of business, the friendly societies, and so on? That is where a profit will be, and if the advertising is taken by them they could well bear the cost; but no cost should be put on to the private trustees.
The noble and learned Viscount mentioned the withdrawal fee. The remark in the Report is astonishing, because in Paragraph 65 the Committee say:
"Finally—and perhaps most important of all—the Withdrawal Fee is in our view inequitable."
They say that it operates harshly against existing trusts which were brought into the Office before the higher rates were imposed. I should like to mention one fact about this subject. The withdrawal, or the winding up of, a trust, must be an important part of the work. From our experience I can say that a great deal of the work arises when the trust is wound up. The fees that are recommended in this Report must be based on a charge to cover that work of withdrawal, because the Committee suggest that no specific charge should be made for it. Therefore, in the scale of fees which they recommended they must have provided for covering this cost.

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If your Lordships look at Paragraph 78 (c), you will see that they also recommend that after thirty years the Public Trustee shall have the right not to make any further charges, including withdrawal fees. If they make that rather astonishing suggestion, the Public Trustee must have made such profits beforehand that it is not necessary for him to go on charging after thirty years. With great respect, I would ask the Lord Chancellor whether he will consider this suggestion. I think the public would much rather have a smaller annual fee year after year, and pay for the withdrawal work when it comes along. The fees must be so based—if I have made my point clear—as to cover withdrawal fees in the earlier years.
I entirely agree with the noble and learned Viscount that the withdrawal fee is not inequitable, and I think we should put that on record. The point that it is referred to in Paragraph 65, where the Committee say it is inequitable, I think really refers to the paragraph that goes before. Paragraph 65 points out that the fee has been increased from ½ per cent. to 1 per cent., and from 1 per cent. to 2 per cent. on the capital value of the trust. I think that that is what they meant was inequitable, and that happened under the existing system. That seems to me to be grossly unfair. With great respect, I would say to the Lord Chancellor that I hope he will be able to say that in future a limit is to be put on the withdrawal fee, and that it will not be quadrupled by the recommendation of the internal finance committee. I am sure that in future the Lord Chancellor will control the fees so that that cannot happen again.
I have only one other point, which is with regard to Paragraph 88 to which the noble and learned Viscount has referred. That says:
"We therefore recommend that a subvention"—
that is, a State subsidy—
"should be given to the Public Trustee … to cover the losses … on the administration of all estates up to £3,000 in value."
I think that that is at variance with the Public Trustee Act, as the Lord Chancellor said at the start there was to be no charge on the public funds. He said they did not agree—I think those were his words—with this subvention. I
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think we could go further, and say that it is entirely a wrong suggestion. Some future Government may say that it was a unanimous recommendation of the Committee. I hoped the Lord Chancellor would say, and that this House would agree, that this recommendation should not be accepted.
3.37 p.m.
LORD DERWENT: My Lords, as one who has been for a good many years in the insurance business, may I say a word in support of one point made by my noble friend Lord Kinnaird on the question of money spent on advertising and trying to increase private trusts—because they are likely to be the small ones, the ones which are not profitable. What must be borne in mind is that where, for example, an insurance company takes a trust that is not in itself, perhaps, very profitable but is likely only to pay its way, profit may nevertheless be made because, through that trustee business, other insurance business is brought into the company. The Public Trustee, who is in competition with other trust organisations, cannot do other business of that type. For that reason, business that may be just profitable for an insurance company or a bank—I am referring to private business—is likely to be a loss to the Public Trustee. Therefore, to spend money on advertising for business that is likely to show a loss, seems particularly unwise.
3.40 p.m.
THE LORD CHANCELLOR: My Lords, I am grateful to the noble Lords who have spoken, and particularly to the noble Lord, Lord Silkin, for his tribute to the work of the Public Trustee, and also for his tribute to the work done in the Committee under Sir Maurice Holmes, in which I most warmly join him. With regard to his third point, about ensuring that fees were not in the nature of a deterrent, may I make it perfectly clear—and I hope this will fulfil what he wanted—that, of course, the Public Trustee must carry out his statutory duty by making both ends meet, but, so far as the Treasury and I myself are concerned, we will do our utmost to see that the fees are on a reasonable basis and also that every possible economy is put into effect (I mentioned two or three, the noble Lord will remember) so that there will not be a burden on fees. By that

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means we hope that the fees will be as low as possible. I cannot give an undertaking on the exact question of their being competitive, because, as I say, there is an overriding statutory duty which I have to carry out but, short of that, I assure the noble Lord that every step will be taken to make the fees as low as they possibly can be made.
My noble friend Lord Kinnaird raised a number of interesting points. There is only one to which I should like to draw the attention of your Lordships. The noble Lord referred to the first sentence of paragraph 14 of the Report, in which it is stated that
"The net result of the somewhat abrupt alternations of profit and loss experienced by the Public Trustee is a deficit throughout the years of £187,145".
But, as the noble Lord will see, the Report goes on to say that that ignores two matters: one is that in the First World War under the Trading with the Enemy (Amendment) Act, the Public Trustee was made Custodian of Enemy Property, and his accounts in that regard showed a surplus of over half a million pounds. Also, if my noble friend will look at paragraph 16, he will see that
"The Public Trustee's cash transactions with the Exchequer during the 47 years of his existence show a balance in his favour of approximately £380,000."
That includes £126,000 representing capital appreciation, but it does not include the value of the office, which was paid for by money earned by the Public Trustee, and for which, as I say, the present value is half a million pounds. So, taking it on balance over the fifty years that I mentioned, the Public Trustee is in credit, if I may put it that way. But, of course, he must always try to keep the fees down so that he is not making a profit out of the matter, which might drive business away.
LORD KINNAIRD: My Lords, I fully realise that a profit of £531,000 was made. I meant to mention it but I forgot. But I did say that that was the part of the business where the profit is made. They say themselves that they see further profits there. But I do not think that money should be spent on advertisement on the private part of the business. The loss is on the private part.
THE LORD CHANCELLOR: I was going to deal with the question of advertising
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in a moment, if the noble Lord would allow me. The only point is that I wanted the House to have the full picture, because I think that is fair to the distinguished men who have been Public Trustees, with many of whom I have had to deal in the course of my ministerial duties. Over the fifty years they have not lost the public's money, and, at the same time, they have not made an excessive profit. That is the way the business should be run. With regard to advertising, which was my noble friend's next point, he will appreciate that the Committee said that there should be no question of public advertising. I think that meets the point which the noble Lord, Lord Derwent, had in mind, too. With that eliminated, it is a difficult matter which requires careful consideration, because this is a public service which some people, for reasons which the noble Lord, Lord Silkin, mentioned and other noble Lords had in mind, desire to use. Therefore, people should know that the public service exists.
I agree with the noble Lord, Lord Derwent, that if one were to over-advertise (if that is a verb) then the effect would be to bring in probably a greater number of small trusts which would not pay the Public Trustee from the commercial point of view. But I think the noble Lord will agree that, while not advertising commercially, there is a certain duty to keep this service before the public in case anyone needs it. I think that is a matter of considerable difficulty on which expert advice should be given and taken.
Having dealt with advertising, I turn to the only other question raised by my noble friend Lord Kinnaird—that with regard to the withdrawal fee. I should like to tell him in general that I have listened carefully to what he said, and that it will be read carefully and examined again. There were two points with regard to the withdrawal fee that affected my mind. The first was that, unless the withdrawal fee was retained, it would otherwise be impracticable fairly to distribute the burden of fees. The second is—and I am sure my noble friend will appreciate this difficulty—that trusts which are managed by the Public Trustee for only a short time would, if only acceptance and management fees were paid, be unremunerative to the Public Trustee. That is one of the ordinary

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incidents of business life when a thing is taken for a short period. But, as I say, having put these points for his consideration, I shall pay close attention to what he was good enough to say. I think I have dealt briefly with the points that have been raised in the debate, but, as always when a matter of a technical nature comes before me, if any noble Lord on reading the debate has any more detailed points on which I can give further information, I shall be delighted to give it if he cares to come and see me at any time. With that, I hope that your Lordships will give a Second Reading to the Bill.
On Question, Bill read 2a; and committed to a Committee of the Whole House.

CINEMATOGRAPH FILMS BILL [H.L.]
3.50 p.m.
Order of the Day for the House to be put into Committee read.
Moved, That the House do now resolve itself into Committee—(Lord Mancroft.)
On Question, Motion agreed to.
House in Committee accordingly.
[The EARL OF DROGHEDA in the Chair]
Clause 1:
The British Film Fund Agency
1.—(1) On such day as may be appointed for the purposes of this section by an order made by the Board of Trade by statutory instrument, there shall be established, in accordance with the provisions of this Act, a body corporate to be called the British Film Fund Agency (in this Act referred to as "the Agency") the objects whereof shall be to make, out of the levy imposed on exhibitors in accordance with regulations made under section two of this Act,—

(a) such payments to, or for the benefit of, makers of British films as are authorised or required to be made by regulations made under section three of this Act; and

(b) with the approval of the Board of Trade, payments to the Children's Film Foundation Limited.

(2) The members of the Agency shall be appointed by the Board of Trade, and the number thereof shall be such (not being less than three nor more than five) as the Board may from time to time determine.
(3) It shall be the duty of the Board of Trade to satisfy themselves, with respect to any person whom they propose to appoint to be a
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member of the Agency, that he has no such financial or industrial interest as is likely to affect him in the discharge of his functions.
LORD ARCHIBALD LORD ARCHIBALD moved to leave out subsection (2) and to insert:
"(2) The Agency shall consist of a person who shall be appointed by the Board of Trade and who shall be assisted by an Advisory Panel to be appointed by the Board of Trade from nominations made by producers and exhibitors. The Board of Trade shall make retaliations providing for the number of persons to be appointed to the Advisory Panel and for the making of nominations by organisations representing producers and exhibitors."
The noble Lord said: In rising to move the Amendment which stands in my name on the Order Paper and before I proceed to my argument, may I express what I think will be not only my own opinion but that of many other noble Lords: that, despite the changes and translations of recent weeks, we are glad that Lord Mancroft is still in charge of this Bill. May I be allowed to make a second point before proceeding to my argument—that is, to declare an interest or, to be strictly accurate and technical, a prospective interest? Some noble Lords may have noticed in the Press that I have agreed to become associated with a new organisation of independent film producers. The association has not yet been formed; that is why I declare it in the form of a prospective interest. But I should make it quite clear that this Amendment and the other Amendments which I have put down have not been drawn or suggested by that new organisation or by any other organisation. In fact, I am sure, from their amateur draftsmanship, that noble Lords will realise that the Amendments are purely my own effort, and nobody else's; and despite my prospective interest, the views which I express in the Amendments will be entirely my own views, based upon my observations and experience of the industry.
With regard to the first Amendment, I think I may say that there are three main reasons for putting it down. As I am a Scotsman, perhaps it would be logical that I should begin with the argument of cost. I think we shall all agree that we should like the agency to be as inexpensive as possible; that as little of the money which is raised by statutory levy should go in expenses and as much of it as possible for the purpose for which it

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is raised—namely, to help in the production of films. I feel that if we are going to have an Agency of some three to five independent people who have to be paid for their no doubt valuable services, it will mean an unnecessary expense. I agree that the machinery for a statutory fund must be somewhat different from the machinery which has been in operation for a voluntary fund, but it need not be vastly different; and the voluntary fund which has been running at some £2½ million a year (a not inconsiderable sum) has, I think, been well and economically administered by a Board consisting of one independent gentleman, a chartered accountant, who has really been the agency in his own person. But he has been assisted by representatives of exhibitors and producers. There is an old saying in show business, "Never tamper with a success," which I commend to the noble Lord in this connection. This has been a successful method, and I do not see why it should not be translated into a form which is acceptable for a statutory fund.
The next point is, as noble Lords often recognise in their speeches on this subject, that here we are dealing with a highly complicated technical business, and if the three to five independent members of the Agency must be selected on a basis which lays down as one qualification that they shall have no interest in the industry—in other words, no experience or knowledge of the industry from the inside—they are not going to find it easy to work out the techniques required. I think that, even if the Agency comprised the full number, it would still be advisable that they should have an advisory panel of representatives from the industry to keep them on the right lines. But if there is to be that panel, do not see any reason why there should be three to five people constituting the Agency. One man like Sir Harold Barton could carry through the job perfectly well, without the additional expense and multiplication which is involved.
I recognise that my noble friend Lord Lucas of Chilworth has an Amendment down which would have the effect at least of bringing in the advice and assistance of representatives of the industry—to that extent we are on common ground. But I would ask the noble Lord, Lord Mancroft, to consider again the point which I
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raised upon Second Reading. May I, at this stage, digress and thank him for the thoughtful letter which I received from him on the point that I raised on Second Reading? Unfortunately, I received it only to-day. Had I received it earlier, it might have been possible for me to avoid putting down some of these Amendments, especially in view of his persuasiveness. I know that lie has answered this point in his letter, but ask him to consider it again and to agree that, for economy and efficiency, the Agency as I propose it is more practical and useful. I beg to move.
Amendment moved—
Page 2, line 3, leave out subsection (2) and insert the said new subsection.—(Lord Archibald.)
THE PARLIAMENTARY SECRETARY, MINISTRY OF DEFENCE (LORD MANCROFT): I should like to begin by thanking the noble Lord for his kind remarks about myself, and to wish him all good fortune in his prospective interest. He has put down this Amendment, and I am sorry if the late arrival of my letter has given him extra work. I would hasten to add that it was not the late writing of the letter but the late arrival of the letter which has embarrassed him, and any further complaints should be addressed to my noble friend Lord Chesham, who answers in your Lordships' House for the Post Office.
This Amendment, and one or two Amendments of the noble Lord, Lord Lucas of Chilworth, are all directed towards the same point, although they approach it from a slightly different angle—that is, the composition of the Agency which is to work this fund. I do not think there is any fundamental difference between the noble Lords, Lord Archibald and Lord Lucas of Chilworth, and myself, and it is not, I think, a very important matter. Certainly, there is no magic in the numbers, and I am not fundamentally opposed to having a single person in charge. I think that there is a practical difficulty rather than a difficulty of principle. If there were just one person, there would be a risk of cutting things rather fine—the risk of unforeseen accident, illness or something like that, which might bring the work of the Agency to a halt at a time when something important was afoot. That is why we think that a membership of three, or possibly, at the most, five, seems to offer some

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assurance that such a situation would not, or could not, arise. We certainly do not have it in mind to appoint a large number of people at great cost to the running of the fund, but rather we envisage a small board of, say, three members, none of whom will be giving his whole time to the job, and whose remuneration will certainly not be excessive. I quite agree with the noble Lord, Lord Archibald, that we do not want to waste a lot of money on paying expensive people—that is not what we think we are doing—although, of course, the remuneration must be sufficient to attract independent persons of standing and reputation to this job.
In regard to the giving of advice to this body, about which the noble Lord spoke, we should prefer not to have a statutorily appointed panel. As the noble Lord knows, the Cinematograph Films Council are already empowered, under the terms of the Cinematograph Films Act, 1938 to keep under review the progress of film production, and to report on it to the Board of Trade at any time. Of course, it is the intention of the Board to consult the Council about framing the regulations. The noble Lord appreciates the importance of the regulations—we discuss them in the next clause. It is the regulations which the Agency have to administer; and the drafting and the construction of the regulations, and their possible amendment from time to time, are just as important as the actual composition of the Agency.
I think I may say this in conclusion. Obviously, it is inconceivable that persons of outstanding ability who will be responsible, if your Lordships pass this Bill, for running the Agency will neglect the elementary precaution of keeping in touch with the opinion of the various sections of the film industry. So, unless any noble Lord feels very strongly about it, I would rather leave unaltered the composition of the Agency as set out in the Bill. I do not think that there is anything fundamentally vicious in the suggestion, but, on the whole I believe that our system is preferable to the one proposed by the noble Lord.
LORD LUCAS OF CHILWORTH: Before I progress with this argument, may I add my felicitations to the noble Lord, Lord Mancroft, upon his new
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appointment. I watched the list daily, and the comings and goings on television, and when I did not see the face of the noble Lord, Lord Mancroft, beaming at the television cameras my heart went into my boots; but I cheered myself up when I heard that he was going to the Ministry of Defence. I can imagine no better Ministry for the noble Lord, and I can imagine no bigger task, for his first task as Parliamentary Secretary to the Ministry of Defence, than to defend some of the provisions in this Bill. He can now start by defending this one.
From the noble Lord's conciliatory opening words I was hoping that he was going to accept the Amendment of my noble friend, because anybody who knows the slightest thing about this industry knows how complicated it is. "Complicated" is about the greatest understatement I can make. But what does the noble Lord do in his Bill? He immediately rules out the possibility of there being upon this Agency anybody with any knowledge of this industry. If the noble Lord will look at the provisions of Clause 1 (3), he will see that it is to this effect:
"It shall be the duty of the Board of Trade to satisfy themselves, with respect to any person whom they propose to appoint to be a member of the Agency, that he has no such financial or industrial interest as is likely to affect him in the discharge of his functions."
If there was one thing which made the body that has administered this Fund all these years the outstanding and efficient body that it was, it was the fact that it was composed of men who lived their daily life in the middle of this industry. Now the noble Lord is to pass them all aside, and to make quite certain that nobody will be a member of this Agency if he has any working interest in the industry. I say, with great respect, that that is entirely wrong.
I have been interested in this subject—though not in any financial sense—since I had to take on responsibility for the film industry, when I used to stand at the Despatch Box at which the noble Lord now stands. I have taken a great interest in the industry, and of all the complicated industries I have never known one like it—and I have had my fair share of complications in industry. If there is one thing one wants at the right hand of anybody who is to administer this Fund, it is someone who

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is in daily touch with this industry, both on the exhibiting and on the production side.
I was hoping that the noble Lord, Lord Mancroft, would give some indication whether he was going to meet us. As he has quite rightly said, there is a slight difference between the Amendments of my noble friend and myself. I do not go so far as my noble friend Lord Archibald, because I know the delicacies of Government Departments, and I thought that, in my Amendment, I would try to meet them by letting them have their three or four outsiders, completely independent and having no financial interest, but include also, as part and parcel of the Agency, one member from the exhibitors and one from the producers, nominated by the President of the Board of Trade, after consultation with the respective sides of the industry—that is, people actually working in the industry. I do not even want them to be paid. Let the industry pay them. As my noble friend has said, when we have paid this Agency (which to-day works on a voluntary basis, the work being done by members of the industry), and when we have paid for the other things which the noble Lord will see if he will turn to the Schedule—three or five people are to have pensions, superannuation and all the fit-up of the permanent Civil Service; and there will be the cost that the Customs and Excise want to charge to the levy to pay their expenses—those who are supposed to benefit. British producers, may find their levy whittled away.
Before we proceed further, I do not know whether the noble Lord would like to try to persuade my noble friend to withdraw his Amendment, but what is he going to do about mine? He can have either my noble friend's Amendment or mine, but I must tell him that we shall go to great lengths to see that this Agency has such people attached to it in some way. I would myself prefer them to be members of the Agency. I do not mind a statutory advisory committee, for if the noble Lord is sincere in saying, "Of course we shall consult all the appropriate sides of the industry"—and I do not doubt his sincerity—let us have it in the Bill. If I can see it in the Bill I shall feel safer. Perhaps therefore the noble Lord might, for the convenience of your
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Lordships, even on this Amendment, indicate how accommodating he is going to be upon the principle of having on the Agency representatives of the industry. I do not want them to outweigh the independent members, and my Amendment was framed with that point in view.
I do not know whether he would prefer to have a statutory advisory body. If my noble friend Lord Archibald will not mind my saying so, I can see the point made by the noble Lord, Lord Mancroft, that for the Agency to be wrapped up in one member would perhaps offend against all the well-known canons of a Government Department. Would the noble Lord prefer to have members of the industry as statutory members of the Agency? Would he prefer to have a statutory body composed of all members of the industry presided over by an independent chairman in an advisory capacity? I must warn the noble Lord that I do not think we on this side of the House, and even some noble Lords on the other side, will be satisfied with the passing over of the administration of a fund that may total millions of pounds to people who, in the very nature of the wording of this Bill, are completely divorced from the day-to-day operation of one of the most intricate industries in the country. Perhaps the noble Lord would like to indicate to your Lordships now how he intends to proceed.
4.10 p.m.
THE EARL OF SWINTON: My experience of the industry goes so far back that I may almost be regarded as out of date, but the industry does not change very much. I was responsible, about thirty years ago, for the original Act on which this kind of thing is based; and, after all, it has stood the test of time. The noble Lord, Lord Lucas of Chilworth, who administered it very well when he was in the Government, said, "You cannot operate this Agency unless you have all the experts in it." By experts, I gather that he means people engaged in the different trades—I suppose producers, exhibitors and a hundred-and-one odd societies. I am not referring to societies in any offensive way, but there are a tremendous number of them.
As a matter of fact, I did not find the help of experts essential. When we started off on the Cinematograph Act of 1926, and I wanted to recreate the British

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film industry, I got together the exhibitors, the producers and the renters (as they were then; I do not know if they still are), and I said to them: "Now, gentlemen, if you will produce some plan which I think is reasonable. I will give statutory effect to it." I gave them nine months in which to produce a plan—it seemed a suitable period for gestation. But long before that nine months was up they came to me and said: "There is not the faintest chance of our ever agreeing upon anything; therefore you had better do it." I am bound to say of the Board of Trade that, while they are very good indeed about making commercial treaties and so on, I do not think anyone in the Board has ever been to a "movie". No one could help me very much, so I wrote the Bill myself. I shall never do such a thing again. When I had done it I left them to correct it. That led me to believe that you may do some quite good work for an industry though you are not an expert in that industry.
I have never been interested in the film industry; I do not suppose that I ever shall be. I am getting a little old now for little ventures of the kind into which Lord Archibald is going—and good luck to him in them! But it seems to me that, having regard to the position of this industry, the ordinary members of the business community, like me, come down on the side of Lord Mancroft rather than on the side of the noble Lord. After all, what is it that we have to do here? An Agency is going to be set up which is to receive certain amounts of money from a levy. As I understand it, that same Agency has to decide which venture in film making it is going to back.
LORD LUCAS OF CHILWORTH: No, that is not the case. I thought that the noble Earl did not understand the position. What I said was that this Agency is entirely different from the Film Finance Corporation. This is an Agency which is set up to administer a specific sum of money that is gathered by a levy upon the industry.
THE EARL OF SWINTON: I followed that.
LORD LUCAS OF CHILWORTH: I hesitate to suggest this to anyone with such great experience as the noble Earl undoubtedly has, but I think that if he
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would read the Bill he might appreciate the position. I do not want to have Toms, Dicks and Harrys, upon this body. All I suggest is that those who are going to contribute to the levy should have a representative and those who are going to benefit from the levy should have a representative, because that is what has happened in the past.
THE EARL OF SWINTON: The noble Lord has instructed me very exactly in the business. I have read the Bill or I should not be here to talk about it. I was perfectly right in saying that this clause sets up an Agency to administer the levy on exhibitors which is provided for in Clause 2. Clause 3 states that payment is to be made by the Agency to the makers of British films. That is exactly what I have said. The noble Lord need not have sought to correct me. What happens is that this Agency takes whatever sum is collected by the levy—a sort of continuation of the Eady Levy—and then has to decide who among film makers is to benefit from it.
LORD ARCHIBALD: I am sorry to interrupt the noble Earl, but I think we are getting a little involved at this point. It is anticipated—if the anticipation is wrong, Lord Mancroft will probably correct it—that the administration of the Production Fund will continue along much the same lines that it has operated on for the past several years: that is to say, money will be paid out in respect of films which have been shown largely in proportion to their earnings at the theatres in this country. So the Agency does not really have to decide as between one venture and another.
THE EARL OF SWINTON: If the noble Lord means that the Agency has to do this on an actuarial basis—to distribute the levy money to certain people on an actuarial basis—then, obviously, you do not need for that purpose the services of a body made up of experts in the film industry; all you need is a competent accountant. But, as I understand it, that is not at all what is going to happen. The object of this levy, as I understand it, is to assist in British film making. Therefore, it is going to be distributed in the way in which it is thought best in the interests of British film making. Really the issue lies in a very small compass: should the distribution of this Fund be in the hands of entirely independent

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people, or should you have an independent chairman plus others, such as one or two other independents, and then have some interested parties—interested in the sense of being people nominated by or selected from nominees presented by producers and so on? I think that the sensible thing to do is to leave it in the hands of entirely independent people. And I will tell the House why. If you say that we have got to have representatives of the producers on the Board, it is going to be extremely difficult. There are producers who are also exhibitors, like the great organisation with which I understand the noble Lord, Lord Archibald, is connected—
LORD ARCHIBALD: No.
THE EARL OF SWINTON: The noble Lord is not now connected with it? He has now become an independent. That shows how difficult all this is. Let me say, then, the late Archibald organisation. Then there is Mr. Rank, who does an admirable job both as exhibitor and as producer—and, I suppose, as renter also, if renters still exist. Then there are the independent producers whose ranks Lord Archibald is now going to join. There are also the people who come betwixt and between. At any rate, a large number of people make films. There are, in addition, the exhibitors who exhibit them, and they do not always take quite the same view about what is a good film. The exhibitor looks at the box office receipts, and personally I do not think that that is a bad test. It is suggested that we must select representatives of producers and exhibitors and put them on this board which is to distribute, to apportion, the levy. It seems to me it would be very difficult and very invidious for an interested party who was on the board.
Take the ordinary commercial practice with which we are familiar as directors of companies. If some matter comes up in which you have an interest, you declare your interest and you do not vote. Let us suppose that Lord Archibald sits on the board and that he has a perfectly admirable proposition which the independents would like to back. Of course he must, not advocate it, and he certainly could not vote upon it. I think that is ging to put everyone in a very difficult position. Either we take somebody so
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important and distinguished that he will be interested in almost every decision that conies up, and therefore will be unable to give an opinion, or we take somebody who is, so to speak, anodyne in the industry and will never be interested in any proposition that comes before the board. Is it not much better, and more sensible, to take two or three independent people, who can get all the advice they want?
Believe me—and I have had experience in administering such a body for the best part of twenty years—it is not so frightfully abstruse a proposition. We all go to the "flicks"—at least most of us do—and the ordinary man is not a had judge of what is likely to be an attractive proposition. But it is very difficult to judge whether a film will be a commercial success. I remember Mr. Sam Goldwyn telling me that it was the hardest thing in the world to judge what was going to be a good film. He gave me one or two negative words of advice about the subject (I do not think I will repeat them to-day, even though there are no Bishops here) which I found extremely useful and rewarding. I think that the ordinary man is not too bad a judge of what the public taste is likely to be, and I think that the man who has a good commercial sense will know whether a sensible commercial proposition is being put up to him. For these reasons, I come down on the side of the Government.
LORD WILMOT OF SELMESTON: I am afraid that the noble Earl is talking about something other than the Bill which is before your Lordships today. It seems to me that he is thinking of the Film Finance Corporation, but that works quite differently and is not the subject of the Committee's consideration. Before the noble Lord, Lord Mancroft, replies, I should like to ask him whether it is really necessary to have all these people appointed and all these charges on the small fund, when in fact the Board of Trade are well equipped for and quite competent to carry out these functions under the regulations, if they are advised by the representatives of the various branches of the industry, as provided by my noble friend's Amendment. It seems to me that that would be the ideal and most economical way of doing a simple jab of administration with which the Board of Trade are quite familiar. I think that the Government have to show

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some good reason why money should be spent and time should be wasted on duplicating administrative posts which are all already being perfectly well filled.
LORD BURDEN: I should like to say a word or two in support of the Amendment moved by my noble friend Lord Archibald and of the case put up by my noble friend Lord Lucas of Chilworth. As I see it, some millions of pounds are to be taken from one side of the industry for the benefit of another side—the producing side. I think everyone would agree that during recent years some admirable British films have been produced, and that has to be put to the credit of the producing side of the industry; but I know of no other industry where such a large sum is abstracted from it and spent by a body of men who, under the argument as adduced, may have no knowledge of the industry. The cinematographic industry is even worse off in this connection than the long-suffering body of taxpayers in this country. The taxpayers have an opportunity of expressing their opinion on how their money is spent, and if they think it has been spent wrongly they have an opportunity of dealing with the persons who have spent it. But these independent gentlemen—if someone will define for me what an "independent gentleman" is—will have all the power in regard to the use of these millions of pounds but will have no responsibility for the result. It is the exhibiting side of the industry which will have to face up to the result of their expenditure. What an admirable position to be in! Power without any responsibility: that will be the position of these independent people.
Further, as I see it, it may not only be that these people will have no knowledge of the industry; it may be something worse than that—they may have a mistaken knowledge of the industry. They may have certain hobby-horses to ride and there will be no check on those idiosyncrasies until films reach the box office. Surely, in an industry of this kind, with its many problems and difficulties, the body handling this money, which has come out of the industry itself, should be made up of men with a knowledge of its many complex problems. I hope that when the noble Lord, Lord Mancroft—I would join my noble friends in con-
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gratulating him—comes to reply, he will find some middle way of helping us in this problem.
LORD JESSEL: May I say from this side of the Committee how glad we are, especially those of us who occasionally speak on trade matters, that my noble friend Lord Mancroft is still going to reply to these debates. Listening to the debate so far, I am inclined towards the Amendment moved by the noble Lord, Lord Archibald, and also the Amendment in the name of the noble Lord, Lord Lucas of Chilworth. On the Second Reading of the Bill, the noble Lord, Lord Mancroft, said [OFFICIAL REPORT, Vol. 200, (No. 21), col. 1337]:
"The Agency is not a policy-making body, and it will be to the Board of Trade, who will make the regulations, that the film industry should make their representations."
I am not wedded to the actual wording of either of these Amendments, but I am convinced that the intention behind them is right. I should be satisfied if we had something in the Bill to ensure that in the making of these regulations there was trade representation in an advisory capacity.
THE EARL OF SWINTON: I should emphatically agree with that, but not with regard to the distribution of the money.
LORD JESSEL: I should have thought that the regulations would effect the carrying out of the policy for the distribution of the money. However, a great deal has been said on both sides about this matter and I will reserve my opinion until the noble Lord, Lord Mancroft, gives us the benefit of a further few words.
LORD ARCHIBALD: Before the noble Lord, Lord Mancroft, replies, may I say that I am not pressing this Amendment, in the sense of being prepared to die in the last or, as the noble Lord said on another occasion, in the first ditch. If the Government feel that three to five members are essential, I should be satisfied if they would accept the principle of having an advisory panel associated with the Agency, or if they would accept my noble friend's alternative suggestion. I am not going to make a big fight for an Agency of one, as against an Agency of three or five. Although the Agency will be carrying out regulations made by the Board of Trade, they are bound to have a certain amount of freedom and

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discrimination in carrying out the regulations. Even at this stage I think expert advice is very necessary.
I am grateful to noble Lords, including my noble friend Lord Burden, who have supported me on this matter. I would take this opportunity of correcting a misapprehension which I am sure will crop up again in the course of our discussions: that the levy consists of a sum of money which is transferred from one section of the industry to another. In the past, the levy has been a sum of money which has been left in the hands of the exhibitors by a reduction in entertainments tax, and has really been the voluntary transfer of a reduced amount of entertainments tax into a production fund. As I said on Second Reading, unless that happens again, the exhibitors will be badly treated. However, I think it is implicit that it will happen again. It is the transfer by, if you like, a side method of entertainments tax and not from exhibitors to producers. Having said that, I would appeal to the noble Lord, Lord Mancroft, to accept the offer which has been made from this side: that we are prepared to let him make his choice as to the method of carrying this out, but that there should be, with the Agency, in some form, some advisory or other trade representation.
LORD MANCROFT: Let me try to sum up the debate we have had, really on Amendments 1 to 5, because we have now gone into the alternative suggestion of the noble Lord, Lord Lucas of Chilworth contained in Amendments Nos. 2 and 5. I am sorry that I cannot concede this matter of principle, but I will do what I can to meet the points made in the debate. I would first of all make clear—because I think it has been a source of some confusion—that the administration of the voluntary levy, the Eady levy, was in accordance with a voluntary agreement and the administration had, of necessity, to have fairly wide powers. The Agency under the Bill will administer the Fund in accordance with strictly drawn regulations, made under Clause 3, and will not have any wide powers. It is for that reason that I feel that trade advice is unnecessary.
My noble friend Lord Jessel raised the essential point when he brought in the question of regulations. That is quite a different matter, which I will come to in a moment, and there I may be able to
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help. However, I am afraid that I must side with my noble friend Lord Swinton, rather than with noble Lords opposite, on the question of trade advice or assistance. I think it was the noble Lord. Lord Lucas of Chilworth, who raised the question of pensions, bat I would say that we do not intend to creat a top-heavy and expensive body. These people are to carry out the administration of strictly drawn regulations in a capacity which is different, because they are, in a way, trustees for this money. That is why I think it is important that it should not be the Board of Trade. No doubt the Board of Trade have the technical knowledge and the technical people to do it, but these people are to be trustees for public funds, and I feel this should be an external body answerable in a different way from a Government Department.
LORD LUCAS OF CHILWORTH: Would the noble Lord indicate what he means by the expression "they are trustees for public funds"?
LORD MANCROFT: They are not Government funds in the hands of the Treasury: they are funds outside the Board of Trade. They are funds for which the Agency though not legal trustees—
LORD LUCAS OF CHILWORTH: They are funds belonging to, and coming out of, the proceeds of the industry. They do not belong to the taxpayer; they come out of the pockets of the exhibitors.
LORD MANCROFT: Yes; as I said, the Agency are trustees for these funds; but they are not trustees for the Board of Trade to the Treasury, or anything like that. That is why I think they should be separate from the Board of Trade. It is a small and technical point but, I feel, important. As I say, for this reason I do not think it is necessary to have these technical experts on this Agency, not only because I do not know where we should begin or end in having them, but because I regard it as essential that they should be apart and independent from tae trade. They have not a very complicated job to do. As the noble Lord, Lord Lucas of Chilworth, said, the film business is an immensely complicated one, but the Agency have not to administer, control and advise, in the same way as the National Film Finance Corporation might have to; they have an entirely

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different job, that of merely carrying out carefully drawn and detailed regulations.
The famous words "Put it in the Bill!" have been used. It was my noble friend Lord Swinton who taught us that cry when in Opposition: a powerful Greek chorus in unison used to cry, time and time again, "Put it in the Bill!". Now, unfortunately, the cry comes from a different quarter. I will try to put something in the Bill that may help. I have been considering this subject and discussing it with my noble friend Lord Fairfax of Cameron, who is helping me in this matter, and perhaps this suggestion may help. I am afraid that I must reject all five of these Amendments, and stick to the point that the Agency must be independent of the industry and must be constituted in the way laid down by the Bill. But, since I have made the point that the regulations are so important, and since it is these regulations that the Agency will be administering, I make this suggestion, which perhaps may help.
At the moment the Board of Trade have every intention of consulting with the Cinematograph Films Council concerning these regulations. That Council, as your Lordships know, covers almost every branch of the trade, including the trade unions. As I say, the Board of Trade have every intention of consulting the Films Council on numerous matters, but, so far, it is only an intention. Would it help noble Lords if I put that in the Bill? Supposing I made that a statutory obligation on the Board of Trade, it would have this effect: that the regulations—strictly drawn and detailed regulations—which the Agency have to administer, will have been drawn up after statutory consultation with all those concerned. I think noble Lords opposite will agree that that goes a long way to meet their suggestion that technical amateurs are going to put their fingers into this complicated pie and bring out goodness knows what. I offer that as an earnest of my intention to try to help them, and to show that I see what troubles them. But I am afraid that I must insist—even though noble Lords opposite may feel compelled to divide—that the Agency must remain as constituted in the Bill; therefore I cannot accept any of these Amendments which attempt to bring in trade representation.
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If noble Lords want to decide that in the Lobbies, well and good. And I may say that I shall not withdraw my offer to consider making consultation with the Films Council a statutory obligation on the Board of Trade.
4.39 p.m.
LORD BURDEN: While my noble friends are coming to a decision in this matter, I should like to put this point to the noble Lord, Lord Mancroft. The consultation he mentions will probably take place even if it is not required by the Bill. But we have to realise that, in consultation in regard to regulations, of necessity the last word, while resting with Parliament, rests in the main with the Department concerned, because it is impossible to get regulations amended in either House. For a long time the problem of regulations has been receiving attention. I wonder whether it would be possible for draft regulations to be debated in this House and another place before the regulations are finally submitted under either the Affirmative Resolution or the Negative Resolution procedure in the ordinary way. It is possible. I think, for draft regulations to be discussed, and that might be helpful for all who are interested in this point. However, I am an outsider in this matter, and it is my noble friends Lord Lucas of Chilworth and Lord Archibald who are the principal people concerned.
LORD LUCAS OF CHILWORTH: I take it that, as I am in charge of this Bill for the Opposition, the noble Lord, Lord Mancroft, made his offer to me. Far be it from me to look a gift horse in the mouth, but may I defer my comment upon his offer until I come to the next Amendment, which I will move formally for the purpose of giving the noble Lord the opportunity to reply?
LORD MANCROFT: What does the noble Lord mean by "the next Amendment"?
LORD LUCAS OF CHILWORTH: Amendment No. 2. In the meantime, perhaps my noble friend Lord Archibald, in view of the discussion we might have upon it, will think fit to withdraw his Amendment.
LORD ARCHIBALD: I thank the noble Lord, Lord Mancroft, for his offer,

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but I am bound to say that in this connection I do not think it amounts to anything at all. There are subsequent clauses where the offer he has made might fittingly be put in, but I do not think that putting it in this clause really makes any difference to the set-up. He is leaving us exactly where we were. However, we will see what he puts down, and if we can accept it, good and well. If riot, we must think about an Amendment at the Report stage. In the meantime, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
4.42 p.m.
LORD LUCAS OF CHILWORTH LORD LUCAS OF CHILWORTH moved, in subsection (2), to leave out all words after "Trade" and to substitute:
"shall include one person appointed as representing exhibitors, one person appointed as representing the makers of British films and not less than three nor more than five persons appointed as independent members, one of whom shall be the Chairman of the Agency."
The noble Lord said: In moving this Amendment, I should like to reply to the noble Lord, Lord Mancroft, and perhaps clear up a few misapprehensions. The noble Lord has said that this Agency has only an administrative job to do—a set of clerks could do it. They have no policy to enact; they are the physical interpreters of the regulations which will be laid down by the Board of Trade. They have no allocation of money, and they do not have to pick out which film or which producer is worthy of a cut in the subsidy. But my experience in this industry is that the things that look the most simple are, in practice, the most complicated. In this matter, there will be a great deal of pettifogging details. As we go through this Bill, your Lordships will appreciate the detail of daily administration where this Agency of five men, entirely independent, can be widely helped by having somebody sitting in with them who knows both the production and the exhibiting side of this industry.
That is the purpose of this Amendment. It is really to be helpful. When we come to some of the other Amendments which will illustrate the difficulties, I hope the noble Lord will concede the point I am making now. As I have said, although I am not going to look a gift horse in the mouth I do not consider the Film Council to be the appropriate body for this task. Maybe they are the appropriate body to discuss regulations. This
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Agency, as the noble Lord, Lord Jessel, has said, for all effective purposes could be composed of a lot of clerks. They have to work out the derail and the working of this Fund. This has been done in the past by the industry. The industry's experience of the voluntary working of the levy has been that there have been many complications, but, because it has been voluntary, and with the good will of all sides of the industry, one making a concession and the other making a concession, it has worked harmoniously.
Once you make it a statutory obligation, however, and once you put in a Bill that default of that statutory obligation is going to attract penalties of £100, then it becomes a different matter. That is the difference between having a voluntary method and a statutory method, and that is why I thought it would be helpful to this Agency if they had sitting in with them, not the managing director or anyone like that, but two of the officers, one from the producers' side and one from the exhibitors' side. May I impress this point upon the noble Lord, Lord Mancroft? Those are the only two sections of the industry who are really interested, and that is the whole point of putting down this Amendment. I will not waste your Lordships' time by asking the noble Lord, Lord Mancroft, to reply to that point, because I take it that his reply would be precisely the same as before. Be rather shut the door when he said that, whatever I had to say in my advocacy of this Amendment, his answer would be, "No."
LORD MANCROFT: I thought the noble Lord said it.
LORD LUCAS OF CHILWORTH: No. The noble Lord said, "From one to five, the answer is No'." I think I am right. That is unlike the noble Lord.
LORD MANCROFT: I did not say that at all.
LORD LUCAS OF CHILWORTH: I beg the noble Lord's pardon if I misinterpreted him. I thought he said that, whether I take your Lordships into the Division Lobby or whether I do not, the answer is the same. I have a higher opinion of the noble Lord than that Perhaps what. I have said now, and what I will say upon other Amendments, may

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convince the noble Lord differently. I will accept his offer, and if he likes to have consultations—if it does not come out in our discussion upon further Amendments—as to the form his Amendment will take, I shall be only too happy to place myself at his disposal. But I must warn him that I reserve the right upon the next stage of this Bill to put an Amendment down which will have as its purpose giving to this Agency the advantage of advice from both the producers' and the exhibitors' side on the detailed day-to-day working of the Fund. If the noble Lord wishes to say anything, I will sit down before I withdraw my Amendment. I beg to move.
Amendment moved—
Page 2, line 4, leave out from ("and") to end of line 6 and insert the said words.—(Lord Lucas of Chilworth.)
LORD MANCROFT: I will not repeat my arguments all over again, and I have only two short points to make. One is to apologise to the noble Lord, Lord Lucas of Chilworth. Nothing was further from my mind than to reject his Amendment before I had heard his advocacy upon it. I thought he had made his speech upon his two Amendments, and did not realise he had more yet to say. The last point is this. The Board of Trade are going to consult the Films Council about the framing of the regulations. I have suggested that consultation should be made statutory. That being so, I did not see, and after listening carefully to what has been said I still do not see, that an Advisory Panel is necessary. I think it is inconceivable that the persons directing the Agency will not keep in touch with all shades of opinion in the industry. Lastly, this is not a job for clerks. Whilst the Agency do not decide on the films for which payments may be made, the Agency must decide on the amounts to be paid to any person on the basis of the information or accounts submitted by that person. That is not really a job for clerks. Let us be quite clear that we have no misunderstanding about what has and what has not been promised. I cannot accept Amendments Nos. 1 to 5. If the noble Lords are so minded, I will agree to produce on Report stage a suitably drafted Amendment—and I shall be happy to have the help of the noble Lords if they
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I will be good enough to give it to me—to make that point: that consultation with the Films Council about the framing of the regulations shall be statutory. But that, of course, has nothing to do with the Agency. It is only regulations which the Agency have to administer. I make it clear that I cannot accept any of these Amendments Nos. 1 to 5.
4.51 p.m.
LORD LUCAS OF CHILWORTH: Would the noble Lord be helpful to us in this? Would he, for the benefit of the House, just give us some indication of the type of person, his qualifications, et cetera, that the Government intend to to put upon this Agency, so that we may have in our minds some idea?
LORD MANCROFT: I am "thinking aloud" now, and if, when the Agency are appointed, they include people totally different from those I am now guessing at, the noble Lord will acquit me of any breach of promise. It is purely guesswork. I should like to see an accountant with experience of the industry in some shape or form; a lawyer who has had some dealings with the industry or knows company work well, and also, probably, somebody who has been a civil servant or in some way connected with a Ministry, who has had some dealings with this sort of work—in fact, an administrator. I should like to see one, two or three of those, and possibly there are others I would have too. But those occurred to me—a lawyer, an accountant and an administrator, all of whom have some experience of films, or at least go to the films now and again. We had a television debate the other day. Everybody in this House, with about two exceptions, got up and said that he did not like television, would not have television at any price and made a speech of about three-quarters of an hour about it. In this debate, we like films and go to them frequently.
LORD LUCAS OF CHILWORTH: I am grateful to the noble Lord. I endorse his first selection. I do not agree with his second: I am filled with horror. I am afraid—that is why I asked him the question—that this Agency of three to five might be found to be the home of retired, but not retiring, civil servants. However, I will accept the noble Lord's offer. I will withdraw this Amendment

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on the understanding that I may return to it and that I am open to have consultations with the noble Lord as to the framing of his Amendment.
THE EARL OF SWINTON: Would the noble Lord appoint Lord Lucas of Chilworth and myself, without pay and allowances but with a free pass to the cinemas? I think that would satisfy everybody.
Amendment, by leave, withdrawn.
Clause 1 agreed to.
Clause 2:
Levy on exhibitors
(2) Regulations under this section—
(a) shall provide for defining the classes of persons, being exhibitors, who are to be liable to the levy and may provide for the exemption of any exhibitors or classes of 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—

(a) 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, be approximately three million seven hundred and fifty thousand pounds;

(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

(4) The Commissioners of Customs and Excise shall be charged with the duty of collecting the levy, and they shall pay the proceeds thereof to the Agency after deduction of such sums as are necessary to defray the cost of collection.
4.56 p.m.
LORD LUCAS OF CHILWORTH LORD LUCAS OF CHILWORTH moved, in subsection (2), to add to paragraph (a):
but shall in any event provide that—

(i) in any week from Sunday to Saturday in which the box office takings of an exhibitor after deduction of entertainments duty, do not exceed a sum calculated by multiplying such an amount as shall be determined by the Regulations by the number of seats in the cinema, in such a week the exhibitor shall be exempt from liability to the levy, and

(ii) that in any week in which the box office takings after deduction of entertainments duty exceed the sum calculated as aforesaid, the exhibitor shall have the option of paying either the levy the excess of such box office takings in lieu."

The noble Lord said: I think this Amendment will give your Lordships at
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least some indication of some of the administrative difficulties of which I have been trying to persuade the noble Lord, Lord Mancroft, to take care. When the Board starred to operate the present levy, it was found that they would have to exempt some cinemas from paying the levy because their turnovers and gross takings were so small that they could hardly scrape together a living. The noble Lord, Lord Westwood, will correct me if I am wrong, but there are, I think, somewhere in the region of 5,000 cinemas in the country.
LORD WESTWOOD: Roughly 4,500.
LORD LUCAS OF CHILWORTH: I thought I was not very far out. There are 4,500 cinemas in the country, and there are a whole host of them whose gross takings do not amount to £150 a week, and where the proprietor may make for himself £5 to £10. So, in their wisdom, the then administrators exempted from levy payments cinemas which did not gross £150 a week. I am speaking roughly; there were some other little refinements, but that was the standard.
Then the difficulty arose, as always happens when there is a dividing line, that there were marginal cases. When you had a bottom limit of £150 a week, you would then find that on the rate of levy the man who took £155 a week was worse off than if he had taken only £150, because the levy came to more than the marginal surplus. So an arrangement was come to—a voluntary arrangement, as all these arrangements were on the administration of this levy—whereby, after an accounting examination—and there were accountants employed by the administrator of the levy to go into his figures—the renters or the distributors very handsomely said, "Well, if the case is proved that this poor fellow will be simply out of pocket, that he will have to pay the levy out of his losses and not out of his profits, what we will do is to reduce his film hire to make that good."
That of course was a very nice gesture and went along smoothly, because it was a voluntary arrangement; but now we come up against the difficulty of how we are to interpret that, how to put it in terms into a Bill which makes the payment of the levy statutory. You can hardly put into this Bill a clause that will

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make statutory the voluntary offer of the renters. I think I have made that clear to the noble Lord, have I?
LORD MANCROFT: Yes.
LORD LUCAS OF CHILWORTH: On the exhibiting side of this industry, considerable research has gone on as to how to arrive at a formula which will take care of the proper exemptions and the marginal cases. That is how this Amendment has been framed.
If your Lordships will look at subparagraph (i) of the Amendment, you will see that it says:
"in any week from Sunday to Saturday in which the box office takings of an exhibitor after deduction of entertainments duty, do not exceed a sum calculated by multiplying such an amount as shall be determined by the regulations by the number of seats in the cinema, in such a week the exhibitor shall be exempt from liability to the levy …"
I suggest to the noble Lord that, instead of having an arbitrary figure of £150, the figure should be based upon a calculation of so much a seat, which will be arrived at on the basis of the man's overhead charges. Then we come to sub-paragraph (ii) in this Amendment—namely
"that in any week in which the box office takings after deduction of entertainments duty exceed the sum calculated as aforesaid, the exhibitor shall have the option of paying either the levy or the excess of such box office takings in lieu."
According to the exhibitors' side of the industry, in their researches with accountants, the figure arrived at was approximately 6s. per seat. That would indicate, if the £150 limit was calculated and said to be right, a cinema with a seating capacity of 500 or under.
I do not know whether your Lordships would like me to go through the rather complicated scale upon which the levy is calculated. It is a percentage or a sum of money calculated upon the net box office admission charges. On the gross box office prices up to 8d. no levy is charged; from 9d. to 1s. a farthing is charged on a seat; from 1s. 1d. to 2s. 2d., a halfpenny; from 2s. 3d. to 2s. 6d., three farthings; on 2s. 7d. a penny; and on 2s. 8d. and over, a penny-farthing That is the amount of the levy which is deducted. In regard to a cinema seating 800, the amount would be £240 a week. On anything under £240 the levy would be paid. If the same figures are assessable
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in the future as they have been in the past, according to the scale that I have read out, it may be that a levy would be £10 or £15 in excess of the marginal cinema owner's takings, or in excess of the minimum. He would have the option of paying one or the other. On the average price of seats in a cinema I should say that the levy would work out at about £5 on £150. Your Lordships can see that the cinema owner should have the option of paying either the one figure or the other. As I say in my Amendment
"the exhibitor shall have the option of paying either the levy or the excess of such box office takings in lieu."
So if his levy payment were £5 and his box office figure £2 10s., he would pay £2 10s., and would not incur a loss.
This is a levy upon the exhibitors to make it profitable to the producers to produce films, because the formula for paying the producers is upon box office gross takings. I think the noble Lord will agree with me that it would be fair that the exhibitor should at least see that his standing charges are covered before he has to pay a levy to make another section of the industry more profitable—in other words, he should not be asked to pay a levy to the producers if he himself is losing money. That is the principle behind this Amendment. The exhibiting side of the industry have informed me that, after careful researches, they have come to the conclusion that this is the most equitable way of arriving at the exhibitor's liability to a levy. I think I have explained the Amendment clearly and that there is no need for me to say any more. I beg to move.
Amendment moved—
Page 2, line 27, at end insert the said words.—(Lord Lucas of Chilworth.)
5.6 p.m.
LORD WESTWOOD: This is an Amendment that I strongly support and I would ask the Government to agree to it. As you have heard from the noble Lord, Lord Lucas of Chilworth, the small cinema owner has at the present time an exemption figure of £150 gross per week. If he takes less than that figure, he does not pay any levy, and relief is also open to him from the renters who adjust the terms of his film hire. This is of some help to the small owner, and I can assure the Committee that at the present time

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there are hundreds of them in distressed circumstances. In 1956, 179 cinemas were closed—not all of them small cinemas. The Odeon cinema, in Colwyn Bay, one of the most modern and up-to-date cinemas in the country, seating 1,700 patrons, has had to close its doors recently.
The Government just cannot stand by and watch cinemas closing down at the rate of three per week. It is therefore essential that there should be some form of exemption device to assist exhibitors who cannot pay their way, let alone pay any levy. It is most unreasonable to ask cinema exhibitors who are themselves in financial difficulties to contribute, by statutory levy, to a Fund which is designed solely to give financial security to another section of the cinema industry. The exhibitors fully realise the necessity for giving financial assistance to the film producers. But cannot that assistance be given to them direct from the £33 million which is "sucked" out of the cinema industry every year by means of entertainments tax?
Let me give the Committee an example of what the small cinema exhibitor is up against at present. There is a cinema near Wakefield, in Yorkshire, which seats 700 patrons. Due to the new films that are being made in the technique called CinemaScope, with which most of your Lordships' House will be familiar, this cinema owner had to instal new equipment in his theatre in November, 1955. This equipment is costly, and to help pay for it he increased his admission prices by 3d. gross. The amazing results of his increase in prices were as follows; the increase in his gross receipts in 1956, compared with 1955, was £234; but the increase in entertainments tax which he had to pay, due to the increase in seat prices, was £427, and the increase in the levy payment was £37. The net result of his year's working under the increased prices was that he lost £230. I know that it is hard to believe and sounds fantastic, but, nevertheless, it is true, and I could quote to your Lordships many more similar cases of real hardship, of men watching their businesses fade away and with bankruptcy staring them in the face. These people must be helped and this Amendment will go some little way to alleviating their burdens. I am hopeful that my plea on behalf of those
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exhibitors will not fall on deaf ears and that this Amendment will be accepted by ray noble friend.
LORD MANCROFT: I can assure my noble friend, Lord Westwood, that my ears are flapping receptively to the plea he has so eloquently advanced. They are also flapping receptively towards the ingenious Wan of the noble Lord, Lord Lucas of Chilworth. I do not have to plead that particularly eloquently. I have only to remind your Lordships of my own remarks on the Second Reading of this Bill [OFFICIAL REPORT, Vol. 200 (No. 21), col. 1337]:
"I should like also to reassure your Lordships that, under the regulations to be made in accordance with Clause 2 of the Bill, there will be provision to exempt exhibitors, in suitable cases, from the burden of the levy."
That remains our intention. We are certainly going to exempt those who would be unfairly hit or rained by the burden of the levy.
The only matter which remains undecided at the moment is the wisest method of doing it. There is one thing on which I believe we should all agree: to be successful this scheme of exemption has to be both simple and easy to operate. I am afraid it is there that the Amendment of the noble Lord, Lord Lucas of Chilworth, comes unstuck. Its intention is wholly admirable, but I believe there would be considerable difficulty in working the scheme, which is a little complicated, and would, I am afraid, give rise to difficulties in administration. It is complicated by the introduction of entertainments duty which, in some cases, might make it operate unfairly. If, for example, a cinema were to give on one day a charity performance on which no entertainments duty was payable, the net box office takings for the week would be greater by the amount of entertainments duty remitted than if the charity performance had been an ordinary performance. This might affect the title of the cinema to exemption and, obviously, it would be most unfair if the giving of a charity performance led to loss of the right to exemption from the levy. Another is brought to mind by the noble Lord's reference to the number of seats. This is rather confusing and might lead to dispute, for I am told that the number of seats is not necessarily fixed. I do not know whether the noble Lord, Lord Lucas of Chilworth, is a "rock'n' roll" addict—
LORD LUCAS OF CHILWORTH: I am not.
LORD MANCROFT: But if he were, he would know that at some cinemas the seats are taken out in order to allow the practice to go on to some degree. That would complicate one clause in the provision. The Customs and Excise, who are to administer the collection of the levy, tell me that they do not like the Amendment on the ground of the complication of the scheme itself. But I want to make perfectly clear that this does not mean that they are not prepared to work out methods of exemption which will take into account the ability of the smaller and poorer exhibitor to pay. On the contrary, they are anxious that there should be provision for exemption for those classes of exhibitor, but it must be in a form which is simple and easy to operate. We are going into the matter carefully now to try to work out a proper scheme and one which will take proper account of what the noble Lord has said. We will look again at his scheme and consider also what has been said by the noble Lord, Lord Westwood; and we shall, of course, consult the trade.
I believe the regulations are a better place in which to deal with this matter than is the actual Bill. There will be less rigidity and more freedom to modify the scheme should the circumstances of exhibitors change. I suspect that the trade might themselves wish for modification in certain circumstances. I will, of course, take careful account of what your Lordships have said about this matter. We will consult the trade and try to work out our scheme on the general views put forward this afternoon; but, for the reasons I have given, I do not think I can quite accept the Amendment in the way in which it is drafted; the scheme is too complicated and its proper place is in the regulations. I certainly agree with what noble Lords are trying to do and we will see whether we can carry out their wishes in the simplest way possible, because they are our wishes too.
LORD ARCHIBALD: One point made by the noble Lord, Lord Westwood, has not been answered. It is a point which I made during the Second Reading debate, and which I would ask Her Majesty's Government to consider, even at this late hour. I know it goes to the root of the whole Bill, but I would ask:
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why not scrap the whole principle of the statutory levy and make the Film Production Fund a charge on the Consolidated Fund? What is being done here is something almost as complicated as what is proposed in the Amendment of my noble friend, Lord Lucas of Chilworth. It is inherent in the whole thing that it should be complicated, because a complicated method is being taken to do what is a simple operation if it is done in another way. As the noble Lord, Lord Westwood, has said, Her Majesty's Government are taking some £33 million in entertainment tax out of the box-office takings of the industry. The Government have in the past given some of that back by way of reduction in tax to exhibitors, on condition that they paid the voluntary levy. We assume that in future they are to get a little more back, because it is made a statutory levy; but what does it amount to? The amount diverted—some of that entertainment tax—may go into the Film Production Fund, but, instead of doing it with all this complicated machinery, it would surely be much simpler to give notice under G.A.T.T. that we are going to do it by the method of transferring, say, £3 million, £4 million or £5 million out of the proceeds of entertainments tax into the Fund. Cut out all the complication of methods of collection, methods of exemption and so on, and you would have your Agency supplied with the necessary funds in a simple and straightforward manner.
The noble Lord has not yet told us why Her Majesty's Government will not take that simpler but bolder course of cutting out all this complication to which he objects and which is inherent in the proposal. I do not think it is too late to consider that matter. We are all in complete sympathy with the objects of the Amendment of the noble Lord, Lord Lucas of Chilworth, and do not want to see the position of small exhibitors who are having a hard struggle made worse. If the statutory levy is taken out altogether and made a charge on entertainments tax direct, then the position of small exhibitors will not be adversely affected.
LORD STRABOLGI: Before the noble Lord, Lord Mancroft, replies, may I say how much I agree with what my noble friend, Lord Archibald, has said. I,

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myself, made the same point during the Second Reading, and I shall be interested to hear what is now said by the noble Lord, Lord Mancroft, who always manages to find most ingenious arguments.
LORD MANCROFT: I am afraid your Lordships will get no ingenuity from me on this particular point. The noble Lord, Lord Archibald, brushed G.A.T.T. lightly aside in the course of his remarks, but this is a fundamentally difficult point, which takes us miles outside the scope of the Bill. Surely what he is suggesting, if I followed hint correctly, would result in every British film being regarded by foreign competitors as a subsidised film.
LORD ARCHIBALD: I think that that is over-stating the case hopelessly. Other countries which are members of G.A.T.T. have found methods of helping the finance of film production without their films being regarded as subsidised films within the meaning of G.A.T.T., and I believe that it is possible under G.A.T.T. to give notice of intention to depart from certain regulations. I am not brushing G A.T.T. aside. I am suggesting that notice should be given of the Government's intention to depart from the Agreement to the exent of making a few million pounds available from entertainments duty. That is actually what Her Majesty's Government are doing by a roundabout way in order not to put themselves outside the existing provisions of G.A.T.T. I am asking that it should be done straightforwardly.
LORD LUCAS OF CHILWORTH: This illustrates what I was trying to point out when we had the first Amendment before us. The Government will not find a simple answer to this: it is a very complicated problem. If the noble Lord will take a hint from me (admittedly this is not his province, so perhaps it has not swum into his horizon yet), and will consult the Estate Duty Act regulations, the regulations governing death duties, he will see that I have precisely copied the procedure therein set out. Why it should be complicated beyond operation by the Board of Trade and the Agency they are setting up, when it is quite a simple procedure with the Inland Revenue Estate Ditty Office, I do not know. But I suspect that the real reason why the noble Lord has been tempted to turn down this Amendment is because of the unholy and
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indecent love that Government Departments are getting to have for government by regulation. This Bill is really a blank cheque to the Board of Trade to do anything they like.
LORD MANCROFT: No.
LORD LUCAS OF CFIILWORTH: Yes, my Lords, it is. Admittedly when it is sought to make a regulation it must conic before both Houses of Parliament, but, as I have asked many times, what option have we when a regulation comes here? We have either to agree it or to reject it: we cannot amend it.
I would beg the noble Lord—I do not often beg him very hard, but he knows as well as I do that Government Departments are not the repository of all knowledge—to consider this fact. This levy, which has been in existence six years, has been operated successfully by a committee of the industry presided over by a very eminent accountant, and this is their solution, advanced after studying all the complexities and the difficulties of operating that levy for those six years. The noble Lord really must find a better argument for turning this Amendment down than he has found up to date. I know that the making of Amendments is something which comes within a "closed shop". I do not expect this precise wording to be acceptable, but I think that the noble Lord might accept the principle. He has accepted the principle that the impoverished exhibitor shall not have to pay his levy out of his losses. He has admitted that. The exhibiting side of the industry has put forward this proposal—I claim no credit for it: it is far too cleverly done for me to have done it.
I hope that the noble Lord will have some second thoughts when he comes to the difficulties connected with charitable performances. Performances given for charitable purposes do not pay entertainments tax, so in the case of performances where there is no entertainments tax there is no levy. It is very simple; it is just taken out. Then take the case of Sunday afternoon performances. No levy is paid on them. They have overcome all such troubles as that. When a past, or perhaps I should say late, Under-Secretary of the Home Office tells me that cinemas are turned into dance halls by the taking up of seats and "rocking'n' rolling," I am surprised. Surely a cinema

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that has its seats taken up and turns itself into a dance hall requires a licence, as a dance hall does, and therefore ceases to be a cinema. It becomes a dance hall under a different set of regulations. May I ask the noble Lord whether it is allowed under Statute for a cinema to turn itself into a dance hall when it is not licensed as a dance hall, by taking up some seats and then having "rocking 'n' rolling?"
LORD MANCROFT: I do not think the Statute has got round to "rocking'n' rolling" yet.
LORD LUCAS OF CHILWORTH: I should not think the Home Office has got round to it. Perhaps the noble Lord might like to remind them that "rocking'n' rolling" has burst upon this country. It might be news to them.
I am not going to say anything about the point which Lord Archibald has mentioned. I shall touch upon that when speaking on the next Amendment. I suppose that the noble Lord, Lord Mancroft, is adamant upon this Amendment. I will withdraw it now, and again I will consult with those who have advised me upon it and I may put it down again at the next stage of the Bill. Perhaps the noble Lord will be able to consult his advisers and see whether they can think of something better. But I do beg the noble Lord, if it is possible, to put the principle in the Bill and not leave it to regulations. He may think of an Amendment, or I may think of an Amendment, that will lay down the principle without the detail. I have not put in this Amendment the 6s. It may be that places like news theatres would require to have a different standard. But that would have to come in the regulations.
All I ask is that the exhibitors shall be able to say, "We know precisely the overhead costs of running a small cinema, of anything from, let us say, 400 to 800 seats. Can there be a scale apportioned per seat on which exemption and marginal relief are based?" And it is vital to look after the people who may be taking £250 gross a week and who, in view of their expenses and costs, interest on operating capital and all the rest, are worse off and have heavier expenses pro rata to their takings than the man taking £150. That seems to me about the most simple thing accountants who have worked
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on this levy for six years have been able to find. We suggest that it might have a little more sympathetic consideration from the Board of Trade.
LORD MANCROFT: My Lords, before the noble Lord withdraws his Amendment, I suppose he realises that the Bill provides for this point in general. Clause 2 (2) (a) provides that:
"Regulations under this Section—
shall provide for defining the classes of persons, being exhibitors, who are to be liable to the levy and may provide for the exemption of any exhibitors or classes of exhibitors; "
So it is actually mentioned in the Bill.
LORD LUCAS OF CHILWORTH: I grant the noble Lord that point, but my proposal is based upon experience. But I cannot find words to put into a Statute that the relief that should be given to the marginal exhibitor shall be dependent on the charity of another side of the industry. This is where we come up to a grave difficulty in turning over a voluntary arrangement to a compulsory arrangement. The renters and the distributors have met the marginal case by lowering their charges to the exhibitor. But I cannot frame an Amendment to put that into a Statute, because their action is a purely voluntary one. We cannot force renters, by Statute, to subsidise the impecunious exhibitor, but I can try to devise a formula by which the exhibitor who cannot meet his overheads shall not have to subscribe to a levy to another section of the industry for the purpose of allowing it to make a profit. I will withdraw my Amendment now, but I may put down a further Amendment, in this or some other form, on Report stage, so that the noble Lord, Lord Mancroft, may be able to give us the benefit of his second thoughts, because I take it that his mind is still open on this point. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD LUCAS OF CHILWORTH LORD LUCAS OF CHILWORTH moved, in subsection (3), to leave out paragraphs (a) and (b) and insert:
"that the amount to be yielded by way of levy in respect of each of the ten periods shall be determined in respect of each period after consultation with both exhibitors and makers of British films in the light of the prevailing economic circumstances of both exhibitors and the makers of British films as well as the prevailing level of production of such films."
The noble Lord said: We come to the most important Amendment, perhaps, in the whole of this measure, dealing with a most important subject. May I remind your Lordships of what is in the Bill? Clause 2 (3) states:
"The Board of Trade shall discharge the duty imposed on them by subsection (1) of this section in such manner as will secure—

(a) 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, be approximately three million seven hundred and fifty thousand pounds;

(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."

I seek to take out of this subsection paragraphs (a) and (b) and insert the words given in my Amendment. The Bill provides that the levy shall apply over a period of ten years; that for the first period of one year the amount of the levy shall be £3¾ millions and in any of the subsequent years it shall be not less than £2 millions and not more than £5 millions.
At the present time the yield of the voluntary levy is running at about £2¼ millions. I believe I am right in saying that the exhibiting side of the industry is in such dire straits that during the last twelve months 179 cinemas were closed down. Where, I would ask first of all, are the £3¾ millions coming from? They are not corning out of the pockets of the exhibitors, because the money is not there to get. Is this levy going to result in increased prices at the box office? If it does, the law of diminishing returns will operate, and still more cinemas will be closed.
The industry set up an all-industry taxation committee which, after careful thought, arrived at the conclusion that the minimum amount that the production side of the industry would require to put it on a financially stable basis was a yearly subvention of £5 millions. That may be right. I do not contradict that figure at all. But there are two things that have to be ascertained: first of all, what the production side of the industry requires, and, secondly, what the exhibiting side of the industry can pay. The Board of Trade have to frame the regulations for the coming twelve months so that the levy for the first year will realise £3¾ millions. But suppose they do not get it—what is going to happen then?
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In another section of the Bill the payment of this levy is made a statutory obligation and Customs and Excise can sue for it in a civil court, and a fine of £100 may be imposed if it is not paid. And I suppose if the court cannot get the £100, the cinema is sold up. I suppose that that is the natural procedure. A cinema owner who cannot pay will be put in the bankruptcy court and his assets will be sold to get the money. This is a very serious thing.
My noble friend Lord Archibald has said that this levy ought to come out of entertainments tax. The noble Lord, Lord Westwood, said that the industry yields through the box office over £30 million a year in entertainments tax, which I believe represents about 50 per cent. of the net box office takings. There have been cases where it represents 100 per cent. of box office takings. Where is the money to conic from? The trouble with the Government is that they have put the cart before the horse. If we agree to put figures in this Bill, this Bill will become law before the Finance Bill. Suppose—I do not know, but I shall ask the noble Lord soon whether the Exchequer has done a deal on this—the Exchequer have told the Board of Trade that if they put £3¾ million in this Bill, the Exchequer will reduce entertainments duty in the Finance Bill by the difference between £2½ million and £3¾ million. Has Chat kind of deal been going on? I am not prepared to stand at this Dispatch Box and say that we should put a levy of £3¾ million on this industry without some statement of intention, because the industry in its present state cannot contribute even £2½ million. That would be unrealistic.
I agree with my noble friend Lord Archibald: that this is about the biggest piece of camouflage and subterfuge one has ever come across. These millions, whether they be £2½ million, £3¾ million or £5 million, are a subsidy. You can hedge it around and call it what you like, but it is a subsidy, and the fact is that the producers have got to have a subsidy to keep alive the British film-producing industry. Is it not a lot of nonsense to say that we will take £30 million out of the industry by way of entertainments tax, but that we cannot subsidise exports and, since any British film is an export, cannot give them a direct grant from the Consolidated Fund

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because that would be an export subsidy. What about the exported British film that gets £100,000 out of this levy? Is that a subsidy? We have to go through this drill and this camouflage to say, "Our consciences are clear. We are not making a subsidised payment to the production side."
My proposal is that in the first year, and in any subsequent years, the industry should be consulted as to its economic position— that is to say, as to the level of production and other factors—before the Board of Trade decide on the amount of levy for that year. It may well be that £5 million will turn out to be not enough. It may be that in the years to come the production of British films, if things go right in the export market, will be such that they will want more than £5 million. On the other hand, it may be wrong to fix the amount at £5 million, because the last thing we want to do is to subsidise the British producer to produce bad films. In a comic industry and in a comic Bill it appears to me to be just as comic that the only yardstick we can get as to who is entitled to any of this subsidy is the person who makes a profit. I see the reason for that. The levy is paid out according to the amount a film grosses at the box office; and on a 3,000 foot film, I think I am right in saying, the amount is £3,000. But if it does not gross enough, it does not get any levy; and the more it grosses, the more levy it gets. So we have had to admit, as we are now admitting in television and in other spheres, that the yardstick of success is the box office.
Does the noble Lord not think it would be wiser not to put either a maximum or a minimum sum in this Bill, but to Jet the Board of Trade decide the appropriate figure every year? They can do that in plenty of time. I am apprehensive—I should like to hear the views of other noble Lords—about what is going to happen if to-day we agree to put in any of these figures and commit the exhibiting side of the industry to pay £3¾ million this year. We do it in the hope that the Chancellor of the Exchequer is going to fulfil a promise to reduce entertainments duty.
LORD MANCROFT: A promise?
LORD LUCAS OF CHILWORTH: Well, a broad hint given that this will be one of the subjects which will receive most serious consideration.
LORD MANCROFT: That is more like it.
LORD LUCAS OF CHILWORTH: But successive Chancellors of the Exchequer have said that for years and years on a great many other matters. My sympathies are with the Chancellor of the Exchequer. We now have a new Chancellor of the Exchequer. What has happened since the industry put forward this figure of £5 million? We have had Suez. Do you think the Chancellor of the Exchequer, with the huge costs of that exploit to pay for, would receive anything but public approbation if he refused all the blandishments from every side to reduce taxation? Do you think he would be blamed for it? Do you not think we are taking a long chance and a gamble? I would suggest that immediately after this Bill becomes law, with the Amendment that I have proposed in it, the industry on both sides, exhibitors and producers, should get together with the President of the Board of Trade and the Chancellor of the Exchequer, and they could agree for this first period the amount of money which the producer could budget on receiving for this next twelve months. To put £3¾ million in this Bill is no guarantee that he is going to get it. I think that is the height of foolishness. I beg to move.
Amendment moved—
Page 2, line 40, leave out paragraphs (a) and (b) and insert the said words.—(Lord Lucas of Chilworth.)
5.45 p.m.
LORD JESSEL: I am inclined to support this Amendment, because it seems to me to make sense. As my noble friend Lord Westwood said, the exhibitors recognise the need of the producers for financial assistance. But as the noble Lord, Lord Archibald, pointed out, this is not the only way to do it, and I am still not convinced that his suggestion of a straight subsidy is not the best answer. After all, it would mean that the sum was annually certain and secure, and it would save all the administrative complications that we have been discussing this afternoon. But apparently it is impossible. In the debate on Second Reading,

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the noble Lord, Lord Mancroft, said that one of the reasons why it was impossible was that it was what he called, "a hypothecated tax". That, I agree, is a tax which is earmarked to be spent on some particular purpose. I do not really understand why that is such a dreadful thing. Does it offend against some economic principle, or some old Gladstonian principle of taxation? It seems to me to be quite sensible.
With regard to the actual figures which have been put in the Bill, here I must agree with the noble Lord, Lord Lucas of Chilworth. It seems to me that the Government are taking a great chance and gambling on these imaginary figures, which may look very silly in the future. I cannot see the objection to the Amendment of the noble Lord, Lord Lucas of Chilworth, which preserves the principle of the whole thing and says merely that the figures should be such as the economic circumstances of the day make sensible. As I said at the beginning, my present inclination is to support the Amendment.
LORD STRABOLGI: I should like to support what the noble Lord, Lord Jesse, has said, and to give my warm support to the Amendment moved by my noble friend Lord Lucas of Chilworth. After all, we are now legislating for a period of ten years, and it seems to me that the figures in the Bill are much too rigid. My noble friend has pointed out how difficult it will be for the exhibitors to pay this vastly increased amount of levy, particularly if there is to be no reduction in entertainments tax. It reminds me of the old biblical story of the Israelites under Pharaoh. First of all they had to make bricks, and then they had to try to make bricks without straw. The exhibitors seem to be in that unhappy position also. Whether they will ever be able to reach the maximum figure is, of course, a matter of conjecture.
As the noble Lord, Lord Westwood, has pointed out, 179 cinemas have closed during 1956. There is another fact which I should like to add to that, and that is that in some areas a cinema has closed which is The only cinema in that particular locality, so that the people who live there are deprived completely of that kind of entertainment. Also, I cannot see why the minimum figure of £2 million has to be kept in the Bill. As the noble Lord,
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Lord Mancroft, said during the Second Reading, it was hoped that British films would earn dollars in large sums in the United States, and one hopes that after a few years the levy will be reduced rather than continually increased. It seems to me that the Amendment of the noble Lord, Lord Lucas of Chilworth, has much to commend it.
LORD BURDEN: May I say a few words in support of the Amendment moved by my noble friend? On the previous Amendments the noble Lord, Lord Mancroft, indicated that the wind would be tempered to the shorn lamb—that those cinemas who, for various reasons, could not afford to pay would not pay. But the Bill lays it down that a sum of approximately £3¾ million is to be raised in the first year, which is, as I understand it, 50 per cent. more than at present. At present the levy is producing somewhere about £2½ million. If there is to be some consideration for those who, on the formula ultimately agreed, cannot pay the levy; if there is a fixed sum to be raised—and, incidentally, 50 per cent, more than is at present being raised—these who pay the levy will have to pay more in addition to the 50 per cent. increase. A few years ago there was a breakdown by the Rank Organisation of every pound taken at the box office, and, in 1953, out of every pound, entertainments tax took 6s. 11d. and the levy 6d. Now even assuming that there is not much in it so far as those who cannot afford to pay are concerned, and assuming, the figures are the same, the 6d. will go up to 9d.
There is another factor to be taken into account. Owing to the many forms of competition, despite the efforts which the cinema industry are making to retain their patrons there has been a steady fall in the number of people attending cinemas weekly. I have two sets of figures. In 1946, the year after the war, the average weekly attendance was 31·4 million, and in 1954, 25 million. Therefore there may be a decrease in revenue from the box office from which to take this money. Why should an industry be saddled with a charge like this? Why cannot the industry be looked at as indicated by my noble friend Lord Lucas of Chilworth, in the light of the circumstances prevailing at each reviewing period? Why fasten this on to them? Why drive a number of other cinemas out of business and

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thereby increase the amount which those remaining have to pay if the fixed amount of £3¾ million is to be retained? One does not know whether there has been any deal behind the scenes, but I expect more will be said on that point when we come to a later clause in the Bill. We plead on behalf of this industry—bearing in mind another factor which I have not yet mentioned, that the numbers employed in it are going down month by month—that there is a case for the Amendment put forward by my noble friend. I hope in this instance we shall have a major accommodation from the noble Lord. Lord Mancroft.
LORD WESTWOOD: I agree entirely with the noble Lord, Lord Lucas of Chilworth, in saying that this is the most important Amendment of this Bill. In my opinion it is a vital Amendment, but I will not bore your Lordships by repeating everything the noble Lord said. I agree with everything he said, except on one point. I think the noble Lord mentioned that the industry had made out a case for £5 million relief. That is not quite right. The producers made out a case that they needed £5 million, but the industry's case to the Chancellor is in the region of £20 million. I thought I would correct the noble Lord.
LORD LUCAS OF CHILWORTH: I am grateful to the noble Lord for that correction. My understanding was that the all-industry taxation committee had put to the Chancellor of the Exchequer some time ago that the minimum which the production side of the industry required was £5 million per year.
LORD WESTWOOD: The production side, but I understood the noble Lord to say "the industry."
LORD LUCAS OF CHILWORTH: No, I know what the noble Lord means. He is talking about the £20 million relief on entertainments duty.
LORD WESTWOOD: Yes.
LORD LUCAS OF CHILWORTH: I am talking about the amount which the all-industry taxation committee said must be the figure raised by this levy to allow them to produce on an economic and stable basis.
LORD WESTWOOD: I ask my noble friend Lord Mancroft to give this matter his earnest consideration. I certainly support the Amendment.
LORD MANCROFT: This is all very puzzling. Time and time again this afternoon your Lordships, more in anger than in sorrow, have turned to me and said, "Put it in the Bill." I have made certain suggestions which might well be placed in the regulations, but your Lordships have said, "No, put them in the Bill." When I have tried to avoid over-precision in some figures, your Lordships have said, "No, let us have the precise figures and put them in the Bill." Here we have precise figures, and we have put them in the Bill, and your Lordships have started away like frightened mustangs. "Take out these precise figures," your Lordships say, "take them out of the Bill. No need to put them in the regulations. Take them right away and leave matters as vague as you possibly can." That is the effect of the Amendment. The effect would be to leave out the maximum and the minimum amounts which the Board of Trade are required to estimate as the yield of the levy and also the estimated yield of £3¾ millions which it is proposed to take as the first year's figure.
Since the main purpose of the levy is to provide for a period of ten years reasonably stable conditions in which British film producers can work, it is, in the Government's opinion, essential that they should be given some indication of the amount of money they are likely to receive from the fund. On the other hand, exhibitors will want to be reassured about the total amount which they may be expected to contribute to it. That is why it is in the Bill. Both sides of the industry must recognise the need of the other in having an upper and lower limit based on the Bill itself. That is why the figures are in the Bill.
I am afraid I must resist this Amendment. The noble Lord, Lord Lucas of Chilworth, says it is fundamental. I must resist it. I do not want it to be thought that we wish to fix the amount of levy without the benefit of consultation with the trade or without regard to the difficult and complex economic circumstances of the industry. The figure of £3¾ millions which your Lordships have criticised has been selected after considering numerous

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representations by all sides of the industry, and, of course, any changes that we make will have to be made in the light of representations from both the exhibitors and the renters of British films. That we fully appreciate.
The sum of £3¾ million is criticised. Cinemas are closing. The Odeon at Colwyn Bay is in trouble—the noble Lord, Lord Westwood, tells us it is. I even see, alas! that my own local cinema, the Odeon at Marble Arch, is in difficulties. "Can this sum be raised?", your Lordships ask. "Is it not wrapped up closely with entertainments duty?" That could well be. I went out of my way to deal with that point on Second Reading. I did not go quite so far as the noble Lord, Lord Lucas of Chilworth, thought I had gone, but he corrected himself just in time. For the sake of accuracy, this is what I said [OFFICIAL REPORT, Vol. 200 (No. 21), col. 1336]:
"the provisions of the Cinematograph Films Bill are amongst the various factors which are being taken into consideration in the review of entertainments duty which has been promised by Her Majesty's Government and which is now in active progress."
Then, note, I was speaking on behalf of the President of the Board of Trade, who knew all about the film industry and, indeed, had been responsible for this Bill, and in whose name I had then the honour to speak.
I promised your Lordships then, in response to many requests, that I would make certain that the Chancellor of the Exchequer was made fully aware of your Lordships' views. That has not been a difficult promise to implement, because the present Chancellor of the Exchequer was the President of the Board of Trade at the time I was then speaking. Why am I afraid, asks the noble Lord, Lord Jessel, of an hypothecated tax? An hypothecated tax is a tax contributed from one particular industry. Why single out the cinemas?—which is the request the noble Lords opposite are making and from which I turn very firmly indeed. Why not the shipping industry? Why not the export trade generally?
LORD ARCHIBALD: Is there a special tax on the shipping industry, or the export industry, comparable with the entertainments tax out of which the hypothecated tax could be made?
LORD MANCROFT: No. Of course, it is impossible to compare these industries one with another.
LORD LUCAS OF CHILWORTH: We have not done so.
LORD MANCROFT: If noble Lords opposite were in power, would they produce a straight subsidy for one industry rather than another and justify the opposition of any other industry who could produce a tale of importance for the national well-being?
LORD LUCAS OF CHILWORTH: You have just subsidised the railways to the tune of £400 million.
LORD BURDEN: Also, under de-rating, the Government have subsidised certain industry and completely relieved agriculture of local rates.
LORD MANCROFT: Now we know where we are. Noble Lords opposite want a straight subsidy for the film industry. Let us be clear about that. That is not what the Government want.
LORD LUCAS OF CHILWORTH: We are trying to make an honest woman of the noble Lord.
LORD MANCROFT: The noble Lord, Lord Lucas of Chilworth, has done very odd things for me in his time, but he has never yet tried to make an honest woman of me. I hope he knows all about the qualifications. I am afraid that, in spite of these blandishments concerning my virtues, I am not going for one moment to admit the propriety of the argument put forward by the noble Lord. We must be quite firm and have in the Bill the maximum and the minimum. We must be quite certain that the industry understands what its position is. I appreciate the difficulty the industry is in to-day and the difficulty it may well have in meeting this actual sum, but I think it is absolutely essential that the principles of this Bill, that the maximum and the minimum, should be known and stated in the Bill. The burden which is to fall upon the exhibitors should be clearly stated, and the advantages to the other branches of the trade equally fairly known. I am afraid we can have no compromise on that.
LORD LUCAS OF CHILWORTH: I have one simple question before the

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noble Lord sits down. Supposing we pass this Bill with the £3¾ million as the amount the levy has to yield in the first period, and it does not yield it, what will happen?
LORD MANCROFT: I think I have already dealt with that point. In my Second Reading remarks, which I have just repeated, I gave a pretty clear indication of what will have to be considered at the same time as that problem arises.
LORD LUCAS OF CHILWORTH: Would the noble Lord repeat them again, because I did not gather them?
LORD MANCROFT: They are:
"… the provisions of the Cinematograph Films Bill are amongst the various factors which are being taken into consideration in the review of entertainments duty which has been promised by Her Majesty's Government and which is now in active progress."
LORD LUCAS OF CHILWORTH: Supposing that Her Majesty's Government, after due consideration of all the circumstances, come to the conclusion that there can be no relief: what happens?
LORD MANCROFT: I am afraid I cannot give an hypothetical answer to quite such a question as that.
LORD BURDEN: Is it not to be wondered at that the cinematograph industry feel that they are "buying a pig in a poke"? It would be the decent thing to postpone this until after the Budget proposals.
LORD LUCAS OF CHILWORTH: The noble Lord illustrated the difficulty. I agree that he cannot commit the Government; I would not ask him to do so. The Chancellor of the Exchequer has a very difficult job in what he wants to do, which is to commit the exhibiting side of the industry to £3¾ million. To reply to the noble Lord's argument, I have a great affection and a very high regard for him. He and I have battled across this Table on many occasions, and I hope we shall battle across it a few more times. I thought his opening argument gibing at us for wanting to take the figures out of this Bill was a debating point of the poorest order. It did not do him or his ingenuity any credit, and
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rather fell below the seriousness of the debate we are having. I hope he will not mind my saying that.
He has said this also, which I think is far more to the point and more dangerous. He said "The production side of the industry must know what they are going to get". The noble Lord wishes to lead them to the conclusion that they can expect, in the coming twelve months, £3¾ million. Are not the Government making fools of them? Supposing they do not get it. What is going to happen? That is an answer that the Government will not give me. Supposing the yield from the levy falls short—you can lead a horse to the water but you cannot make it drink; and you cannot get blood out of a stone, or a levy out of a bankrupt cinema—what are you going to do? If the noble Lord will forgive my saying so, I do not think the Government are playing fair with the Committee. They are asking the Committee to agree to something which they know may not happen. Some of us have had some experience of industry, business and commerce. Fancy asking a business man to commit himself to an expenditure of this amount on the hypothetical case that he might get a subvention from taxation at some time!
The noble Marquess the Leader of the House is here, and I should like to appeal to him. I do not want to divide the Committee on an issue like this, but I think this is a fundamental matter, and the Committee are placed in a deplorable position. The position is that the levy is to-day yielding only £2½ million. It has been proposed, and it has been supported by every speaker, that we should take out of the Bill the £3¾ million and state that the figure shall be arrived at after consultation between the Board of Trade and the industry in the light of the economic circumstances—which means all those things about which we have just been talking. I think that the sense of the debate is that that would at least be the most honourable and sensible thing to do. For the life of me I cannot see anything against it.
I admit that the producers want to know well in advance the amount of money they are likely to get; otherwise they cannot plan for the future. But you are fooling them. You are saying, "The approximate amount you are going to

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receive is £3¾ millions." But if the Chancellor of the Exchequer does not give taxation relief, and if the levy cannot do 50 per cent. more than it is doing now (which it will not do) you are fooling them. Do they go on with their plans or do they cancel them at the last moment? I think that this is placing the Committee in a position in which the Government should not place us. I do not want to divide the Committee on such a matter as this, but may I ask whether the matter will receive further consideration? The noble Lord, Lord Mancroft, has been most definite. Can we have some reconsideration of this matter between now and the next stage? Otherwise I feel that at some stage during the passage of this Bill I must divide the Committee upon this point. I am not going to be so dishonest as to agree to put into the Bill something to indicate that the production side of this industry can expect in this coming twelve months £3¾ million, which I know, if during these corning twelve months things are precisely as they stand to-day, they do not stand any chance of getting.
May I ask the noble Lord to say whether he will convey to the President of the Board of Trade and the Chancellor of the Exchequer (at least we have the advantage that the noble Marquess the Leader of the House has heard every speech that has been made) that there has been not one speech that has not supported the proposed Amendment? I admit the necessity for the levy. I want to see it adequate. But, whilst I want to see it adequate for the producer, I want to see it possible for the exhibitor to contribute. Can I adopt a fairer attitude than that? I think the matter deserves a little more sympathy and consideration than that which it has received from the noble Lord, Lord Mancroft.
LORD JESSEL: May I say one word before Lord Mancroft comes to reply? I personally am not convinced by his argument in reply to Lord Lucas of Chilworth. I think there is something to be said for putting in the Bill an upper and a lower limit. The point I cannot "swallow" is the £3¾ million—this wild guess for next year. Surely that can be left until after the Budget, when we know what the entertainments tax relief is to be and what the economic situation is at that time in the cinema. But to ask us now to support this figure of £3¾ million is too much.
LORD MANCROFT: I should like to meet the noble Lord in regard to this matter if it were at all possible, and I am sorry that two of my noble friends behind me are not supporting me on this. But I should be less than frank if I were to say that I will take this back and consult with my right honourable friend in the hope of getting some agreement. In doing that I should not be honest, and I think I must therefore ask the noble Lord, if he differs as strongly as he says he does, to carry this difference into the Lobby.
LORD LUCAS OF CHILWORTHM: If that is the case I cannot hope for any consultation, even upon the lines that the noble Lord, Lord Jessel, has suggested. That suggestion I am prepared to accept. I am sorry, but even if I go into the Division Lobby alone, I am not going to be so dishonest as to accept the provision in the Bill as at present drafted. Therefore, I shall press this Amendment to a Division.
On Question, Whether the said Amendment shall be agreed to?
Their Lordships divided: Contents, 12; Not-Contents, 36.

CONTENTS

Attlee, E.

Haden-Guest, L.

Milner of Leeds, L.

Buckinghamshire, E.

Jessel, L.

Rea, L.

Lucan, E. [Teller.]

Lucas of Chilworth, L.

Strabolgi, L.

Mathers, L.

Westwood, L.

Burden, L. [Teller.]

NOT-CONTENTS

Salisbury, M. (L. President.)

Onslow, E. [Teller.]

Goschen, V.

Perth, E.

Hailsham, V.

Albemarle, E.

Radnor, E.

Massereene, V.

Fortescue, E. [Teller.]

St. Aldwyn, E.

Gosford, E.

Selkirk, E.

Amherst of Hackney, L.

Home, E.

Swinton, E.

Balfour of Inchrye, L.

Chesham, L.

Hampton, L.

Merrivale, L.

Clitheroe, L.

Hawke, L.

Remnant, L.

Craigmyle, L.

Howard of Glossop, L.

Rochdale, L.

Fairfax of Cameron, L.

Kinnaird, L.

Strathcona and Mount Royal, L.

Gifford, L.

Luke, L.

Stratheden and Campbell, L.

Glentanar, L.

McCorquodale of Newton, L.

Waleran, L.

Gridley, L.

Mancroft, L.

Resolved in the negative, and Amendment disagreed to accordingly.

6.20 p.m.
LORD ARCHIBALD LORD ARCHIBALD moved, in subsection (3) (b), after "estimation" to insert:
"and after consultation with the Cinematograph Films Council and with organisations representing producers and exhibitors,".
The noble Lord said: This Amendment seeks to do at this particular stage of the Bill what I believe the noble Lord, Lord Mancroft, has told us he is, at least in principle, willing to do in some parts of the Bill: in other words, it provides for consultations. The same point is covered by Amendment No. 13 put down by my noble friend, Lord Lucas of Chilworth, and it may be that his is a neater way of dealing with it, but the point at issue is the same: that the Board of Trade, in arriving at the amount of levy in years after the first, should consult both with the Cinematograph Films Council and other organisations representing producers and exhibitors.
The point involved here is a very simple and elementary one and I do not think there is any need to labour it. I have named the Cinematograph Films Council because, as the noble Lord, Lord Mancroft, has said, that organisation is charged with keeping watch and ward over the industry as a whole and advising the Board of Trade with regard to it. But the point that is at issue here is not one that fundamentally concerns the distributors, and I have therefore suggested that in addition to the Cinematograph Films Council the organisations of the producers and exhibitors should be consulted. As this part of the Amendment is, I hope, non-contentious, I will move it in the hope that it will be accepted. I beg to move.
Amendment moved—
Page 3, line 2, after ("estimation") insert ("and after consultation with the Cinematograph Films Council and with organisations representing producers and exhibitors,").— (Lord Archibald.)
LORD MANCROFT: The effect of the noble Lord's Amendment is to make it
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obligatory for the Board of Trade to consult the Cinematograph Films Council and organisations representing producers and exhibitors before fixing the amount of the levy for the second and subsequent years in the ten-year period. We were prepared to undertake to consult the Council, on which different sections of the trade are represented, before making or altering a regulation under Clause 2. In any case, I am certain that the Council will have a lot to say on the amount of the levy; and we are at all times ready to listen to representations from all sections of the industry. I think, however, that the obligation separately to consult all organisations representing producers and exhibitors might be a little time-wasting and is not wholly necessary.
I was prepared to give an undertaking to consult the Cinematograph Films Council, but, as I indicated earlier, when we had some conversation about whether things should be put in or taken out of the Bill, if it would make noble Lords happy I was prepared to help if I possibly could and to make it a statutory obligation rather than the obviously necessary day-to-day obligation that it otherwise would appear to be. I now repeat that undertaking; so that although I cannot, for the reasons I have given, accept the Amendment, even though there may be, when it is necessary, consultations with producers and exhibitors, I will certainly accept that part of the noble Lord's Amendment which applies to the Cinematograph Films Council. If, therefore, he will allow me to redraft the wording to make that point, then we will make it obligatory on the Board of Trade in this particular clause—Clause 2—and for this purpose to consult the Cinematograph Films Council.
LORD ARCHIBALD: I thank the noble Lord for what he has said, and, on that basis, beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
LORD ARCHIBALD LORD ARCHIBALD moved, in subsection (3) (b) to leave out lines 3 and 4, and insert
"sufficient to ensure the production of an adequate number of British films and to meet the needs of the Children's Film Foundation Limited."
The noble Lord said: I am sorry that this Amendment brings us back on to some of the ground which we have jus, been over, and on which we have just had a Division, but the point that I have in mind on this Amendment is a somewhat different one from that which was argued by my noble friend, Lord Lucas of Chilworth. One of the objections to the maximum and minimum figures is expressed by my noble friend in his immediately following Amendment. No. 11. I believe I am right in saying that since the voluntary levy came into operation, some five or six years ago, film hire has been falling steadily. I do not say that it is cause and effect. The falling film hire may be due to the more stringent economic conditions with which exhibitors have been faced. But there has been a fall in the amount of film rentals paid by exhibitors which, I believe, is now something like £2 million less than was being paid five or six years ago. That is not all British film hiring, but British film hire is a considerable proportion of it.
It may very well be found that, owing to circumstances, television competition and other things which, at the moment, we cannot envisage, film hire will fall substantially further, and the amount needed by producers to-day, calculated by the industry to be £5 millions, accepted by Her Majesty's Government as, at the moment, £3¾ million, may be £3¾ million, £4 million or £5 million plus a considerable amount to make up for the fall in film hire that has taken place between to-day and the year for which preparation is being made. In these circumstances, the limit of £5 million becomes quite unrealistic. I appreciate entirely the argument which Lord Mancroft gave us with regard to the reason for putting in those figures—that exhibitors should have some assurance that the amount would not go above a certain figure and that producers should have an assurance that it would not fall below a certain figure. I am sure producers would be glad to give up the minimum assurance in return for losing the maximum, because the
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maximum may, as I say, change. If there is, for example, a rise in the cost of production or a cut in the amounts being received in ordinary film hire, the £5 million may become quite an insufficient amount. I have sought in this Amendment to provide that, after suitable consultations, the amount should be determined in such a way as to ensure that production may be maintained at a reasonable level.
I may say that I do not expect that the noble Lord will accept the Amendment as it stands. I hope that he will, however, undertake to look at it again in relation to Amendment No. 11 on the Marshalled List, because there is a point there which I think has not now been sufficiently realised and which would justify second thoughts and a second look at this Amendment. I beg to move.
Amendment moved—
Page 3, line 3, leave out lines 3 and 4 and insert the said new words.—(Lord Archibald.)
6.32 p.m.
LORD MANCROFT: I will of course look carefuly at Lord Archibald's point again and I will also have it examined in relation to the remarks made on the previous Amendment, on which we have just divided I am afraid that Lord Archibald is right: I cannot accept the Amendment, not only for the general principle—and I will not weary your Lordships by discussing that all over again—but because I think that in his Amendment the noble Lord has left one or two gaps which might lead to trouble. The effect of this Amendment would be to dispense with the minimum of £2 million and the maximum of £5 million for the levy and to substitute instead a requirement to fix the levy at such a rate as to ensure the production of an "adequate" number of British films and to meet the needs of the Children's Film Foundation, Limited—which is not in controversy.
If the minimum of £2 million is omitted, one of the objects of the Bill which we have been discussing at length—to give producers some confidence for the future—will be destroyed. If the maximum of £5 million is omitted, the exhibitors may well feel that they have here an open-ended commitment. A difficulty which I see is this. I do not

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know how we are going to define what is an "adequate" number of British films. In any event, the fixing of the amount of the levy might not "ensure" the production of any particular number of films. This will depend on a variety of factors such as the availability of creative genius. I am afraid, therefore, that I cannot accept the noble Lord's Amendment. I will certainly have his remarks carefully examined in the light of this debate and of the longer one which took place on the previous Amendment.
LORD ARCHIBALD: I realise that I was probably falling into some of the pitfalls that await the amateur draftsman and that an "adequate" number of films might be challenged as lacking in definition. But, after all, the Board of Trade are responsible for fixing the level of the quota under the Cinematograph Films Act, and can more or less calculate quite closely what level of production is required to enable exhibitors to fulfil their quota. I should have thought that that would be a fairly simple test of what was an "adequate" number of films. I agree that one cannot ensure their production in any statutory sense. Nevertheless, it is pretty clear that if the amount of the levy is made sufficient, people who make films are so keen to make them that films will certainly be produced unless there has been some catastrophic situation quite outside anything we have been discussing. As the noble Lord has assured me that the matter will be looked at again (I put it no higher), I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.36 p.m.
LORD LUCAS OF CHILWORTH LORD LUCAS OF CHILWORTH moved, after subsection (3) to insert:
"(4) When framing regulations to be made under this section specifying the rate of the levy for each such period after the first the Board of Trade shall have regard to the general level of film rentals since the beginning of the last preceding period, and where they are satisfied that any exhibitors have sought to recoup themselves for payments made in respect of the levy or any part thereof by means of a reduction in film rentals and that a significant change in the general level of film rentals is attributable thereto, they shall calculate the rate of the levy for the period next following in such manner as will secure that such an amount is yielded by way of the levy as will compensate for such reduction in film rentals."
The noble Lord said: This is an attempt to write into a statutory enactment something that was found necessary to embody in the voluntary agreement. I do not know whether the noble Lord, Lord Fairfax of Cameron, is going to reply.
LORD FAIRFAX OF CAMERON: I am.
LORD LUCAS OF CHILWORTH: That will be a treat for us all. We are glad to see the noble Lord coming into the hurly-burly of the battle. I do not know whether he has with him a copy of the Memorandum of the British Film Production Fund, Limited, wich relates to the operation of the Fund. This Memorandum set out when the Fund was operating on a voluntary basis what I now wish to ensure. One of the principles it was found necessary to include in this document on a voluntary basis is now included in this Bill—indeed it is on a statutory basis. It is this: that the exhibitors agree they will not seek to recover by a reduction of any film rentals any part of the contribution for which this agreement provides.
Here is the problem, which does not arise on the top strata, though it has been found to arise on the lower strata. The impecunious, small cinema operator, who pays a rent of £5 or £10, or some very small sum, for a very old film, says, "I cannot afford to pay £5; I shall have to pay £2 15s. or £3 levy this week. I must have that film a bit cheaper." So, in the goodness of his heart, the renter deducts from his film hire the amount of the levy. Now what the renter gets for the film hire has a direct bearing upon what the producer gets from the renter and if this practice became prevalent it would be found, in effect, that the producer was paying the levy. I trust that the noble Lord has followed my argument. What I have just described is not intended. Although I do not pretend that by this Amendment the individual producer can be recompensed, I do suggest that producers as a whole, and the Fund, should not be whittled down in this way. It is a very simple point. This Amendment is again trying to do something that is somewhat difficult in a statutory enactment, something that was found necessary by the administration of the Film Production Fund when it was a voluntary arrangement. I hope that the noble Lord will

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see his way clear to accept the Amendment. I beg to move.
Amendment moved—
Page 3, line 4, al end insert the said subsection.—(Lord Lucas of Chilworth.)
LORD FAIRFAX OF CAMERON: In rising to reply to the noble Lord I should like to say how appreciative I am of his remarks, and also that I feel it a great compliment to find myself facing such a doughty opponent on this, the first occasion of my speaking in the Committee stage. The Amendment which the noble Lord, Lord Lucas of Chilworth, has moved is designed to ensure that the Board of Trade, when deciding what is to be the amount of levy after the first year, shall pay special attention to the possibility that exhibitors have sought in the preceding year to recoup the amount of the levy paid by them by the expedient of reducing the amount of film rental they are prepared to pay. If the Board are "satisfied" that this has been done, they would be under an obligation to adjust the levy for the following annual period so that the producer would not be worse off. If there were a general drop in rentals, it would be difficult indeed for the Board of Trade to be "satisfied" that it was due to the reason suggested in this Amendment. If rentals went down, it might be for a variety of reasons, such as a drop in the quality of films available; higher operating costs leaving less margin for film hire; or even that exhibitors were becoming more greedy and wanted to get more for their money.
But, apart from administrative difficulties of working such a provision, it is surely up to renters to see that they get a fair share of box office returns. Negotiations over rentals must be left free from legislative interference of this kind.
It must be recalled that, because the levy is deducted from box office takings before calculating the rental, the renters already suffer a reduction in rental equivalent to about one-third of the amount of the levy. If, therefore, we were to give way on this Amendment, the exhibitors might well insist on another Amendment that renters must not seek to recoup themselves by putting up the rentals. If I may say so, this is a case of "what is sauce for the goose might be sauce for the gander." But I assure
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your Lordships that the amount of levy will be fixed after taking into account all relevant considerations, including falling returns to producers, from whatever cause. It would be invidious to pick out one possible cause for special mention in the Bill, and I hope that the noble Lord, Lord Lucas of Chilworth, will appreciate the force of this argument and see fit to withdraw his Amendment.
LORD LUCAS OF CHILWORTH: I do not think much of the noble Lord's argument, but he put it over well. All the other factors he mentions are in the ordinary course of trade and business. If pictures are bad, or attendance falls off, and the industry becomes depressed, of course rentals will fall. Does the noble Lord understand the commonly used expression "fiddling"? This Amendment is to prevent "fiddling." It could be prevalent, and, indeed, was sufficiently prevalent for those administering the levy to put this in the agreement. I would not contradict the noble Lord that it might be right to have the obverse of this proposal. He said that "what is sauce for the goose is sauce for the gander," and I am going to remind him of that expression on a further Amendment, I hope not to-night. It is partly to prevent this "fiddling" that I want two people representing the industry on the Agency, two people who know all the tricks of the trade—and in every trade there are tricks. However, I am grateful for what the noble Lord said. He has broken the ice into the film world. It is a tough school, as he will find out, but on the principle of letting first offenders off lightly, I do not propose to press this Amendment, and, with your Lordships' permission, will withdraw it.
Amendment, by leave, withdrawn.
6.46 p.m.
LORD LUCAS OF CHILWORTH LORD LUCAS OF CHILWORTH moved, in subsection (4), to omit all words after "Agency". The noble Lord said: Sauce for the goose and sauce for the gander! I propose to leave out of the Bill the right of the Commissioners of Customs and Excise, who are charged with the duty of collecting the levy, to deduct from the amount collected the cost of collection. The exhibiting side of the industry collects entertainments tax for the Government. Why should they not be paid the cost of collecting the tax? Why should the Customs and Excise

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charge their expenses for doing a statutory duty? Is this going to be a new procedure? I know that industry to-day is loaded with millions of pounds of costs for collecting taxation, from P.A.Y.E. all the way through; there is no end to it. Why should we have this creeping into all these Bills? Why should the Customs and Excise collect this money and pay it over to the Agency after deduction of costs. Who is going to vet the costs? Is there any court of appeal if the industry is charged what they think to be too much? What is it going to cost to collect this levy? Is it going to be thousands of pounds? I think that this is a wrong principle, so I propose that we should leave out the words "after deduction of such sums as are necessary to defray the cost of collection". I beg to move.
Amendment moved—
Page 3, line 7, leave out from ("Agency") to end of line 8.—(Lord Lucas of Chilworth.)
LORD ARCHIBALD: This is a case of noble minds thinking alike. My noble friend and I put this Amendment down independently and found that we had arrived at exactly the same formula far approximately the same, or at any rate overlapping, reasons. I feel that this provision in the Bill is a bit contemptible, a bit mean and pettifogging. After all, what are the costs of collection? The unfortunate exhibitor has to make up his return of entertainments tax and get his cheque ready for that. He will have to make up his return of levy and get his cheque ready for that. Having collected them, prepared the forms and written the cheques, he then hands them over to the Customs and Excise who, in turn, pass on the amount of the levy to the Agency. The Customs and Excise have no costs worth talking about to bear. As my noble friend Lord Lucas of Chilworth said, the costs are borne by the exhibitors. Not only will the costs involved be insignificant; it would probably take a microscope in order to separate them from the costs involved in collecting entertainments tax at the same time. In view of the fact that they will be covered by the same officers collecting entertainments tax, and the same machinery, I think it is unnecessary to put this in the Bill, and we should do well to take it out.
LORD FAIRFAX OF CAMERON: The effect of this Amendment which the two noble Lords have moved jointly
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would be to make no provision for Customs and Excise to deduct from the proceeds of the levy their costs of collection, and would be tantamount to a subvention from general public funds. The costs of collection are, in fact, very small indeed. Noble Lords have asked what they amount to and I can say that they amount to less than half of 1 per cent. of £3¾ million.
LORD LUCAS OF CHILWORTH: What is that? My arithmetic is not very good.
LORD FAIRFAX OF CAMERON: I am afraid mine is no better than that of the noble Lord, and I can give him only the percentage figure at the moment. I am sure he will agree that that is a small amount. This is in line with current costs, which are in two parts: those relating to that part of the collecting work which was performed by a private firm (working as agents of the voluntary fund) and that performed for the fund by Customs and Excise. Since the levy is intended to operate as a film industry measure rather than as a subsidy—because it is not a subsidy—it is appropriate that any expenses incurred in the running of it should be met out of the levy rather than out of general revenue. In view of that, I hope noble Lords may see fit to withdraw the Amendment.
THE EARL OF LUCAN: Speaking from considerable ignorance, I would ask whether this is a new departure, in principle, in the method of collecting Government funds. The Post Office act as agents in collecting a great deal of revenue for the Government, but I have never heard that the Post Office charge collection fees to the other Government Departments for which they act.
LORD FAIRFAX OF CAMERON: In reply to that, I may say that these are not Government funds, but funds belonging to the industry.
THE EARL OF LUCAN: They are going to be expended by the Board of Trade.
LORD FAIRFAX OF CAMERON: No, they are not expended by the Board of Trade at all; they are handed out to the producers by the Agency.
THE EARL OF LUCAN: I am sorry. I should have said "by a statutory body," which is the Film Fund Agency.
LORD ARCHIBALD: Later in the Bill there are elaborate provisions for checking up on exhibitors' books and records to see that they have paid their revenue properly. Will there he any opportunity for exhibitors to check the costs of collection to see that this £18,750 (as I make it) has, in fact, been incurred?
LORD LUCAS OF CHILWORTH: I think this is terrible. I do not hold the noble Lord responsible for this; he has a brief. I think it very remiss and nearly bordering upon discourtesy to the Committee that instead of putting the sum down in plain figures the Government come and say it is, I believe, one-third of 1 per cent.
LORD FAIRFAX OF CAMERON: I said one-half of 1 per cent.
LORD LUCAS OF CHILWORTH: One-half of 1 per cent. of £3¾ million. Why not say £18,750, if that is the figure? Why put this arithmetical proposition to us? It is circumlocution run riot. If it were not five minutes to seven at night I should carry this debate on and very likely divide the Committee.
LORD MANCROFT: I must interrupt the noble Lord, particularly when he accuses us of discourtesy. I do not mind being accused of talking nonsense, but I take exception to being accused of being rude. The only reason why the figure is given in that way is because the normal way of calculating is by doing it in percentages of the gross sum. On my humble reckoning, the sum is about £10,000 to £15,000. There is no mystery about it. The only reason that it is given as a percentage is that that is the normal way that it is done by the people behind the scenes.
LORD LUCAS OF CHILWORTH: I think the noble Lord will agree that I said I did not attribute any of this discourtesy to the noble Lord. The last thing I would attribute to the noble Lord, Lord Fairfax of Cameron, or to the noble Lord, Lord Mancroft, is discourtesy. But I think it is discourteous of the Department.
LORD MANCROFT: No.
LORD LUCAS OF CHILWORTH: Why do they not give the noble Lord, in parentheses, the amount as a sum
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of money? You cannot get away with this kind of thing.
LORD MANCROFT: It is not getting away with anything at all.
LORD LUCAS OF CHILWORTH: Just one moment. I am getting rather dissatisfied. I do not include the two noble Lords on the Government Front Bench in anything I say, but I loathe and detest this Government Departmental obstinacy when it comes to dealing with Opposition Amendments in this House. I think we should at least have some plain English in some of the answers. I shall return to this matter, because I have another Amendment down of precisely the same effect. But, as we arranged to finish at seven o'clock, I will withdraw this Amendment, and in doing so I would ask the Government Chief Whip whether now would be a convenient time for the House to resume.
LORD MANCROFT: The next Amendment is uncontroversial.
LORD LUCAS OF CHILWORTH: If it is for the convenience of the Committe, we can take it.
Amendment, by leave, withdrawn.
6.57 p.m.
LORD LUCAS OF CHILWORTH LORD LUCAS OF CHILWORTH moved, after subsection (5) to insert:
"(6) Regulations under this section shall not be made save after consultation with such bodies as appear to the Board of Trade to be representative of makers and exhibitors of British films."
The noble Lord said: I can move this Amendment quite quickly, because I expect that it will be turned down with the same bluntness as all the others.
LORD MANCROFT: No; not a bit.
LORD LUCAS OF CHILWORTH: If it is going to be accepted, then I can sit down now. I do not want to re-argue the case; I have done it before. I think this is a perfectly reasonable Amendment. It goes in Bill after Bill, and was accepted in the Cinematograph Films Act, 1948. It was the same principle and precisely the same wording. Can it be accepted in this Bill? I beg to move.
Amendment moved—
Page 3, line 11, at end insert the said subsection.—(Lord Lucas of Chilworth.)
LORD MANCROFT: I cannot go quite so far as the noble Lord wants, but I can give to him the same answer that I gave

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to the noble Lord, Lord Archibald. I am prepared to put into the Bill a statutory obligation on the Board of Trade to consult the Films Council. I will not elaborate the same arguments. If the noble Lord would like me to put that in, and it will meet his wishes, I will do so. I am afraid that I cannot go to quite the length that he wants me to.
LORD LUCAS OF CHILWORTH: I want to be helpful to the noble Lord, and perhaps I may ask him this. Will he give consideration to the matter of whether the Films Council are really the appropriate body? I intended to bring this point out some time during the Committee stage, and I will do it now. I have nothing against the Films Council; I think they are an admirable body. But are they really the appropriate body for this? This is the narrowest of narrow issues. In my view, it is a matter purely between the two sides, the exhibitors and the producers. The Films Council is set up and comprised of independent people with a wide sphere of jurisdiction; it is the Grand Council of the film industry. I ask whether the noble Lord will consider that. I appreciate that he is trying to help us. I should have thought that the wording I have put down here leaves it to the discretion of the Board of Trade. There may be issues they can refer to the Films Council, but fancy having to refer to the Films Council a little insignificant regulation dealing with some of the little things on the collection or the payment out! Is it worth it?
So long as we can be assured that no regulation is made, however trivial, that has not been discussed with the industry, affecting the producer on the one hand and the exhibitor on the other, I shall be quite happy. I will withdraw my Amendment and accept the offer of the noble Lord. But will he think seriously whether the Films Council are the appropriate body whom it is obligatory for the Board of Trade to consult every time under this particular clause? If he will do that, I will, with your Lordships' leave, withdraw this Amendment for the time being, but will return to it on another stage of the Bill.
LORD MANCROFT: I will, certainly.
Amendment, by leave, withdrawn.
On Question, Whether Clause 2 shall be agreed to?
LORD ARCHIBALD: I will not detain your Lordships for more than a minute or two, but there is one point I should like to put to noble Lords opposite. The opening words of Clause 2 lay down that it shall be the duty of the Board of Trade by regulations to do so and so. There is nothing in the clause which indicates when these regulations will be made, and I think it is important that they should be made as early in each year as possible. The date of the levy is put not later than October 24, but it is important that the industry should know as early in the year as possible what the levy is to be for the following year. There should be some provision to cover that point. I hope that that can be looked at and brought up later.
LORD FAIRFAX OF CAMERON: May I reply briefly to the noble Lord? What the noble Lord wants to ensure is that the Board of Trade shall decide well before the end of each Fund year what the estimated yield of the Fund is to be for the following year. It is already the case that they will decide in advance, and it is already included in the clause. If I may do so, I will explain it to the noble Lord. The effect of the clause is that the Board of Trade will impose by regulation a levy beginning on a day not later than October 24, 1957. The amount which the Board of Trade are required to estimate to be yielded by way of levy during the year is £3¾ million. Thereafter, as noble Lords know, the estimated yield may be between £2 million and £5 million. If any alteration in the rate of levy is required, such alteration will have to be made by a fresh regulation, subject, of course, to an Affirmative Resolution of both Houses. In practice, this means that any such amending regulation would need to be before the House in the July preceding the beginning of the Fund year in October, since otherwise the House would not be sitting and would not be able to pass an Affirmative Resolution. From this, I think the noble Lord will appreciate that there are at least four clear months before the regulation comes into effect.
Clause 2 agreed to.
House resumed.
House adjourned at four minutes past seven o'clock