THE CINEMATOGRAPH FILM INDUSTRY

HL Deb 26 March 1958 vol 208 cc447-89

2.50 p.m.

LORD LUCAS OF CHILWORTH rose to call attention to the state of the cinematograph film industry; and to-move for Papers. The noble Lord said: My Lords, in opening the debate on the Motion standing in my name on the Order Paper, I should like to address to the noble Lord the Minister without Portfolio, who I understand will reply, two simple but important questions. First of all, do Her Majesty's Government still think that the cinematograph film industry can play a worthwhile part in the cultural and economic life of this country? Secondly, do they still think that the British section of this industry is a valuable medium for propagating throughout the world the British way of life? In those two questions is the nub of the problem which I am going to pose to your Lordships this afternoon.

If the answer to those questions is "No", I want the Government to be honest enough to tell the industry, so that it knows the fate which awaits it. If the Government's answer to the two questions I have asked is "Yes," then I ask a third: What do the Government intend to do about it? For unless some form of first aid is given to this industry—the type of first aid which only the Government can bring—then within a measurable space of time it will cease to exist, with all the consequences, some of which I intend to outline, that that will entail. But what the Government cannot do is to answer in the affirmative the two questions I have asked and then bludgeon this industry to death with the killing force of a penal tax which they have been forced to remove from every other entertainment section of the life of this country, cultural or otherwise.

During the last two months the Government have been inundated with propaganda, facts and figures. I will not weary your Lordships with many, but there are one or two basic figures which I think you should have to enable you to assess the seriousness of the present position. During the last ten years the attendances in the cinemas of this country have dropped 40 per cent., the biggest drop being within the last two years. In 1948, there were 4,600 cinemas; to-day, there are 500 less—about 4,100. I am informed, on the best advice that is open to me that if this entertainments tax continues to be applied to the cinema industry, as the last remaining victim, even on the most optimistic figure available, another 1,000 cinemas will be closed; while the most pessimistic figure given is 2,000. If I divide the two, and put the probable figure at 1,500, that will bring the number of cinemas open in this country to about 2,600, which will be approximately 900 to 1,000 fewer than the datum line upon which the production industry of the cinema world can exist. The horrible thought might cross your Lordships' minds that of course the brewing industry would come to a standstill if all the public-houses were closed.

The production side of the cinema industry needs a minimum of 3,500 cinemas in the United Kingdom in order to exhibit its products. The questions are two: what can the Government do in this crisis—because crisis it is—and what can the industry do? Our first responsibility in Parliament is to analyse what the Government can do. I am not going to be so naïve as to ask the noble Lord who is to reply whether it is the Government's intention to remove the entertainments tax when the Budget is produced and to put the appropriate clauses in the Finance Bill. The reason I am not going to do that is because if I could cajole him, or tempt him, or urge him, into some kind of reply, it might call for his resignation, which in my view would be a catastrophe for the Government and, if he will permit me to say so, a serious loss to everyone in your Lordships' House, wherever he may sit. So I am not going to ask that.

But what I am going to do, or at least attempt to do, is to prove to your Lordships—and, I sincerely hope, to the noble Lord and, through him, to the Chancellor of the Exchequer—that the Government have no option whatsoever but to remove this entertainments tax from this industry, which, I repeat, is the last victim of this form of taxation which has been imposed upon every form of entertainment in this country. Even dog racing, all-in wrestling and all like forms of "culture" have be freed from this tax; the cinema—and various Governments for years, as far as I can remember, have said that a prosperous and successful cinema industry is essential to the British economy—is the last remaining victim and is now suffering this slow torture which will ultimately end in death.

I am going to attempt—and knowing the noble Lord, Lord Mancroft, as well as I do, I do not think it will be an unsuccessful attempt, because he and I have debated this matter across the Floor of your Lordships' House over a number of years—to anticipate what his reply to me is going to be. There are people who are saying, very easily, that there is nothing wrong with the cinematograph film industry that the industry itself cannot put right. I hope that I am not over-stating my feelings in this matter, but I put that into the category of utter and complete nonsense.

The next thing that is said is: "Of course, what the cinema industry requires to do is to make better films". I suppose that is one of the easiest things that anybody, without any knowledge or perception, can say. Of course it is. If the noble Lord, who occasionally, I happen to know, visits racecourses, could always hack winners, what a lovely life he would have—far better than having to reply to every tricky debate on behalf of Her Majesty's Government! If we could, in our business lives, always pick the winners; if the theatrical profession could always produce Flowering Cherries or Chalk Gardens or plays like that, what a lovely life it would be! But they cannot. Even with the Government, if they could choose officials in some of their Departments who did not lose £40 million of the taxpayers' money over building silly vehicles or futile aeroplanes, what a nice time the taxpayer could have! Why should you try and put on an artistic as well as a commercial industry a higher standard of business perception and crystal-gazing than you are prepared to accept in any other industry or sphere of activity in this country?

My Lords, what is a good film? I suppose that, in the context in which we are discussing this matter this afternoon, a good film is one that will make the most money at the box office. I have been at pains to make some investigations. I suppose that we can divide films in this country into three categories—the good, the medium and the bad. In the case of the good, I am given to understand that the average which one of the most successful films in this country will gross at the box office during its life in this country, which, as your Lordships know, usually runs for about 2½ years, is about £345,000. I have been able to obtain the exact results of three films, which I have chosen at random, that have grossed at the box office £400,000 and over—so they must be put in the category of the best British films and of a high standard.

Perhaps your Lordships will bear with me if I give some details about the first of these three films, because I think it is essential, in view of all the ballyhoo that is talked about this industry, for you to have the absolute facts; and the figures I am going to give have been vouched to, me by responsible people in the industry as being correct. There was a film, The Good Companions. The estimated bookings of that film were 1,800. I should explain to you that immediately the first bookings of a film are made the experts can accurately forecast the residual bookings, and it is on these that they base their economics. In the case of The Good Companions—I am now dealing with the exhibition side—the estimated box office takings were £421,500. Entertainments tax to the tune of £131,500 was extracted. The levy that had to be paid into the production fund was £12,224. So that left a total of £277,776. The hire of the Wan cost the cinemas £95,000. So that the 1,800 cinemas of this country would net £182,776; and as estimated overheads were £190,000, that left a loss of £7,224 to be shared by the exhibitors.

Now we come to the producer. As I have said, the cost of film hire was £95,000—that was what the distributor had gross. The distribution costs of that film were £44,000, so that the producer's share was £51,000. Money out of the production fund which has to be added to that amounted to £23,500. The export receipts of that film were estimated at £8,500, so the producer's gross receipts were £83,000. The cost of the film was £201,382, so that the loss on production was £118,382. And out of that film the Government took in entertainments tax £131,500. That is the first example.

The second example is on the other side—it is a film that has recently been released, Woman in a Dressing Gown. Some of your Lordships have seen it, and I think you will all agree that it is one of the best films produced in recent times. I will not take you through the whole of the figures, because I do not want to bore your Lordships, but the estimated gross box office takings of this film were £480,000. Taking the same progression of figures that I have just given your Lordships, I find that the exhibitors here—who number 1,900—will lose £14,000 on the film. On the production side, gross distribution receipts were £110,000, and the cost of the film was £100,387, and the figures will show on the home market a profit of £3,000. But because it is anticipated that there will be a good export market for that film, the producers hope to make a profit of £54,000-odd, of which the Film Finance Corporation will take one-third.

My last example is the film which your Lordships will know as The Divided Heart, which I think was one of the best films made in recent years. The history of this film is that it grossed at the box office just about as much as the others; the exhibiting trade lost approximately the same amount as the others; and in spite of the fact that the film earned (and as it was produced four years ago its useful life is now over) export receipts of £62,000, it lost the producers £26,596. I could give your Lordships 108 examples to show how the producers of this country produced 108 first-feature films, and, after the levy payments had been paid, had lost £1 million by the end of 1957. That is why the production side of the cinema industry is in a crisis. That is why we are having cinemas closed over this country by the hundred. There is no getting away from these figures; they are authenticated; and I ask the noble Lord to accept them as I accept them.

Now let us take the exhibitor. It has been said that there are too many cinemas. That may be right. I would not question that. But what I do suggest to Her Majesty's Government is that, if there are too many cinemas, the natural law of economics should be allowed to work, and the economic "cosh" (if I may use that colloquialism) should not be weighted by about £25 million to hammer an industry out of existence. That is something no other industry in the entertainment world has to suffer. I have here a letter from a man who owns eight cinemas in the working-class suburban areas of Glasgow. He had his auditors prepare figures for the eight weeks ended February 22, 1958. During those eight weeks he lost on those cinemas £785, and while he was losing that sum he paid in entertainments tax £8,706. I repeat that if this goes on we shall be in this position in the cinema world: that it will not be worth while for producers to make films, because there will not be sufficient cinemas in which to show them.

This decline has been going on for ten years. What is the real gist of the competition that is driving this industry into these dire straits? One has to face the fact that its principal competitor is television. In 1947, when the decline in the exhibition side of the cinema industry can be said to have started, there were about 15,000 television licence holders. To-day, there are 8 million licences, catering for an audience every day and night of 22 million adults. It is estimated that the 22 million adults view television for 11½ hours per week, and that three-quarters of the viewers of television in this country are drawn from the working classes—the noble Lord, Lord Mancroft, will know what I mean by "working classes": the class to which we belong.

My Lords, these are the figures. Every week, at the present time in this country, 54 million hours are spent in the cinemas viewing the films, and 259 million hours a week are spent in looking at television screens. That is the nub of the whole problem. May I say this, quite frankly: if the cinema industry, given a fair field, cannot cope with that economic problem, then the cinema industry will have to suffer. But I do not think it is right that the cinema industry should be saddled with a tax of £25 million—because that is what it will be this year, 1958—

EARL WINTERTON

It will be £26 million.

LORD LUCAS OF CHILWORTH

The noble Earl says, £26 million. What is El million among so many! That is the weight that is put into the scales against this industry.

My Lords, what are the implications of this situation? If British production goes out, will American production come in? We all know that the British cinema could not exist without American films. The quota of British films is still only 30 per cent.; 60 per cent. of the screen time is now filled with American films—and, may I say in passing, of very poor quality. I said this in your Lordships' House when we last debated this subject, and I believe that I am right: that for a long time the American film industry has been so panic-stricken that it has tried to meet television competition in America by being more vulgar than the vulgar. And certainly the films it has sent over to this country simply put an emphasis on stars whose vital statistics—if that is the correct phrase, and I believe it is—are in inverse ratio to their acting ability. That is a had thing for the cinema industry. That the exhibition side has to look to American imports for 60 per cent. of its material is not something the industry can gloat over. What it does bring home is the fact that there never was such a time for the film industry to increase its export market.

I think that a number of us have been wrong in saying that we could not make a dent in the American market. That has been proved wrong in the case of motor cars; I believe that it is going to be proved wrong in the case of films. But you can never get the British industry into an economic shape unless you preserve a really virile home market; and you cannot have that virile home market if the Government perpetrate something which, in their wisdom—and I have applauded them for it—they have removed from every other entertainment. Do not let the Government go the same way as they did with the "live" theatre. Entertainments tax killed the "live" theatre in the provinces. If the Government do not do something about this problem they will kill the cinema industry.

My Lords, there are various remedies. The cinema industry has tried to do something. It has tried boycotting old films that are appearing on television. In doing that, I thought the industry was mistaken. I have seen some of these age-old films that have been bought and shown on the television screen. The only sort of amusement they give me is that when we sit and watch these old films my wife and I play a kind of game of "spotting the corpses", counting how many of the actors appearing in the film are now dead and gone and recalling when was the last time we saw them. But, to my amazement, I understand that when certain old films of renown are shown on the television screens of this country the cinema attendance on Saturday night falls by five millions. I have never thought that handicapping one's competitors was the right way to succeed, and I am going to suggest something else that can, perhaps, be done. I would suggest to the noble Lord that this problem is not only one of finance, nor is it only the problem of keeping the cinema alive in this country for its culture, for its economic value and for its way of propagating British life overseas. The problem is, if we do away with the cinema, if we "kill" cinema entertainment in this country, what are we to offer the youth of this country? Pin-tables? Dance halls? Or the streets?

A NOBLE LORD: Or "pubs"?

LORD LUCAS OF CHILWORTH

Or the "pubs"? Because I believe we have all known—some of us are not too old to remember—times when we wanted to get away from the parental eye. We wanted to slip mother and father and go out on our own. One did not want for ever to sit with them, even around the television set; and my information is that the juveniles of this country are getting rather sick of television. There is in this matter a social implication which I do not think Her Majesty's Government can afford to ignore.

I posed a question to the noble Lord what can Her Majesty's Government do? There is nothing that they can do except to remove this tax from the cinema as it has been removed from every other form of amusement in this country. So I am going to do a little crystal-gazing. I am going to conclude by saying something that perhaps will be challenged by many of those in the industry. I have no financial interest whatsoever in the film industry. I am not its spokesman. The reason why I have raised this Motion is because I have been intensely interested in the economics of the film industry since I happened to be spokesman for the Board of Trade in your Lordships' House and piloted through the House one or two Bills connected with the industry, so perhaps standing here I could be considered to occupy the rôle of "honest broker"—perhaps the noble Lord, Lord Mancroft, would say "broker", and I will settle for that.

I will assume that Her Majesty's Government are going to remove this tax and I will say what I would do with the £25 million. First of all, it is quite clear that the exhibitors must be given an economic return—and only an economic return—on their investment. It is equally clear that the producers must have a greater income. I feel that the producers were right when they said that the minimum amount they want from the levy is £5 million. Also, I am convinced that the levy is the finest method of passing it to them. And I believe that the public have to share in it, because I cannot get it out of my mind that the law of economics must apply even to the cinema industry. In all my business life, when I have had anything to sell—and, after all, this industry is selling seats for watching films—I have always believed that there is no substitute for low price; and I consider that the prices, loaded with entertainments tax, which are charged in the cinemas of this country are far too high. So I believe that the public, the producer and the exhibitor must benefit. And I believe, also, that the number of cinemas and of producers in this country must in future be regulated by economics and not by the weighted and ridiculous system that we have at the present time of taxing one entertainment industry—the one which caters for the working class of this country. If the industry cannot succeed when that is done, then I am sorry; but that is the only thing that I can suggest. I beg to move for Papers.

3.27 p.m.

LORD TEYNHAM

My Lords, the noble Lord, Lord Lucas of Chilworth, has certainly painted a somewhat sombre and depressing picture of the cinema industry, but I do not think he has in any way over-emphasised it. I do not propose to weary your Lordships with a lot of facts and figures somewhat similar to those which the noble Lord has given, but I am sure that a little later in the debate noble Lords who are actually interested in the industry will be able to give your Lordships figures. I would say that the primary question is: do we want to see this great industry, which earns a substantial amount of foreign exchange, going from bad to worse for the lack of a helping hand at the right time?

The noble Lord, Lord Lucas of Chilworth, has already pointed out that if the decline in the industry is to be arrested, entertainments tax must be abolished or, at least, considerably reduced. It is true that a small measure of relief was given by reduction of the entertainments tax in the Budget last year, but that has been completely wiped out by the colossal slide in box office receipts during the last twelve months. Surely it is only right that the cinema industry should be put on the same level as its great competitor—television—and be free from a tax penalty. I suggest that, however great may be the technical improvement and production, and so on, in television, it can never supplant the cinema in all its aspects, with its broad panel of art and entertainment and the production of the great spectacle which will live for all time. I say, therefore, that we must keep this vital industry alive, not only for public enjoyment but also for posterity.

Why should the cinema industry bear a penalty as compared with other forms of entertainment? The cinema is an art, an art which reflects our way of life all over the world; and I am sure there are few of us who would like to see that in any way diminished. It is the only art or entertainment which really contributes in any substantial way to our balance of payments with foreign countries. I know it has been argued in some quarters that the film industry would be more deserving of relief if they practised greater economy in their methods of production, distribution and so on. That may well have been true in the past, but I do not think it is by any means true today. I believe that great care is now taken of expenditure. It must not be forgotten that the cinema industry must compete in a world market for the talented actors and actresses, and without adequate finance it can neither obtain them nor build up the stars of the future, nor in fact pay the very necessary directors to direct these productions.

Is it really the case, as was put forward by the noble Lord, Lord Lucas of Chilworth, that Her Majesty's Government think that dog racing and all-in wrestling are more cultural than the cinema? I am sure that that cannot be true. It is sometimes argued that the tax is paid, not by the cinema but by the public; but this also, of course, is not true. We all know that every form of entertainment, in fact I would say any business, can charge only what one might describe as "what the traffic will bear"; and therefore in respect of the lower-priced seats the industry bears the tax, because any rise in price at the present time would discourage the public still further and the box office receipts would again be reduced. The cinema industry, I believe it has been said, is paying some £25 million in entertainments tax; but, obviously, if the box office receipts continue to decline the tax yield will fall with it and the law of diminishing returns will operate, to the detriment of the Chancellor of the Exchequer.

I would emphasise that the British film industry does not receive any subsidy, but what do we find when we turn to other countries? Both the French and the Italian industries are heavily subsidised; in fact. I believe that the French industry is subsidised to the extent of 20 per cent. on overseas earnings. The British film industry is certainly not asking for a subsidy, but it is asking for fair treatment as compared with other forms of entertainment, and I hope that the noble Lord who is to reply to the debate will draw the attention of my right honourable friend the Chancellor of the Exchequer to the most important points that have been raised this debate.

3.32 p.m.

LORD AUCKLAND

My Lords, this is the first occasion upon which it has been my privilege to address this House, and I hope your Lordships will extend to me the usual kindness which you traditionally show to a beginner. The subject for debate this afternoon is one of tremendous social importance. The cinema has for too long been regarded as a place where young couples perhaps go on a Saturday night. It is something very much more than that, my Lords; it is somewhere where, above all, dollars are earned—many dollars; and I make no apologies for trying to impress the sterling quality (in more ways than one) of British films.

But let us first consider the question: why do people go to the cinema? Do they go to be entertained? Do they go to be educated? I submit, both; and that is surely a cast-iron reason for promoting the welfare of the cinema far more than is being done now. Let us consider the entertainment value of British films. Seldom have we had better quality British comedies than at present. In the past few years we have had films like Doctor in the House, Genevieve, and happy is the Bride, to name just a few films which portray tine British way of life with supreme faithfulness. I am the last person to go into a lot of anti-American feeling on this subject. There is no doubt that Hollywood has produced some very fine films; but equally, my Lords, there is no doubt that at the present time British films in quality have the edge on Hollywood, and let us not forget that.

I have been doing quite a lot of research for this debate and I have seen at least two cinema managers. One has told me that British comedies attract approximately 70 per cent. of his clientele. The other week he showed, because he was forced to show by his circuit, one of these rock 'n' roll films, with Elvis Presley or some such star in it; and after the cinema showing some of his regular patrons went to him and said, "Why the blazes do you show this kind of stuff here? I have been patronising this cinema for many years and I shall think twice about coming again." This was said to the cinema manager, and he had to reply that his circuit ordered that he should show this film. Here, I think, is a case where circuits should arrange for a public local poll to be taken, so that the right kind of film is shown in the area. One of the troubles at present, I imagine, is that there is a sufficient dearth of British films to preclude the showing of more than the 30 per cent. quota which now exists, and they are forced to fall back on American productions, which, as the noble Lord who moved this Motion has rightly said, are often of very inferior quality.

To come to the television menace, I must confess that I possess a television set, primarily because I have a young family and until quite recently I was not able to get out in the evenings very much. There is an important social factor involved here: that probably many young people possess television sets, in a lot of cases on hire purchase, the money for which would normally go towards the cinema; but because they cannot get to the cinema, since they are unable to arrange for people to look after their children, they are forced back on to television. It must be faced, also, that in the spell of bad weather which we have been having here recently and which we tend to get at this time of the year, unless the cinema is literally next door people are going to be tempted just to flick on the television knob and perhaps see some third-rate variety show, rather than to trek along to the cinema to see a first-class British film. In saying that, I am not trying to denigrate television—some of the shows on television are very good—but it is disturbing that the cinema industry should be suffering through the medium of television.

I should like to quote a passage of a well-known young British actor who in an interview said these words: I love working and living in this country. I like the English way of life. This is the best country in the world to live in. Without all my friends, and without my golf on Sunday mornings, I'd be lost and unhappy. I quote that statement as an example of the loyalty which British actors have towards this country. Many of them have been forced over the Atlantic, often to their own detriment. Hollywood has improved very few British actors; it has been the ruination of many. But unless something is done, and quickly, to remove the tax on the cinema, there will be an increased fall off in patrons and the actors themselves are bound to suffer—and not only the actors, but also the "overheads", the doormen, usherettes, operators, and other employees. I have no financial interest in the cinema. I am speaking purely as a cinema patron who likes to go along and see the film of my choice and of my wife's choice every now and again. I implore the Government to remember, so far as the cinema is concerned, three words: British is best.

3.42 p.m.

LORD WESTWOOD

My Lords, I am sure that I am speaking for the whole House when I offer my sincere congratulations to my noble friend Lord Auckland, who has addressed us this afternoon for the first time. I hope sincerely that he will take part in our debates on many occasions.

As is usual in this House, I must declare my interest in the subject of this debate by informing your Lordships that I am a member of the National Executive Committee of the Cinematograph Exhibitors' Association and have been connected with the cinema industry for some twenty-six years. I am most grateful to the noble Lord, Lord Lucas of Chilworth, for initiating this debate today. The present state of the whole cinema industry in this country is in a very critical condition, and it is only right and proper that the attention of this House should be drawn to it and that some effort should be made to save it. It was only a few months ago that a well-known lady interrupted the proceedings of this House to draw attention to one theatre. To-day I am trying, if possible, to save, not one theatre but 4,085 theatres from extinction, from the large theatres which exhibit first-run films in cities down to the small village halls which cater for a few hundred patrons per week. In my view, both types of cinema are essential, and at this time both types are fighting for their very existence.

There is one thing upon which we can all agree in your Lordships' House to-day, and that is that this is not a Party matter, but a matter which merits the attention of all noble Lords. The cinema industry, as it is at present constituted, can be likened to a three-legged stool: we have the producer who makes the films, the renter who distributes the films, and the exhibitor who shows the films. And, as with a three-legged stool, every leg is dependent upon the other two. It is essential, therefore, if British film production is to be maintained and improved, that the exhibitors in this country should be put in a position to keep the cinemas open. It is only through the pay-boxes that their means of existence is derived. The producers, the distributors, and the exhibitors owe their existence to the pay-boxes. I am sure that every noble Lord will agree with me when I say that during the past few years the British film producers have made many wonderful films, films which have now gained a foothold in the markets of the world and, I am happy to say, are earning much-needed dollars in America. I am told that in New York alone more than twelve British films are being currently shown. What an improvement on the position that existed a few years ago!

The cinema industry is in a very critical condition, but the answer to most of its problems is a very simple one—abolish cinema tax. Your Lordships will observe that I say "cinema tax" and not "entertainments tax", because the cinema is now the only form of entertainment which bears the tax. Why should this be so? Why this discrimination? This tax was introduced in the year 1916 as a temporary war-time measure. Is it not about time that it was totally removed'? We have finished two wars since 1916, yet this tax is still with us. The present Prime Minister, when he was Chancellor of the Exchequer in 1956, said: I give this pledge, and I state it quite deliberately—I hope this will be the last occasion on which it will be necessary for me or Treasury Ministers to defend this tax. Alas! it is still with us to-day, two years later.

The condition of the cinema industry generally is deteriorating week after week, and exhibitors simply cannot afford to refurnish, re-seat, re-decorate and re-carpet their theatres. If they are to meet the challenge of television, which has been mentioned this afternoon, they must be allowed to re-equip and modernise their cinemas. Can any noble Lord visualise what it would be like if there were no cinemas in this country and all the people were condemned to spend their lives gazing at television screens?

LORD LUCAS OF CHILWORTH

Horrible!

LORD WESTWOOD

As the noble Lord said, it would be horrible. It is a ghastly thought. When the Cinematograph Bill was being debated in your Lordships' House in December, 1956, several noble Lords stressed that unless substantial reductions in tax were made in the 1957 Budget many cinemas would be forced to close their doors. Although a small rebate was given in the Budget in 1957, it was a mere pittance; and as was forecast, many theatres had to shut down. In the years 1956 and 1957, 417 cinemas switched off their lights for the last time. They went out of business. Surely we just cannot sit and watch while more than four cinemas a week go to the wall and the livelihoods of many people go with them. It is nothing short of a major disgrace that such a state of affairs should exist in this country; and something must be done about it, and done very soon.

Looking at the problem from the producers' point of view, the main reason why this unfair tax on cinemas must be abolished is the fact that, if it is not abolished in this year's Budget, more cinemas are bound to shut down; and if their sources of income are depleted by such closures, the producers are bound to suffer severe losses. In other words, it will virtually mean that the whole of the British film industry will collapse. I have spent more than twenty-six years in the cinema industry, and I am speaking with some knowledge of what I am saying. Let there be no doubt in anybody's mind that this gloomy forecast will materialise unless help is given to the trade on April 15, when my right honourable friend presents his Budget in another place. The choice for the Chancellor of the Exchequer is a simple one: either he abolishes the cinema tax, or he abolishes the cinema industry. Let there be no mistake about that. I am quite sure that any Government is desirous of maintaining a healthy British film production. Therefore, it must create the conditions which will put a stop to the closing down of these cinemas; and this can be achieved only in one way—that is, by tax abolition.

There is another important point which should also be borne in mind, and that is the loss to the local authorities throughout the country when cinemas close down. In many cases the local picture-house is the largest ratepayer; and, from information which I have gathered, I understand that several local authorities are now viewing the position with some alarm. It may be of interest to your Lordships to tell you of an incident which happened only a few weeks ago. The cinema to which I refer is the Ritz Cinema, in West Drayton, Middlesex. Last year that theatre paid a sum of £5,960 in cinema tax, and yet it ended up the year "in the red" by £2,122. The owners realised that they could not continue at this rate, and they suggested closing the cinema. The news spread round the town, and so much commotion was caused that the local council made a grant to the exhibitor of £200 to help him. The local clergy, of all denominations, in order to save the amenity of the cinema, launched an appeal, and a further £1,000 was raised by local subscriptions to keep the cinema open until Budget day next month. How would any of us here to-day like to carry on our business through the help of charity?

I am fully aware that in some quarters (and the noble Lord, Lord Lucas of Chilworth mentioned the point in his speech) the opinion is held that there are far too many cinemas. I remember my noble friend Lord Mancroft making this point when the Cinematograph Films Bill was given its Second Reading in your Lordships' House on December 20, 1956. His words on that occasion were [OFFICIAL REPORT, Vol. 200, col. 1334]; We all know places in which there seem to be competing cinemas on every corner, and it is little wonder that in times of declining cinema attendance some of these must of necessity close their doors. That may well be so in large cities, but what is the position of the town or village where there is only one cinema? If that cinema shuts down, the patronage is lost to the cinema industry for ever, as in most of these instances the village or town is many miles away from the nearest large centre, and with the cost of transport the patrons of the village hall just cannot afford the extra expense involved in travelling. I am informed on good authority that where a cinema in a village closes down the percentage of its patronage which attends the nearest cinema to the village is between 5 and 7½ per cent. It will be clearly seen, therefore, that the fact that many theatres are closing does not necessarily mean that the patrons are swelling the admissions of those which are fortunate enough to remain open. I trust that my noble friend will bear this point in mind, as I am sure he will.

I should like now to tell your Lordships of a few of the anomalies which exist in the cinema industry and which, quite frankly. I find it hard to understand, as they appear to me to be so unreasonable and unfair. The public can go to the Cup Final at Wembley, if they are lucky enough to get a ticket, and they pay no tax. But if they go to see the film of the game in their local cinema, then cinema tax must be paid. If the Bolshoi Ballet returned to this country your Lordships could all go and see it tax-free; but if you see only a film of this wonderful show, then you must pay cinema tax. Is it possible for discrimination to be carried to greater heights of absurdity? The cinema offers relaxation, good cheer, a comfortable and warm refuge from boredom and bleak weather; and, above all—and I emphasise this—it offers good family entertainment, carefully categorised by an excellent Board of Film Censors.

The industry can start to plan ahead for a prosperous future—prosperous not only to itself but to Britain, too—if it gets the green light from the Chancellor of the Exchequer. If the cinemas prosper, then British production also will prosper and will be able to continue making good films; and they, in turn, will be able to show our way of life to the rest of the world. They say that trade follows the film, so here is a golden opportunity which must not be missed. The boost to this country would be immense and incalculable. But the producers must have a sound home market: every single cinema that closes down automatically cuts the scope of our home producers. Another point that must not be overlooked is that the abolition of this tax would result in a considerable saving of Government expenditure on administration of the tax, the revenue of which is bound to be affected by diminishing returns.

In conclusion, my Lords, there is one other matter upon which I will touch, and that is the iniquitous Sunday charity levy which has to be paid by cinemas for the privilege of opening on Sundays. Here again there is discrimination against the cinema. No other form of entertainment suffers from this extortion. Television, working men's clubs, concerts, public-houses and fair grounds all cater for the needs of the public, but no Sunday tax is levied on them—and rightly so. Why should the cinema industry be victimised by this levy? I understand that in Nottingham the corporation have collected something approaching £50,000 from the cinemas in the last ten years, through the medium of the Sunday charity levy, and they are still undecided how this money should be spent. How grateful the cinema exhibitors in Nottingham would be if the watch committee of that city returned that money to them and helped them to keep in business!

Well, my Lords, there it is—a sad story, but one which can have a happy ending if the Chancellor abolishes this onerous burden on April 15. The cinema tax must go. It is not only iniquitous, it is immoral, and it is destroying the cinema industry. What man in your Lordships' House would expect to pay more in tax than he actually earns? That is happening week after week in this industry which is now fighting for its very life. Exhibitors keep paying more out in cinema tax than they actually make. That cannot go on much longer. I would ask my noble friend who is to reply to the debate to make early representation to the Chancellor of the Exchequer and to plead with him to save this once great industry before it is too late.

4.0 p.m.

LORD HAWKE

My Lords, I have no particular interest in this matter, but I have an important interest in that it is a consumer interest, and the consumer these days is sometimes forgotten. So my interest in intervening in this debate is personal and, at the same time, patriotic. As a middlebrow, I enjoy going to the local cinema and seeing a good film; and, by a curious coincidence, what I believe to be a good film nearly always turns out to be a British film. If the receipts go plunging down as they are doing, there will be not only a closing of these cinemas, particularly the rural ones, which I should greatly regret, but also fewer British films made both for home and export, which again I should greatly regret.

Your Lordships' House is perhaps by tradition more associated in sympathy with the live stage, both variety and legitimate; but for years the drama has been brought to the masses by the cinema. In the last century it was the gin palaces which stood out as a beacon of light, attracting all in the slums of our great cities. In this century it is the Odeon in the High Street which is a blaze of light, attracting people to come there and, for a moment, forget their drab lives in their celluloid dream. In them, youth can, for once in a way, feel that it is living and walking with the great. I hope your Lordships will have great sympathy with this industry for that reason, because, until recently at all events, it was the great mass indoor entertainment, giving pleasure at home and also prestige abroad.

All over the Empire people look forward to seeing the latest good British film—and outside the Empire, too. I understand that the Rank Organisation has been making a great effort to get into the South American market, and, moreover, has had considerable success in doing so. I remember that I happened to be in one of those great cities when a great British film arrived. Undoubtedly the whole prestige of the British community was very much enhanced as the queues at the box office for this film grew longer and longer, and the congratulations of the local inhabitants came to their British friends on the achievement. As a nation we are modest, probably too modest, and we are reluctant to blow our own trumpet. One thing we may be quite certain of, and that is that Hollywood will never blow it for us. But our film industry can, and does.

At the moment we have a 30 per cent. quota, but if the takings decline the levy will be less, and further down there will be pressure on the rent of the films, so that still fewer British films will be produced, and it will be impossible to fulfil the 30 per cent. quota, which I think would be disastrous. I should like to see that quota gradually increased, but, of course, that is impossible without increased box-office revenues. Previous debates in your Lordships' House have often taken the shape of discussion on the problem of how to divert enough revenue from the exhibitors to the producers, but now both the producers and the exhibitors are in the same bowl of soup. The industry is demanding total abolition of the tax. Of course, very big sums are involved, I believe £30 million a year or so—perhaps £25 million at the moment, but I doubt whether it will be much more than £20 million next year and perhaps £15 million the year after, unless something is done.

But one must remember that if the Chancellor of the Exchequer remits £20 million of revenue he either has to impose another tax elsewhere, or to forgo the advantage of reducing another tax. Therefore the industry must clearly satisfy the country in the fullest possible way that it is doing the best it can for itself; that it is collecting the maximum possible revenue, and that it is operating with the maximum degree of economy. I think the first of these propositions can be more or less assumed from the fact that it is run by astute business men; but on the second I think the country would like some enlightenment, because there have been allegations in the past that in the studios, among the studio technicians, restrictive practices were very rife, and among artists and producers outbursts of artistic temperament led to considerable waste and extravagance. Now were these charges ever true, and are they true to-day? I hope the noble Lord, Lord Archibald, or my noble friend Lord Winterton, who follows me, will be able to give the answer.

Nevertheless, in the public eye there does appear to be considerable ostentatious spending by the principal artists. Maybe these are only foreigners, but if they are British, and in view of the request of the industry for tax remission, one is entitled to ask the question: is such expenditure really necessary in order to sell seats at the box office? Is a multiple mink and Cadillac standard necessary to fill the cinemas? I do not know. Perhaps the noble Lord, Lord Archibald, will answer that question. If it was proved that this was not necessary for the purpose of filling the cinemas, I could remind my right honourable friend the Chancellor of the Exchequer that it would be impossible if the Inland Revenue collected the taxes which Parliament levies. If the answer to all those questions is satisfactory, if the industry has done all it can for itself, and if the existing path, as it would seem to do, leads to the awful certainty of the showing of an increasing number of sex-ridden Hollywood films in a decreasing number of British cinemas, accompanied by a smaller number of British films going abroad, then, I think, a remission of tax is highly desirable.

It would not be without precedent. County cricket was saved from, I think, extinction some years ago by the remission of tax, and that brings one to the theory of so-called entertainments tax. It seems to me that if one is going to have a tax on entertainment it must be flexible and eclectic—in other words, you must follow the money. Public taste is fickle, and it is no good trying to tax a form of entertainment which the public are deserting. To-day, I think the money is going on television, motoring, dance halls and betting. If, for political reasons, the Chancellor of the Exchequer feels that he cannot tax or increase the tax on any of these, then I think he should give up the idea of an entertainments tax at all: in other words, either no tax, or else let the tax follow the money.

Of course, the case for total remission is undoubtedly strong, but if, for revenue reasons, he feels unable to go the whole hog, I would earnestly hope that he would at least go half way and watch the position for two years to see whether it stabilises or deteriorates any further. To-day it is the exhibitors who are raising their voices, but it is important, as the noble Lord, Lord Lucas of Chilworth, said, to see that the producers get their proper share, because it is to them that we look for maintaining British prestige abroad and for our entertainment in the cinemas at home. It will be impossible to maintain this industry on imported films. Particularly at this time of year many people and industries have cried, "Wolf, wolf!" and yet the sheep have grown fatter each year for shearing. But in this case I believe we are talking of a sheep which has lost pretty nearly all its wool already.

4.10 p.m.

EARL WINTERTON

My Lords, I rather run the risk of boring your Lordships by again speaking in a film debate and having once again to disclose my interest in the industry. I will try to avoid being repetitive, either in the sense of saying what I have said before or repeating the arguments which have been used by my predecessors in your Lordships' House in this debate. I think I can put my points, to avoid trespassing too much on your Lordships' time, in tabloid form. I will reply in a moment to the specific question put by my noble friend Lord Hawke.

To me, as one who is deeply interested in more ways than one in the industry, this has been a most satisfactory debate, and I should like respectfully to thank noble Lords in all parts of the House who have taken part in it for what they have said. It is impressive in another sense, that there is in fact complete unanimity of opinion that the entertainments tax is an iniquitous and anomalous burden on the industry. There is another point about this particular situation which is of great interest: employers and employees, all three branches of the industry, in the shape of producers, distributors and exhibitors, the whole of the employees, whether they are usherettes in a theatre or cine-technicians or artistes, are in complete agreement that this tax is quite unjustified. I may be wrong, but so far as I know there is no other industry at the moment which is making a concerted movement, through the employers and through the trade union representatives—notably that redoubtable member of another place and a personal friend of many of us, Sir Torn O'Brien—to try and get the Government and the Chancellor of the Exchequer to see reason and fairness.

I want to be absolutely fair and honest in putting the case before your Lordships. Let me say at once that of course the industry is suffering from the competition of television, which is partly responsible for its troubles; though I was encouraged to learn from one noble Lord (I think it was the noble Lord, Lord Westwood) that in his opinion the younger generation were showing themselves to be slightly allergic to television, and consequently it was hoped that they might return to the cinema. It is also true that there has been a reduction in cinema attendance in countries where there is ro television. It is, I think, the fact—I believe that any expert would agree—that the way to meet television competition and to reduce, or, rather, bring to an end, the fall in attendance, is to have good films. Çsa va sans dire; that is obvious.

Yet it is not quite so easy to find those good films as some critics of the industry have suggested. The British film industry, to which many tributes have been paid this afternoon (a fact which gratified me very much, as one connected with a company which produces on a large scale) has shown great enterprise and energy in the last few years. As other noble Lords have pointed out, we have built up an export trade which, though at present it runs into only a few millions, is very valuable because of the prestige which it helps to bring to this country in so far as the best British film portrays aspects of British life which are perhaps not known to foreigners. Far too many people in the United States, as noble Lords who have visited that country will agree, think that Britain consists of old mediæval churches, quaint Tudor villages, people who wear curious costumes in your Lordships' House and elsewhere, and whose only conversation is about the weather, the Test Match or the Cup Final. A good British film shows the throbbing and thriving life of this country, and in that respect alone does a great deal of good. In a few years since the war we have built up this trade, of only modest proportions; but we are, as a result, bringing into the country several million pounds.

The noble Lord, Lord Hawke, asked the noble Lord, Lord Archibald and my- self, both being connected with the industry, if we could give an assurance that everything possible had been done to increase efficiency in film production. I think the answer is, Yes. Considering how wages and what might be called the raw material of the production of a film, in the shape of various accessories, have risen in price in the last few years—and I think in the main British films cost less to produce than they did—I do not think we have a bad record.

I did not quite see the relevance of his observation about the personal lives of theatre artistes. When the tax on the living theatre was taken off, people did not inquire whether actors or actresses were earning too much or living too lavishly. It was taken off because it was considered to be a wrong tax, presumably, by the Chancellor of the Exchequer of the day; and, similarly, we who are connected with the film industry claim that the tax should be taken off for the same reason. I do not think it is fair to say that British film artistes, at any rate, necessarily set a bad example. The short answer to my noble friend is, Yes; everything possible has been done to increase efficiency. He referred to the difficulty which has been experienced in the past with some of the unions. He knows quite well that the employers in every industry, or at any rate most industries, have to contend with the same sort of thing. It is all very well to say that we ought to do away with restrictive practices, but it is a question of getting the unions to agree. I do not know that there is an undue amount of obstruction in that sense in the film-producing industry, or that it exists to a greater degree in this industry than in many others.

Now I come to the question of the tax. I want merely to support to the fullest degree what previous speakers have said. Those of us connected with the industry are indebted to the noble Lord, Lord Lucas of Chilworth, for the very interesting breakdown of figures which he gave in connection with certain films. Those figures are, I think, approximately correct. The entertainments tax taken from the industry this year will be approximately £26 million, and it cannot be too often stressed that that is not a tax on profits but a tax on takings. Assuming that it was taken off, and that we pressed for the abolition of the whole tax, the money would be dealt with probably in this way. About £8 million to £10 million more would go to producers—that would be necessary under the arrangements in the industry. About half of that, perhaps more, would go to American producers. But as the noble Lord who is going to reply for the Government knows, and as he will probably tell your Lordships, there is a friendly arrangement between our Treasury and the industry in the United States by which a large proportion of that money has to be kept in this country, and it would probably result in the production of more films. I want to make it clear that we in the film industry have no hostility to the American production industry—indeed, without it we could not carry on.

Incidentally, I want here to go off into parenthesis by saying that one or two people, who really know nothing about the circumstances, are always saying, "Oh, yes, it is quite easy to solve the problems of this industry. All you have to do is to produce enough British films." If pressed, they say, "Well, I think you ought to produce practically all the films that are shown in this country." To use an analogy, that is like saying that the whole of the school accommodation problem could be solved if enough schools were built in the next two years; or that the whole of the road problem of this country could be solved if enough money were spent on tearing down houses and building trunk roads, and so on. The effect would be that the Exchequer would have to pay an astronomical sum of money which it just could not afford. There is not the money in this country to produce all the films that are required for the British cinema. Nor would it be right to do so, because if we showed nothing but British films here, it would be difficult to induce the Americans to allow British films into America. Moreover, as I have said, we are building up a good export trade. Again in parenthesis, I am grateful to my noble friend Lord Hawke for mentioning what for reasons of modesty, could not have mentioned: that the Rank Organisation is having considerable success in exporting its films all over the world.

That, my Lords, gives some idea of what the position would be if the tax were removed. Noble Lords may ask: What would happen to the rest of the money? I think the noble Lord, Lord Lucas of Chilworth, suggested that some of it should go to reduce the cost of seats. That may or may not be possible. But I should like to emphasise—I am sure that the noble Lord, Lord Archibald, would support me in this point—that we require many millions to renovate the cinemas, many of which have got into a bad state of internal decoration owing to the fact that the money has not been available. In order to compete with television and to attract audiences back to the cinema, all the big circuits will in the next few years have to do what indeed they are doing on a small scale to-day—namely, to use a generic term, to improve certain methods of projection. All the time we are trying to improve the actual appearance on the screen.

One argument which was used in the past—though I am glad to note that it has not been used to-day—for differentiating between the cinema industry and the "live" theatre, and which seemed to justify the Government's action in taking off the tax on the "live" theatre, was that the "live" theatre had a higher moral and artistic value than the cinema. I really do not think that that contention can be maintained. I do not want to attack the "live" theatre. Like others of your Lordships, I am a patron of it. But I do not see anything particularly high in the level of morals of some plays that are put on, or, indeed, in those who act in them. In the moral sense I do not think that they are any better or any worse than the cinema. In regard to the artistic value of the "live" theatre, it should be remembered that some of the most celebrated actors of the time, including that very great actor, one of the greatest in living memory, Sir Laurence Olivier, have been pleased and proud to act in films. Your Lordships may remember that Sir Laurence Olivier was in the celebrated film Hamlet a few years ago.

My Lords, there is one point that has not been mentioned—namely, what is the position of the "live" theatre vis-à-vis the Government, and its financial attitude towards it. As I have said, from the cinemas is taken every year in entertainment tax—though, like Lord Westwood, I should prefer to call it "cinema tax", because it is levied only on cinemas—a total of £26 million. Not only does the "live" theatre not pay that tax, but in one way or another it receives sums by way of subsidy. This year the subsidy will approximate to £1 million. That subsidy goes to Sadler's Wells, to opera and ballet, to orchestras and in other ways. Perhaps one ought to say that the subsidy goes to the "live" theatre and to orchestral concerts. The amount is over £800,000 this year, and next year it will be £1 million.

Why should there be this astonishing contrast between the two? Perhaps the contrast is even greater when one considers the removal of the tax from dog racing—which cannot be said to have either a very high moral or artistic value—and its retention on the cinema. France is considered by many to be the homeland of artistic and esthetic perception. As a Feat admirer of France I would say that, in spite of all the terrific difficulties with which France is confronted at the present time, they have still maintained that position. I believe that both production and exhibition are subsidised. The Government also give a subsidy on every French film which is exported to be shown in other countries. What a contrast between the attitude of the French Government and that of the British Government!

I do not want to trouble your Lordships any further. I think it would be difficult for the Government to resist the strong movement which exists in this country, not only in the industry itself but outside, in favour of the total abolition of this utterly iniquitous and anomalous tax. I am a great supporter of Her Majesty's Government. I think it is the first Government since the war which has shown courage in tackling questions the solution of which brings no popularity, and may, indeed, bring a loss of votes at by-elections. I commend it for that. But there is a limit to what you cart do in the way of making yourself unpopular. The Government can be unpopular with some of the people some of the time, but if it is unpopular with all the people all the time it will have a very nasty fall when the General Election comes. If the Government does not abolish this tax, it will earn a great deal of unpopularity with a large number of people.

My noble friend Lord Hawke seemed to suggest that there was some dilemma here—that if the Government did away with the £26 million tax they would have to increase other taxes. I see no reason why that should be so.

LORD HAWKE

Or, alternatively, forgo the opportunity of reducing other taxes.

EARL WINTERTON

I do not see why that should be so. But even if it were so, surely that is no reason for keeping on an unjust and iniquitous tax.

LORD HAWKE

There are many unjust and iniquitous taxes.

EARL WINTERTON

I do not think there is any other tax that is so unjust and iniquitous as this one, for the reasons which all noble Lords who have spoken, except my noble friend Lord Hawke, have mentioned in their speeches. I thought it was agreed that it is iniquitous and unjust. But I do not think that that dilemma really arises. I do not want to attack the noble Lord, Lord Hawke, because he made a very friendly speech, but I do say that only the abolition of the tax can save this industry. Although. obviously, no announcement can be made this afternoon, I very much hope that Her Majesty's Government will have due regard to the very strong pressure upon them, not only in your Lordships' House but elsewhere, to abolish it.

4.30 p.m.

LORD ARCHIBALD

My Lords, like the noble Earl who has just resumed his seat, I must declare an interest, though not perhaps as direct an interest as his. I am chairman of the Federation of Independent Film Producers, and therefore, naturally, I approach this question primarily from the producer's point of view, although I hope not exclusively from that point of view. I believe that the whole of this debate must be based on the assumption, which I think has once been stated, that the continuance of a forceful, energetic and thriving film production industry is regarded as of national importance. I believe that view has been accepted by every Government of this country since it was first formulated at the Imperial Conference in 1926. That must be our starting assumption in approaching this subject.

Like other noble Lords, I am grateful to the noble Lord, Lord Lucas of Chilworth, for having initiated this debate, but I am sure all who have taken part in it, including the noble Lord who moved the Motion, would agree that it would be a much happier position for the British film industry if there were no need to debate it in your Lordships' House for many years to come. It is always an indication of the sad state of an industry that so much of your Lordships' time has to be taken up in discussing it.

I have indicated that I approach this subject substantially from the point of view of the producer, and I want to emphasise how much more the producer is hurt in a period of declining box-office receipts. I need not weary your Lordships with the technicalities of the booking or renting methods. It is sufficient to say that the system which prevails provides broadly that the more a cinema theatre takes at the box office, the higher the proportion of the takings which will go in film rental; and, correspondingly, the further it falls below its average takings, the smaller the percentage of those takings which will go in film rental. What has been happening in recent years? No one anticipated (he would have been foolish if he had) that cinema takings would remain at the boom level which they reached in the immediate post-war years; and they began to fall by round about 2 per cent. per annum. Then, with the coming of commercial television—I believe we can say that that was the direct cause—it became a drop of about 7½ per cent. per annum. Then, last year, the drop was about 20 per cent.; so that the graph of the decline has become an exceedingly steep and dangerous one.

In that situation, from what I said a moment ago, it follows that the film renter's share is not the same share of lower box-office takings but is a lower share of lower box-office takings. I am not making here a point against the exhibitors. I am sure that the noble Lord, Lord Westwood, would agree that what I am saying is factually correct—that the producer is getting not the same percentage of lower box-office takings but a lower percentage of lower box-office takings. That, in itself, would naturally and inevitably produce a crisis in the production side of the industry; but we have, in addition, the fact that production costs have been increasing, though I can assure the noble Lord, Lord Hawke, that is not because of extravagance.

I believe that everyone would admit that a number of years ago many charges of extravagance could have been levied against the production side of the industry, but sheer economic necessity has had the effect of weeding out I will not say all, but the major part of the extravagance. On the particular point made by the noble Lord regarding the remuneration of "stars", it must be borne in mind that one is dealing in an international and not a British market, and that any outstanding British "star" or, for that matter, any outstanding British director or technician, can get much greater rewards in Hollywood—even with the declining level of Hollywood production. The British producer who wishes to use a "star" or director of international status has to be prepared to compete, if not on the full Hollywood level, at least on a level somewhat comparable with it. So that these inflated figures, as we might regard them, are not something that is thrown out lavishly and willingly but something forced on the producer by the fact that he is operating in an international field.

Leaving that aside, I would point out that during the last few years practically all the basic costs of production have been going up; the costs of the raw stock which is used in filming, wages, paint, and all the various things used in a studio have increased. In addition, new techniques like the wide screen have inevitably involved higher costs of production. So that I might not be thought to be theorising about this matter, I have looked up certain films and have taken the cost of two films made in the same studio with the same artist, one made in 1955, the other in 1957. The film made in 1955 cost £ 188,000; that made in 1957 cost £284,000. I have allowed for the fact that the 1957 film may be physically slightly bigger and that there may have been accidental reasons raising the cost. I have gone into the question with the people concerned, and the most that we can knock off, due to this being a slightly bigger film or for any other reason, is £45,000; so we get, for strict comparison, an increase in cost of £51,000. I have also had from another company details of the cost of two strictly comparable films, one made in 1953–54, costing £116,000, and what might be called the sequel or companion to it, made last year, which cost £150,000.

I do not want to weary your Lordships by multiplying the examples, but the only lesson that can be drawn is that over as recent a period as the last three years the basic costs of production have gone up by in the region of 25 to 30 per cent. So that here we have the tragic position for the producer that to make to-day not a bigger film but the same level of film that he was making three years ago will cost him 25 to 30 per cent. more, and the returns he may expect from the box office in this country are in the region of 30 to 40 per cent. less; and that, obviously, is a situation which is very serious indeed

My noble friend Lord Lucas of Chilworth referred to the returns which had been got out on, I think, 108 films, and he told us the amount by which they would fail to recover their costs. Of that same 108 films, 79 as individual films will fail to recover their costs. Those 79 films cost (in round figures) £9 million to produce. They will get back in this country from the box office roughly £4¼ million, so that the loss is more than 50 per cent. of their production cost—£4¾ million. That, I agree, is before allowing for the production fund, the statutory levy; but the statutory levy will not amount to more than £2½ million this year, and even if these films were getting the whole of it, it would fail to bring them to the position of breaking even with their costs of production.

I want to emphasise that when I refer to the fall in box-office receipts, and therefore in the possible return to the producer from his films, we have also to reckon with a shortfall in the estimated return on the statutory levy. Your Lordships will remember, from what was said when the Bill providing for the setting up of the statutory levy was before us, that it was provided in that Bill that the Board of Trade should establish the level of the levy for the first year so as to produce £3¾ million. The Board of Trade, unfortunately, did not anticipate the steep decline in box-office takings, and provided for the levy on a basis which, according to present indications, will not produce more than £2½ million in the current year; so that the producers, in addition to the natural falling off in the box-office receipts, are going to be somewhere in the region of £1¼ million short in what they might have expected to receive from the production fund.

My Lords, it would be misleading your Lordships' House if one were to suggest that the problem of making ends meet in British film production is a new one, or that it is something which is occasioned only by the present slump in the cinema business. The problem of British film production has been before Parliament now for something like thirty years. The attempt to put it on a satisfactory basis was at first confined to quota legislation; then we had the voluntary levy; and now we have the statutory levy, all of which have been indications of the difficulties of the British film production industry.

I think that these difficulties can be, well exemplified by the history of one film-producing company, and, as it is a public company, there is no breach of confidence involved in referring to its figures. It is A.T.P. Limited, which is the company which owns Ealing Films. Most of your Lordships will know of the films made by this company. It is particularly associated with British comedy—in the early days with the George Formby films and those of Gracie Fields and, more recently, the Alec Guinness films and many others which your Lordships who are cinema-goers will remember with delight. It has also made outstanding films in other fields, like The Cruel Sea, and epics like Scott of the Antarctic and Dunkirk. It is a public company which has been making films for twenty-nine years, and in that period its shareholders have twice had a dividend of 7½ per cent.—approximately ½ per cent. per annum—and I think it would be true to say that neither of those dividends arose from profits on film-making but arose from completely extraneous activities. If it has been as difficult as that for twenty-nine years, the point I am emphasising is that the present slump changes it from being difficult to being impossible, and if something is not done British film production is going to come to a standstill.

At the present time, as one talks to producers one finds that the whole emphasis is on the point that they are waiting to see what is going to happen before they put another film into production, and, in these circumstances, that the only thing that can be done that will give them any hope at all is the abolition of the cinema tax. The industry is not asking for a subsidy from the Government—it is not really asking for help from the Government in the proper sense of that term. What it is asking is that the Government should get off its back and give it a chance to stand upright and fight for its own existence against the new forms of competition that it has to meet.

We have had reference already to-day to the cliché that there is nothing wrong with the industry that good films cannot cure. In over forty years' association with the industry, I think this is the third time that we have had an acute depression and that that cliché has been trotted out, so you will not be surprised that I am a little tired of it. I do not know why anyone should expect that film producers should be able to produce nothing but masterpieces. If you look at a publisher's list you do not expect that every volume in the list will be a best seller. It would be just as unreasonable to expect that every film that is produced in British studios should be a best seller. All that can be asked—and I think we are getting it—is that every endeavour is made to make the best possible films in the most economic manner possible.

In this connection may I emphasise that this is not just a financial matter; it is a matter affecting the livelihood of thousands of men and women, ranging from the theatre staffs to the highly skilled technicians and others in the studios. It is their bread and butter which is at stake in this question. and they are entitled to ask that the industry in which they are engaged should be given the opportunity of finding its own level without being handicapped by this enormous volume of tax.

If cinema tax is abolished the corollary to that should be (and I am sure that the noble Lord, Lord Westwood, will agree with me that the exhibitors accept this view) that the statutory levy should be increased to an amount which would produce £5 million a year. That is not a question of Government subsidy; that is simply a question of the internal allocation of the revenue of the industry, and all sides of the industry are agreed that what is required is not only abolition of the tax but also raising of the statutory levy to the £5 million level. Granted that that can be done, I believe that the industry, despite the intense competition of television, can find its own level, can do a certain amount of internal reorganisation and can go on to contribute in the future, as it has done in the past, a useful amenity for the people of this country and an increasing earning of foreign currency to help with our balance of payments problem.

4.50 p.m.

LORD MANCROFT

My Lords, I have been answering debates in your Lordships' House about the film industry for over five years now. Every time we have a debate on the industry, or introduce a Bill connected with it, my heart sinks lower, because every time it seems to me that the affairs of this extraordinary but fascinating industry become more and more complicated.

Today, of course, as the noble Lord, Lord Lucas of Chilworth, has pointed out in a friendly way, for which I thank him warmly, I am in additional difficulties because a Budget looms, and any aspect of the film industry's fortunes might of course find a place in any Budget. I wish to make it quite clear, however, that I have not discussed this matter in any way with my right honourable friend the Chancellor of the Exchequer. I have no idea whatever of his present views on the fate of the cinema industry. Indeed, although he is an old personal friend of mine, I have of late been avoiding him like the plague whenever I have seen him, on either social or official occasions. I shall be happy when this debate is over and I can explain to him why, and thus repair a beautiful friendship. Of course, I will bring to his attention everything that noble Lords have said this afternoon.

I must of necessity, therefore, fail to touch on or deal with quite a few points that I would otherwise have tried to answer to the best of my ability. I am sure your Lordships will appreciate my difficulty. Let me make it perfectly clear, therefore, that nothing I may say, accidentally or on purpose, or may omit, accidentally or on purpose, must be held to have any relation to a forthcoming Budget or, indeed, to anything. I am determined, whatever happens, that there is to be no Budget leak inquiry, and that this debate will end in your Lordships' House and not in Church House.

Let me, however, offer one or two general observations upon the topics your Lordships have raised this afternoon. After this debate, I think that we shall all realise that the problems of the film trade, which are so much in the public eye at the moment, stern directly from a fall in attendances. This seems to denote a major change in public taste for entertainment. Even if to-morrow we abolish the whole entertainments duty—or cinema tax, as my noble friend Lord Westwood naturally likes to call it—this change of attitude on the part of the public is unlikely to be affected. Perhaps a few cinemas might reduce their prices in the hope of attracting more patrons. Possibly others, as my noble friend suggested, would smarten up their appearance, with the aid of a reduction of tax if that proved possible. But we should delude ourselves if we thought that the abolition of this tax would entice everybody back into the cinema.

I do not wish to minimise in any way the seriousness of the outlook, particularly for exhibitors. I am impressed, as anybody must have been, by the weight of complaint in your Lordships' House, but the plain fact is that the public is spending less of its "leisure pound" on seeing films and more on other forms of entertainment. Television may be the main cause of the drop in attendances, but there are several other competing candidates for the "leisure pound". There is the new "Do-it-yourself" fashion, which claims not only its share of the "leisure pound" but a great deal of the leisure time of householders which otherwise might be spent in the cinema. Many people—except, of course, builders and decorators—might think this was not a bad thing. Then there is the enormous popularity and expense of gramophone records, radiograms and record-players, which are clearly responsible for keeping out of the cinemas a great many in those age groups to which cinemas particularly look for their custom.

No doubt if there were enough really outstanding films the position would be improved. But I agree with the noble Lords, Lord Archibald and Lord Lucas of Chilworth, that we can presume that when any producer of a first-feature film starts work on a new picture, he aims to produce a winner. I do not think that I should shed any new light on the needs of the industry if I joined in pious exhortation to producers to make better films—particularly in a week which has seen four new British films reviewed in the London Press. Here I should like to join strongly with the views the noble Lord, Lord Auckland, expressed in his interesting maiden speech.

There have been many gloomy forebodings expressed recently about the size to which the exhibiting industry might decline if certain steps—notably, of course, reduction in entertainments duty—are not taken to protect it: and even gloomier ones about the inevitable decline, even if such steps are taken. The exhibition industry must face the fact that it may have to reorientate itself in a world of changing fashions. Various individual attempts have been made to meet these changing fashions by the installation of dance halls, restaurants and so forth. I realise that in many cases this just is not "on." I think that some very painful readjustment is also probably necessary in the cinema seating capacity of a great many of our towns. Frankly, there are too many places that have too many cinemas.

The latest figure of the fall in attendances for the year 1957 is 17 per cent. Total attendances for the year were 915 million—the lowest since the war. Of course, I regard this as a serious state of affairs, particularly in the villages—here I agree cordially with the noble Lords, Lord Westwood and Lord Hawke—but it is also right that we should reflect that this is only a trifle below the attendance in the year before the war. That would admittedly be a more comforting reflection if there were any signs that the decline in admissions to cinemas was slowing down significantly, or if we had any reason to believe that television was anywhere near its saturation point. It obviously is not.

While the outlook for cinemas may be cheerless, I suspect that the fortunes of film producers may not be quite so seriously menaced as one might at first suppose. Of course we are concerned at the heartbreak of little independent exhibitors whose life-savings are in jeopardy, and of course we are worried by the risk of unemployment in the exhibition industry. But what of the money invested in the production of films, in studios; and what of the prospects of the artistes and technicians as well as of the creative talent in the industry? The production of British films, as all noble Lords have said, is something which many Governments of different complexions—with this Government well to the fore—have sought to foster. We must bear in mind, therefore, the prospects of this part of the industry.

Fortunately, as the noble Lord, Lord Lucas of Chilworth suggested, the film production side of the industry is not wholly dependent on the outlet provided by the cinemas in the United Kingdom: it has an export market; and here I should like to pay tribute to the tremendous drive and energy which some producers, and particularly the Rank Organisation, have recently been putting into selling British films overseas. Until the Rank Organisation achieved their worldwide distribution of British films, the American companies were the only companies to maintain world-wide distribution arrangements.

One has, I know, to be wary of talking in the same breath about the exploitation of films on both television and cinema screens, The cinema market must remain, of course, for a long time to come the most important outlet for British films. Nevertheless, in reviewing the state of the industry as we are to-day, I think we ought to bear in mind other outlets for British films. At present the revenue which a feature film could expect from television showing in this country would be only a tiny fraction—perhaps 2 or 3 per cent.—of what it might get from the cinema market, if we include both film rentals and levy payments. But television programme contractors are earning far more money than people had originally believed possible. One day, may be when the cinema and television have learned to live together, producers may find a useful addition to their income from this source.

Then there is the possibility that the idea of subscription, that is, penny-in-the-slot payments to see new films on television, will open the way to revenues comparable to those obtained from exhibitors. In short, therefore, there is probably nothing which the Government could or should do to attempt to influence the public to attend cinemas if they do not want to do so.

EARL WINTERTON

Perhaps I may interrupt my noble friend to say that nobody has suggested that they should. I appreciate his difficulty in talking about entertainments tax, but nobody has suggested that. All we have asked is that the Government should treat us fairly by taking off the entertainments tax.

LORD MANCROFT

I fully appreciate what my noble friend says, but there is a feeling that, if the Government remove the entertainment tax completely, most of the ills of the cinema will be automatically solved; I am merely trying to lay that bogy. I apologise for doing it to an expert like my noble friend; but not everybody is as aware of the fact as he is. The point I am trying to make is that the cinema market will have to find its natural size, and that size may be a good deal smaller than at present. Producers, on the other hand, may have a rather brighter outlook, and the developments to which I have referred give them a hope that other lucrative markets may later on be found.

There have been suggestions in the last three or four weeks that the credit squeeze has been responsible recently for curtailing film production. In particular, it has been suggested that the National Film Finance Corporation's lending policy has got "tougher". The Managing Director of the Corporation has recently gone on record as saying that for the current financial year the Corporation have advanced larger sums than in any previous year since the Corporation were set up—when they made the £3 million loan to the old British Lion Film Corporation. Not only was more money lent, but more films were assisted during the year. This, I think, disposes of any idea that production is imperilled by some new financial policy.

This is not to say, however, that the film industry has achieved some especially privileged position. The Corporation, like every other national corporation, must have regard to the Government's general financial policy of credit restriction. So far, their Managing Director has been able to state that he knows of no case where, because of the Corporation's need to go carefully with their loans, a film has failed to be made. I am sure that producers generally will play their part in seeing that the available finance for film production goes as far as possible.

My noble friends Lord Teynham and Lord Hawke drew attention to the question of the need for production economy. I myself have been very struck with what has been achieved in the direction of greater efficiency in film production during the five years in which I have answered for film affairs in your Lordships' House. I agree strongly with the point of view put forward from both sides, by my noble friend Lord Winterton and the noble Lord, Lord Archibald, that the average cost per camera day of films financed by the National Film Finance Corporation has now been reduced progressively from £2,935 in 1947–48 to £2,418 in the year ended March, 1956. Admittedly in the last financial year the figure rose to £2,840, but this is still below the figure at which it stood ten years ago. Bearing in mind the substantial increases in the cost of labour and materials, this is quite a startling achievement, for which both producers and the National Film Finance Corporation must be given credit.

We must face the fact that there are limits to what can be done in this direction. If British films are to be made on the cheap, they will begin to look cheap: and if the stars we have been talking about this afternoon are not given the "rate for the job", they will, as the noble Lord, Lord Archibald suggests, go and shine elsewhere. My noble friend Lord Hawke spoke of personal extravagances, and I agree with what he has in mind. But I think the days of a surfeit of mink and magnificence may be passing. Here again, however, we must remember that the people who put up the finance for films feel more assured of the safety of their money if the film commands a star-spangled cast. I think the late and much-lamented Mike Todd offered good proof of that.

The yield of the statutory film levy has been referred to by the noble Lord. Lord Archibald, and others. I should like to be able to tell your Lordships that it has been decided to alter the rate in this way or that, in order to achieve such-and-such a yield. But I cannot. No such decision has been taken. Nor can it be, as yet. All I can say, therefore, is that the Government are very conscious of the importance of the levy to producers, and that they remember their obligations under the Act of 1957. Just how important it is to producers is shown by the fact that about 35 per cent. of the total revenues from the United Kingdom are at present received by British film producers from the levy fund.

While I am on the subject of yield, I should like to say that the suggestion which has been made recently, that there is some sort of revolt against payment of levy, is without any substantial foundation. So far as I can find out, up to last week, only two cases of default had actually reached the courts where orders for payment were made. I believe that there are about seven other cases rending. In all other instances where proceedings for recovery had been ordered, payment has since been made, with costs where appropriate. Exhibitors, on the whole, have behaved extremely well over these payments, and for the most part realise that the levy is not simply a device for helping producers but is also a device for helping exhibitors to get more British films to show to their patrons, films which British patrons are obviously demanding in increasing numbers.

Your Lordships will not expect me to comment at any length on the references this afternoon to the overhauling of quota legislation which is now in train. The Board of Trade have only recently received representations from the various trade bodies, and these are now under consideration.

All I can do is to assure your Lordships that the views expressed by the trade and by your Lordships on this and, indeed, on all other subjects we have been discussing this afternoon, will be studied by those of us who have the unenviable task of dealing with such knotty problems as the definition of a British film; should the renters' quota be reimposed; how co-productions with European countries can be arranged and whether the anti-monopoly provisions of the Act require amendment.

While on the subject of the 1948 Act I should like to say a word about the greatly improved situation as regards the achievement of quota by exhibitors. I think these figures may be new to your Lordships. The average proportion of British films actually exhibited during the last quota year at all theatres was 31.8 per cent. for first-features and 28.1 per cent. for supporting programme. This compares with averaged prescribed quotas, after taking reduced quotas into account, of 25.5 per cent. for first-features and 23.8 per cent. for supporting programme. It may be too early to talk about dispensing with quota legislation, but these figures do not lend support to the idea that British films have any longer to be forced on the reluctant exhibitors. The average first-feature quota achieved by the three major circuits was as high as 37 per cent.

By all means let us look soberly at the decline in attendances, as we have done this afternoon. We must face the blunt fact that no fewer than 572 cinemas have closed between October 1, 1954 and the end of February this year. But let us also not overlook that in this period of uncertainty and keen competition with American films, with all that they have in the way of assured finance and a larger home market, British films have secured a steadily increasing share of our screen time and have achieved a greater popularity almost everywhere. The industry has its troubles—real troubles—and we have discussed them frankly and firmly this afternoon. I am sorry that, for reasons which I have already explained in detail, I am not able to be more forthcoming, and to express the Government's view more firmly upon those troubles. It does not, to me, look like a dying industry: it looks to me a pretty vigorous one.

5.11 p.m.

LORD LUCAS OF CHILWORTH

My Lords, may my first words in withdrawing my Motion be of congratulation to the noble Lord who made such an interesting maiden speech this afternoon? I enjoyed it thoroughly, and it was quite nice to have, if he will forgive my saying so, the views of the common man instead of the experts in the film industry who are becoming very numerous in your Lordships' House. My second word will be of congratulation to the noble Lord, Lord Mancroft. As an admirer of and a humble practitioner in the art of forensic exercise, I think his speech was marvellous. I congratulate him upon it. He did not answer 99 per cent. of the ques tions asked, but he answered a lot which were not asked but which it suited him to answer. I think that that is something upon which we should compliment him, because I knew he could not answer the main point.

I would refer to two things he said, and I was glad the noble Earl, Lord Winterton, took him up on one point. Nobody throughout the whole course of this debate has asked for a subsidy for the film industry. Indeed, I even resisted the temptation of pointing out to the noble Lord that in another entertainment industry, the live theatre, the Government spend the taxpayers' money in subsidising plays which cannot be thought to be a commercial success.

EARL WINTERTON

To the extent of nearly £1 million.

LORD LUCAS OF CHILWORTH

I did not ask the noble Lord to do that. When he talks about the ability of the public to find other avenues for spending their "leisure pound", may I remind him that the "leisure pound" which they want to spend in the cinemas is the only "leisure pound" spent in the entertainment world where the Government immediately grab 30 per cent. of it. He also said—and I agree with him; it was my contention—that we should let the law of economics regulate the number of cinemas, and that if they are not patronised they will close. But the law of economics is being weighted by £25 million. What the cinema industry is asking for, and what I ventured to ask for this afternoon, is a fair field, with no favour and no disfavour.

I thank the noble Lord for the other information he gave. I will absolve him from all trickiness. He had a tricky job to do. He did it with skill, and perhaps the one satisfaction we can have in your Lordships' House is that he ran no risk of getting the sack, and that we shall for a long time to come see him exercising his usual skill, to our enjoyment and our edification. All I can ask him to do, if he will—and I know he will—is faithfully to represent to his right honourable friend the Chancellor of the Exchequer the powerful case which he found quite unanswerable this afternoon, so that the cinema industry may at least be given the opportunity in the future of putting its house in order, without being unduly prejudiced by taxation. With those words, and with many thanks to those noble Lords who supported this Motion, I beg leave to withdraw it.

Motion for Papers, by leave, withdrawn.

House adjourned during pleasure.

House resumed.