§ THE MINISTER WITHOUT PORTFOLIO (LORD MANCROFT) rose to move, That the Draft Cinematograph Films (Collection of Levy) (Amendment) Regulations, 1958, be approved. The noble Lord said: My Lords, Section 2 of the Cinematograph Films Act, 1957, under which these Regulations are made, requires the Board of Trade to impose a levy on exhibitors for the benefit of makers of British films, to yield, in the Board's estimation, approximately £3¾ million in the first year ending on October 18, 1958. The rates of levy 372 were fixed last year before the full severity in the decline of cinema attendances had shown itself. It is now quite evident, as those of your Lordships who are interested in the matter will agree, that if these rates remain unaltered, the levy will not bring in the sum laid down in the Statute for the first year. The obligation therefore rests on the Government to amend these rates to achieve the prescribed target, and the proposed amendment which is before your Lordships to-day for approval, is designed to this end.
§ First, let me say a word about some small changes in the method of imposing the levy. At present, the levy is paid on the net seat price after deduction of entertainments duty, so that, as your Lordships will see, a reduction of duty automatically increases the yield of the levy. This has been demonstrated by the recent change in duty in the Budget, but the increase in levy yield was not sufficient to make unnecessary a change in the rates at which the levy is charged in order to secure the £3¾ million. The amendment before your Lordships provides that the levy should in future be charged on the gross seat price including entertainments duty, so that the yield will not be affected by any subsequent changes there might be in entertainments duty.
Secondly, instead of the levy rising by steps of ¼d. for specified price ranges, as in the past, it has been decided to change over to a straight 10 per cent. of the amount by which the gross seat price exceeds 11d. Apart from being more equitable, the new system is, I am told, much easier to operate. Its effect is to reduce the levy on seats of 1s. 1d. and under, and to increase the levy progressively on higher priced seats.
§ I think I can say that these changes in the method of imposing the levy have enjoyed a favourable reception in the trade. There has, however, been a little disappointment on the part of some exhibitors because the Government have not felt able to improve on the exemption arrangements. Your Lordships will remember that exhibitors whose net weekly takings, after deduction of entertainments duty, were less than £150, were exempt from payment of the levy. Some exhibitors who have previously been exempt on this account will now, because 373 of the substantial reduction in entertainments duty, be left with considerably greater net box-office takings and will therefore be in a position to pay the levy. Naturally, no one who has been exempt from a liability of this kind likes to have to pay, but I see no justification for raising the exemption limit so that a relatively small number of exhibitors might continue to enjoy exemption regardless of their improved position. This could be done only at the cost of placing a heavier burden on other exhibitors. I do not think it is generally realised that some 1.300 exhibitors are at present exempt from levy.
§ The increase in the levy has been represented in some quarters as taking away with one hand what the Chancellor of the Exchequer has given with the other hand by way of entertainments duty relief. How far this is valid your Lordships can judge for yourselves by comparing the £14½ million reduction in entertainments duty, with the relatively small increase necessary to bring the levy back to £¾million, from what it would have fallen to if there had been no change. But such an argument is, I would suggest, beside the point, because, as I hope I have made clear to your Lordships, the amendment to the rate of levy does not represent an arbitrary decision to take advantage of the improved position of exhibitors following the reduction of entertainments duty: it is before your Lordships for approval because the Act requires the Board of Trade to fix the rates of levy in a way which, will yield in their estimation approximately £¾ million. The Act provides that the Board of Trade shall consult the Cinematograph Films Council before making Regulations, and this has been done. I hope, therefore, that the House will be able to approve these Regulations. I beg to move.
§ Moved, That the Draft Cinematograph Films (Collection of Levy) (Amendment) Regulations, 1958, be approved.—(Lord Mancroft.)
§ 3.13 p.m.
§ LORD LUCAS OF CHILWORTH
My Lords, it must give the noble Lord, Lord Mancroft, as much satisfaction to ask for your Lordships' consent to these Regulations as it does to the majority of your Lordships to hear him say it. After all, he has had to bear the brunt of the attack that has been made upon 374 Her Majesty's Government for quite a number of years now in regard to a reduction in entertainments duty. I am not going to speculate as to how many were surprised or disappointed at the action of the Chancellor of the Exchequer in reducing the entertainments duty by 50 per cent., but it will mean a benefit of somewhere in the region of £14½ million to the industry and those who benefit from the industry. I understand that queues are already lined up with their traditional porridge bowls to get, if I may use the expression, a "cut" of this £14 million—all, I have not the slightest doubt, worthy claimants.
The Regulations deal with that share which goes to the Fund as levy and which will directly benefit the producers; and. as the noble Lord has said, it is designed for the amount of £3¾ million. Whilst I hope that all those connected with the industry—producers, exhibitors, and the labour employed in the industry—will benefit, may I put in a word for the silent majority, the British public? I sincerely hope that some of this will result in reduced prices to the public, because the cinematograph film industry must realise that if it is to compete successfully with its principal competitor, television, it can do so only on a rising income at the box office; and that, in the last analysis, will depend not only upon the quality of the pictures the industry produces but also upon the prices which the public have to pay to go to see them.
I am glad that the Government have been able to alter the incidence of the levy to favour in some way the small cinema in remote districts. What pleased me more than anything else was to hear the noble Lord give the hint that Her Majesty's Government, if they are in a position so to do, intend further reductions in entertainments duty, because they have now so arranged the machinery that they will not have to alter it again —I think the noble Lord said this in as many words—when they make any future alteration in the amount of entertainments duty. Since the Government can only alter it downwards, I am hoping—in fact I know that it is the only thing that will be of lasting benefit to the industry—that in perhaps twelve months' time the noble Lord will come 375 to your Lordships again with a Regulation to increase the levy, so that it will give the producers a minimum of £5 million a year, which they will be able to have out of the takings and increased earnings by the industry through the total elimination of entertainments duty. And do not forget, my Lords, that this is the only industry, or the only section of the entertainment industry, in the whole country which has an entertainments duty levied upon it. I congratulate and thank the noble Lord for the part he played in persuading his right honourable friend the Chancellor of the Exchequer, and hope he will be able to do the same in twelve months' time.
§ 3.17 p.m.
§ LORD WESTWOOD
My Lords, as one who is interested in the film business, it is only natural that I should support the remarks of the noble Lord, Lord Lucas of Chilworth. The cinema industry recognised the fact that, consequent upon the recent reduction of entertainments tax and the decrease of the box office receipts, some amendment of the levy rates had to be made. This was necessary because the British film producers were supposed to receive the £3¾ million as laid down in the Cinematograph Act but were going to fall short of that sum as a result of the reduction in the box office receipts. I am quite confident that the new rates which my noble friend has outlined to your Lordships today will enable the figure of £3¾ million to be reached, and probably exceeded, in the next year, starting October, 1958.
Like the noble Lord, Lord Lucas of Chilworth, I was very sorry indeed that the Chancellor of the Exchequer could not see his way in his recent Budget to abolish the cinema tax—I say "cinema tax"; I do not call it entertainments tax, because the cinema is the only form of entertainment which is taxed. However, half a loaf is better than no bread, and I am hopeful that he may yet have it in his heart to give us some more relief, either in an interim Budget or in next year's Budget, and bring the cinema into line with all other forms of entertainment.
I was interested in what the noble Lord, Lord Lucas of Chilworth, said about a queue being formed for the £14½ million which we are alleged—when I say "we" I mean the executive side of the industry 376 —to have got. But out of the £14½ million concession which we have been given, over £5 million will be given to the film distributors on account of film hire—and rightly so: they are entitled to it just as much as the exhibitors are, and they must have it to enable them to stay in business. That leaves a balance of £9½ million in the exhibitors' hands. Your Lordships have heard to-day that the levy rates are to go up, which will further reduce that sum by about £1¼ million, bringing the balance in exhibitors' hands down to something like £8 million. On top of that we have had demands from the two trade unions for wage and salary increases. As a result of all this, I can visualise the concession of £14½ million gradually dwindling until it may well have little value to the exhibitors of this country and the closing down of cinemas will still continue. The tax concessions to the live theatres came too late to save many of them. I hope the same will not prove true with the cinemas. Like the noble Lord, Lord Lucas of Chilworth, I hope that the Chancellor of the Exchequer will have some softening of his heart, either in the Committee stage of the Finance Bill or later, and give us what we are, I think, entitled to, tax abolition for this wonderful industry which brings entertainment to so many of our people.
§ 3.21 p.m.
§ LORD ARCHIBALD
My Lords, I would not intervene on this matter except that when we had a previous Order before us there was a slight discussion on it, and it might be misunderstood if that were not followed up on this occasion. Like those who have spoken, I welcome this Amendment Order, for two reasons. I think it puts the method of the levy on a more equitable basis than is was formerly; and I would say, speaking for producers, but without having consulted them, that they are naturally very pleased that the short-fall which was obviously going to take place on the levy is now being restored.
I feel, however, that it is necessary to say a word or two of qualification. Reference has been made to the remission of tax being of the order of £14½ million. That figure, I think, is a little illusory. It would have been £141 million if receipts for the ensuing year, admissions at the box office, had remained at the same 377 level as last year. With the fall in attendances at the cinema the total yield of tax would have been down again, and therefore the remission is something less than the£14½ million. So far as British producers are concerned, the best estimate is that out of the so-called £14½ million they will receive in increased film rentals something of the order of £1 million. With the effect of this amending Regulation they will get from the production fund £3¾ million..I am bound to say that I do not think that that does any more than put them in the position of hopefully continuing for a further year. The industry's case was for abolition of the tax and a £5 million levy for production. They will continue for the current year on the same basis of the optimism that has always sustained them in the past; but unless, in a year from now, there is abolition of the tax and a £5 million levy I do not think that British production can be sustained at the level we should all like to see.
With those qualifications, may I say that I think that all sides of the industry welcome the Regulation. There may be a little disappointment among some of the exhibitors at the failure to raise the exemption limits, but apart from that I think all sections of the industry welcome the Regulation as making a necessary and equitable change in the situation.
§ 3.25 p.m.
§ LORD MANCROFT
My Lords, I am grateful to your Lordships for the friendly way in which you have welcomed these changes. There are two points only with which I want to deal. The first, to which the noble Lord, Lord Lucas of Chilworth, gave voice, was the complaint that we have heard elsewhere, that the duty reductions are not being passed on to the cinema patrons as freely as one may wish. But whatever may be felt about the exhibitor's decision to pass or not to pass on to his patrons by way of a reduction in seat prices some of the duty reduction, I do not think that this is a matter in which the Government can or ought to interfere. Whether increased patronage would compensate them for reducing prices is a matter for the commercial judgment of exhibitors. They must make up their own minds on it.
My Lords, throughout the numerous debates we have had on this subject of 378 late, the noble Lord, Lord Lucas of Chilworth, and those who support him in this matter have made several attempts to get me to forecast my right honourable friend's Budget for 1958. Now that we have that safely behind us, the noble Lord, Lord Lucas of Chilworth, tries to ensnare me into saying what will happen in 1959. I can only say what I have said before: that I will see that his remarks are passed on to the proper quarter, but I cannot anticipate my right honourable friend's Budget for 1959 or any other year on which the noble Lord attempts to ensnare me.
§ On Question, Motion agreed to.