DRAFT CINEMATOGRAPH FILMS (DISTRIBUTION OF LEVY) (AMENDMENT No. 2) REGULA- TIONS, 1959

HL Deb 07 April 1959 vol 215 cc387-91

2.46 p.m.

THE MINISTER WITHOUT PORTFOLIO (THE EARL OF DUNDEE) rose to move. That the Draft Cinematograph Films (Distribution of Levy) (Amendment No. 2) Regulations. 1959, be approved. The noble Earl said: My Lords, the effect of these Draft Regulations will be to make two amendments in the existing Regulations which govern the distribution of the cinematograph levy. The cinematograph levy was at first a voluntary arrangement, asked for by the industry itself, in return for concessions in the entertainments duty, and in return for which a condition was made that the industry should take steps to improve the production of British films. Under the voluntary levy each cinema made a contribution in proportion to its number of seats occupied, and the money was distributed among British film producers. That voluntary arrangement was made statutory by the Cinematograph Films Act of 1957.

The levy is now distributed through the British Films Fund Agency under Regulations which are made by the Board of Trade. The distribution, as a general rule, is in proportion to the earnings of the films. But there is one important exception to that, in the case of short films (and a short film is defined as a film of less than 3,000 feet), where they receive payments from the levy not on the basis of their actual earnings but on the basis of two and a half times their actual earnings. The reason for that is that it is considered particularly desirable to encourage the production of short films, which British producers do articularly well.

My Lords, all sections of the film industry, or nearly all, have been pressing the Board of Trade very strongly to make a similarly favourable provision in the case of what I will call second-feature films: that means long films which are subsidiary to the main feature, to the main film, which is being shown and which do not cost nearly so much to produce; which are not so ambitious; and which, therefore, do not earn nearly so much money. Consequently, the contributions which they receive from the levy are very small. The great majority of the industry have asked, and the Board of Trade have agreed, that their contribution shall now be on the basis of twice their earnings. The industry desires to encourage production of these second-feature films, because it is said that the public like them and they provide favourable ground for the training of actors and technicians.

It is not possible to get a satisfactory definition of a second-feature film. and they are therefore described in the regulations as "low cost films." On the first page, in sub-paragraph (b) of Paragraph I it is provided that in the case of a low cost film twice its earnings shall be taken as the basis of distribution under the levy. On the next page, in sub-paragraph (3), near the end, a low cost film is defined as: a long film the labour costs of which do not exceed £20,000. My Lords, the effect of this amendment will be to give more to these low cost or second-feature films at the expense of the other films. That has been asked for by the great majority of the industry, who are dealing, of course, not with public money but with money raised from the industry itself; and it has been approved by the Cinematograph Films Council.

The other amendment is to restrict the definition of what is an eligible film in respect of which distribution from the levy may be paid. That is now to be restricted to films the maker of which was throughout the time the film was being made, a person ordinarily resident in, or a company registered in, and the central management and control of whose business was exercised in, the United Kingdom. The effect of that will be to exclude Commonwealth film producers who have hitherto been receiving a levy on films shown in the United Kingdom. They will continue to receive it for films registered before December 31 of this year, but after December 31, 1959, they will be excluded. We are not doing anything to alter the status of Commonwealth films for quota purposes: they will still continue to rank as British films for the screen quota. But it has been represented to us by the United Kingdom film industry that it is unfair that a Commonwealth film should rank for receipt of levy on films shown in this country when the Commonwealth countries do not give any reciprocal advantages to United Kingdom films there.

All the Commonwealth Governments have been consulted about this change, and none of them has raised any objection. Nothing is being done, of course, to discourage United Kingdom producers from making films in the Commonwealth and showing them here. I understand that some anxiety, or some fear, has been expressed that United Kingdom-resident companies which may be subsidiaries of American or other foreign companies will be excluded from the levy. That is not so, however. The definition which I have read to your Lordships—namely, "a company registered in, and the central management and control of whose business was exercised in, the United Kingdom"—is adapted from the recognised definition already contained in the Income Tax Act, and if a company is resident here for income tax purposes its films will continue to be eligible for levy.

My Lords, both these amendments have been asked for by nearly the whole of the film industry. The Cinematograph Films Council, as they are required to do by the Act, have considered the amendments in detail, and have given their approval of them. I beg to move.

Moved, That the Draft Cinematograph Films (Distribution of Levy) (Amendment No. 2) Regulations, 1959, be approved.—(The Earl of Dundee.)

2.53 p.m.

LORD ARCHIBALD

My Lords, I do not wish to oppose the approval of the regulations, but I should like for a moment to make one or two comments and to ask a question. With regard to the first amendment, which provides that second-feature films shall get a double contribution from the levy, I would first of all congratulate the Board of Trade and the Parliamentary draftsmen on their ingenuity in finding some method of defining what a second-feature film is. The noble Earl has referred to the difficulty, and I am bound to say that I think they have met it extremely well. I must say, however, that I think that the proposal that these second-feature films should get a double contribution from the levy is a mistake. The argument which has been used is that second-feature films very largely provide a training ground for actors, technicians, et cetera; but I think that that argument is more specious than sound. I do not know of any of the outstanding people in feature film production, whether producers, directors, technicians, or actors, who have come out of the second-feature school. I think that people outside the industry have been over-impressed by that, as I say, rather specious argument. However, the Cinematograph Films Council have blessed the amendment; and, although I think that it is a mistake and a great pity, I am not at the moment opposing it.

With regard to the second amendment, I should say that I am 100 per cent. in favour of the objective that is involved here. In the past, it has been most unfair that films from Commonwealth countries —where, as the noble Earl has said, no reciprocal advantages are given—have been recipients from a levy which is raised entirely from the industry in this country. The question that I want to raise on this matter has partly been answered in anticipation by the noble Earl, but I am still a little worried, as a layman, and not being a lawyer, by the phrase ߥa company registered in, and the central management and control of whose business was exercised in, the United Kingdom. I have particularly in mind the fact that for many years—practically, I should think, from just before or just after the First World War—the major American companies have had their subsidiary companies operating in this country, in the early days only as distributors, but in more recent days also taking an important part in British film production. It would be no exaggeration to say that in recent years what might be called Anglo-American film activity has been of supreme importance in the level of British film production.

Now these subsidiaries of the big American companies carry out their film operations here in two ways: partly by financing what one might call native film producers, and partly by making films under their own steam. "If a company —Paramount, United Artists. 20th Century Fox, or Metro-Goldwyn Mayer; any of the well-known companies—makes a film here under its own name, under its own organisation and with its own finance, I should have thought that, from the point of view of the layman, it could well be argued that none of these companies has in fact its central management and control in this country: its central management and control is certainly in the United States of America.

I am quite sure that the Board of Trade and the Government have not in mind to put the status of the production of these companies in jeopardy; and that, like myself, they want these companies to go on either financing or making British films here: but it certainly could be argued that if Metro-Goldwyn Mayer, for example, make a film at their studios at Elstree, the ultimate decision about making that film is made not in this country but in New York or in Hollywood, and to that extent the central management and control is not in the United Kingdom but is overseas. I am quite sure that it would be a profound relief to the British film industry as a whole, and to this Anglo-American production film activity, which is so valuable, in particular, if we could get a reinforcement of the assurance which the noble Earl offered: that this phraseology is not what the layman would read it to be, and that there is no possibility of the registration of these films as British being challenged in the courts on a question of interpretation. As I have said, I am entirely in support of the objective of the second amendment, but I should like to get that point put beyond any shadow of doubt.

THE EARL OF DUNDEE

My Lords. I am grateful to the noble Lord, Lord Archibald. for his observations about the first proposed amendment. Of course, I appreciate the force of the noble Lord's arguments. He has recognised that this amendment about second-feature films has been strongly asked for by the great majority of the film industry and approved by the Cinematograph Films Council, and it is the money of the industry with which we are dealing. With regard to the second proposed amendment, I, too, like the noble Lord, am a layman, but I do not think that he need be unduly concerned about the position of United Kingdom-resident companies which are subsidiaries of American or other companies, because the definition which I read to your Lordships is taken from the Income Tax Act and it is quite certain that if a company is resident here for income tax purposes, its films will then continue to be eligible for the levy.

On Question, Motion agreed to.