HL Deb 05 April 1960 vol 222 cc672-83

2.50 p.m.

THE MINISTER WITHOUT PORTFOLIO (THE EARL OF DUNDEE) rose to move, That the Draft Cinematograph Films (Collection of Levy) Regulations, 1960, be approved. The noble Earl said: My Lords, I expect your Lordships would like to take these two Regulations together. The first deals with the collection of levy and the second with the distribution of the levy. The Regulations are made under Sections 2 and 3 of the Cinematograph Films Act, 1957, and they amend the Cinematograph Films (Collection of Levy) Regulations, 1957, and the Cinematograph Films (Distribution of Levy) Regulations, 1957. All they do is to provide that exhibitors showing non-standard films over 16 millimetres in width should pay levy, and that makers of certain British non-standard films of similar size should be eligible to receive levy. The change is not an extensive one. In practice it mainly affects the type of films over 35 millimetres, of which one is Todd-AO and another Cinerama.

Your Lordships may possibly remember that on Second Reading I explained why these non-standard films had not previously been subject to the levy. It was felt that when new techniques of this kind were introduced—Cinerama, for instance, has been going for only about five years—since they involved a great deal of capital expenditure it was reasonable to allow them to find their feet, and that the experiments which they involved should not be hampered as they might have been if exhibitors of these films had had to pay levy. But now it is felt that the conversion of cinemas to these new techniques has gone about as far as it it likely to go, and there no longer appears to be any reason why these films should be exempt from levy. The rest of the industry has always felt rather strongly that their competitors were getting away with not having to pay it; but I think it was reasonable not to impose the levy to begin with.

With regard to theatres which have been specially adapted for these new techniques, like the London Casino for Cinerama, it is not proposed to subject them to the quota. It would be unreasonable, I think, that they should have to alter the whole arrangement of their cinema programme for part of the year, at great expense, in order to fulfil a quota. They are, however, now to pay levy. If British films of this kind are made in this country, then they will be equally entitled to receive the proceeds of the levy, as well.

These proposals to bring non-standard films within the scope of the levy Regulations have been considered by the Cinematograph Films Council who must, by Statute, be consulted by the Board of Trade before Regulations are made. The Cinematograph Films Council have recommended, first, that the showing of non-standard films should now be liable for levy at the normal rates for standard films; and secondly, as a corollary, that any non-standard films meeting the labour costs and other requirements laid down for a British standard film should receive a share of the levy. These Regulations give effect to the Council's recommendations. I beg to move.

Moved, That the Draft Cinematograph Films (Collection of Levy) Regulations, 1960, be approved.—(The Earl of Dundee.)

2.54 p.m.

VISCOUNT BRENTFORD

My Lords, I venture to oppose these Regulations in their present form, and in doing so I must declare to your Lordships an interest in this matter. It is an interest which I have never had to declare before in my Parliamentary career, and I never expected to have to declare it to your Lordships' House. It is simply that I am the professional adviser to one of the companies concerned, the company which distributes and exhibits Cinerama, though I have no direct financial connection with them. If it had not been for the noble Earl's adoption of his usual courtesy and frankness in this matter, I might have been tempted to lay some of the blame upon him for having put me in this predicament of having to declare an interest to your Lordships, because it was largely his eloquence and his convincing argument in the Second Reading debate, to which he referred, that lulled Cinerama into such a sense of security, by being excluded from the quota system, that it was only recently brought to their attention that they were going to be included in the levy Regulations.

It is for that reason that, despite the Board of Trade having replied to the representations which were made to them with, if I may say so, unusual but commendable promptitude, there was no time for Cinerama to arrange for their point of view to be heard by your Lordships on consideration of these Regulations except through myself. I was so completely convinced that Cinerama was not to be included in these Regulations that I ventured to undertake the burden of attempting to submit their point of view to your Lordships in order that your Lordships might come to your own conclusion.

The brief point, as the noble Earl has clearly said, is that hitherto the levy has been collectable from the exhibitors of films which included only up to the standard films of 35 millimetres. I agree that that definition required amendment, because so much has developed in the cinema industry since the definition was created that it is no longer applicable. But now the noble Earl has, in my submission, swung too far the other way, and he has opened the door so that the levy is collectable from the exhibitors of all films which exceed 16 millimetres. It is a point to make, I think, that he could easily have amended the draft before now, had he so desired to exclude Cinerama, by limiting the upward measure to films which do not exceed 100 millimetres in width. I think, however, it is perfectly fair to say, as the noble Earl has already said, that it is recognised that there is no mistake here and it is the intention that the Regulations shall be made to apply to Cinerama.

Having, I hope, come to agreement that the Regulations include Cinerama, and that there would be no difficulty in excluding Cinerama, if your Lordships so thought fit, one really comes to the 64,000 dollar question of whether Cinerama is justified in considering that it should be excluded from this levy. In my submission to your Lordships, there is no question about it whatever, because Cinerama is not an ordinary sort of film: it is something which is entirely exceptional and to which the normal considerations of the film industry do not apply.

Your Lordships are well aware, for instance, of the way in which films are distributed in this country. If you take the big feature films, as they are called, the expensive ones, they are given a run at a West End London cinema for a matter of a few weeks; they then go on circuit throughout the country and are distributed throughout all the provinces, and Scotland and Wales as well, in cinemas where they are seen by the public for up to a week at a time, and sometimes for three days. That is tone great difference, indeed, because Cinerama is shown at one theatre only in England; that is, as the noble Earl said, the London Casino. It is shown at that theatre only because it is an exceedingly costly process, as the noble Earl indicated, to convert a theatre for use by Cinerama: in fact, it costs some £50,000 for that purpose. Consequently, it is not the intention, nor has it ever been envisaged, that Cinerama shall go on circuit like an ordinary film and be seen throughout the country in other theatres.

And this is not exceptional to this country, my Lords. It is the circumstances of Cinerama itself. Excepting countries which are virtually continents in themselves—such as America, where there are several Cinerama theatres, and Australia, where there are two Cinerama theatres—I think Spain (and that for special reasons) is the only country which has more than one Cinerama theatre. In all, there are some thirty Cinerama theatres in the whole world; and if your Lordships will compare that with the total number of cinemas that there are throughout the whole world, you will appreciate the magnitude of the difference in that respect.

My Lords, that is a feature which applies to no other entertainment which is connected in any way with the film industry. The makers of other films of above standard size which have been developed have been able to make arrangements whereby they can be distributed in the normal way of films, but there is no anticipation of there being any possibility whatsoever, for technical reasons, of Cinerama being so distributed. Another point as your Lordships will appreciate is that the form of entertainment is something completely different. As I was saying just now, the public normally have the opportunity of seeing an ordinary film for a week in any given place. Cinerama runs in the same place for two years. That is the average length of the run of Cinerama: and it is a definite tourist attraction which is visited by people who come to London, whether from overseas, from Scotland or from the provinces. That is another reason why it is not intended, even if it were possible, that Cinerama itself should circulate throughout the country. It is, indeed, a unique venture, and it is something which is not in any way connected with the ordinary film industry as we understand it. Yet, if it is made subject to the levy, it will become involved in granting a subsidy to that very film industry. It seems exceedingly unfair that it should be subject to the collection of a levy for the benefit of the film industry as a whole, but should be excluded from any hope or anticipation of being able to benefit from that levy.

The noble Earl was perfectly right—and, if he will allow me to say so, was quite justified—in saying that Cinerama would become entitled to benefit from the levy if it produced a British film. I entirely agree; but I think my noble friend probably had his tongue in his cheek when he said that, because he must know as well as I do that it is quite impossible for Cinerama to become a British film. There are many reasons for that—largely of a technical nature, but some not technical. One, for instance, is that (as your Lordships who are familiar with these matters know) when a film is being made it is necessary for what are called "rushes" to be examined in order to see that the shooting of the film has come out satisfactorily, or whether it must be shot again. There is no facility in this country for processing a Cinerama film at the present time. Indeed, except for the London Casino, there is no facility even, for seeing a "rush" of a Cinerama film; and ob- viously it would not be practicable to show "rushes" during production work at the one and only Cinerama theatre that is available in this country. That is one point.

Another point is somewhat technical; that is, that there are seven sound tracks to a Cinerama film, which connect with 47 loudspeakers. That is something which does not happen in any other form of film production in the world. There is no other form of film which has so many sound tracks; and the apparatus necessary to score a Cinerama film is exceedingly complicated and, in fact, does not exist in this country at all. I am advised that to create and instal such machinery would of itself cost £250,000. That is something which obviously could not be contemplated in this country, when a Cinerama film is made, at the most, about every other year, so that for the rest of the time that expensive apparatus would be lying idle. Moreover, as your Lordships will appreciate if you have seen it, Cinerama is an international form of entertainment. It cannot be made in any one country, because the whole concept of it is to compare different parts of the world in the one entertainment. Consequently, to anticipate the creation of a British film in Cinerama is to anticipate an impossibility.

I do not wish to detain your Lordships any longer, save to deal with one point which the noble Earl made with regard to the recovery of the capital cost. That argument, so far as it goes (your Lordships will recall it) is very true, but it goes only as far as the exhibition of Cinerama. It may well be that the capital cost of the conversion of the London Casino has by now been recovered, but that is only one aspect of the capital cost involved. For the reasons I have indicated, the capital cost of the production of Cinerama is necessarily exceedingly expensive, and the outlets through which that cost can be recovered—namely, the thirty or so Cinerama theatres throughout the world—are so limited that the royalty which the producers have to impose upon the exhibitors is exceedingly high. In consequence, as your Lordships may have already felt personally, the cost of seats for Cinerama is proportionately very much higher than the average cost of seats at any ordinary cinema.

I therefore submit to your Lordships that Cinerama is something which is quite exceptional. It is not part of the film industry in the ordinary sense. Indeed, logically, there is no greater justification for the imposition of the levy upon Cinerama for the benefit of the cinema industry than there would be for the imposition of the levy upon, for instance, something like My Fair Lady, again for the benefit of the film industry. I therefore submit to y our Lordships that the Regulations in their present form ought not to be passed, but that my noble friend should introduce into them a very minor Amendment. That is all that would be necessary, because there can be no other film of the magnitude of Cinerama, in excess of 100 millimetres, within the foreseeable life of, I think, any of your Lordships present here today. A simple Amendment of that sort would therefore preserve the position for Cinerama, and I submit to your Lordships that that should be done.

3.9 p.m.

THE EARL OF DUNDEE

My Lords, I am grateful to the noble Viscount, Lord Brentford, for his kindness in giving me notice that he intended to raise this matter on behalf of the Cinerama exhibitors, and I am also grateful for the very moderate and clear way in which he has put forward his case. He is quite right in saying that we could, if we thought it fair and just, exclude Cinerama from these Regulations by limiting them to films with a width of not more than 100 millimetres instead of to those with a width of anything over 16 millimetres; or something of that kind. We could manage to exclude it. But the Cinematograph Films Council and the Board of Trade agree that it would not be right to exclude Cinerama permanently from the levy. I have given your Lordships reasons why we thought it was justifiable while the industry was establishing itself here to exclude it; but it is not considered justifiable to extend that exclusion indefinitely.

My noble friend gave two reasons why he thought Cinerama should not be brought under the levy. One was that he represented that it was a different kind of entertainment altogether. At the moment, of course, it can be shown only at the London Casino. But I do not think I would necessarily accept that never at any time in any of our great provincial cities in other parts of England and Scotland can they ever afford to spend £50,000 on adapting a theatre to show films of this kind. I do not think we could take it as axiomatic that the same Cinerama film could never be shown in other parts of the country besides London. But even as it is now, the rest of the film industry decidedly regard Cinerama as a competitor. After all, it is a form of entertainment which is produced by making films; it is not produced in the same way as My Fair Lady was produced; it cannot be described as live theatre. And the Board of Trade, on the advice of the Cinematograph Films Council, feel that it would be unfair to the rest of the industry if we continued indefinitely to exclude it from the levy.

The noble Viscount went on to point out that, although Cinerama could pay the levy, it could never benefit from it because the Cinerama type of film could never be made in this country. That is a question which I do not think the Board of Trade are capable of judging. My noble friend gave a number of technical reasons why he said it would always be impossible, and I think that, for the time being at any rate, we must accept a statement of that kind which comes from people who know so much more about it that we do. While I do not see why it should be ruled out for all time that, in different circumstances, films of this kind would be able to rank as a British film, we must accept, on the strength of the statements which have been made, that in present circumstances that could not happen. But that does not mean that Cinerama is in any worse position than any other American or foreign film which does not qualify as a British production. The exhibitors who show foreign films have to pay the levy, but the films, not being a British production, do not qualify for any part of the distribution of the levy. We do not think it would be fair that Cinerama should be placed in a special, privileged position for an indefinite length of time on the ground that it is a different type of entertainment.

There is one respect in which there is no doubt at all that Cinerama is not different from the rest of the cinema industry, and that is in its liability until yesterday to pay entertainments tax. In the Budget, Cinerama, together with other films, has now been relieved of entertainments duty. It is estimated that the amount of duty on which Cinerama exhibitors will be relieved as a result of the Budget will be double what they are likely to have to pay in levy. Therefore I hope they will console themselves by what is, on balance, a substantial gain.

3.16 p.m.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, we have listened to two very competent speeches. I should not like these Regulations to pass without saying that I appreciated the case submitted by the noble Viscount who rose to oppose them. It seemed to me, at first sight, to be almost unthinkable that the general duty to be levied in this industry should apply to such a singular case as he put on behalf of Cinerama. On the other hand, the noble Earl who has just replied seems also to have made a study of the matter and has put a fairly competent answer. Therefore, I think I should be moved in the matter if I could have a little more information about the amount of the duty, and also about the date when Cinerama, as such, would become chargeable. It seems to me that the future of Cinerama is one that we ought to try to promote in this country. At present, judging from the noble Viscount's case, the prospects do not seem to be very great without a large capital expenditure. But if we could have information on those two points, then I think there might be some case for setting off the benefit not yet to be achieved until next August, I think it is, in the case of cinema duty.

THE EARL OF DUNDEE

It is when the Finance Bill is passed. I think it is retrospective.

VISCOUNT ALEXANDER OF HILLSBOROUGH

That is some months ahead. I should be interested to know the date when this duty will apply to Cinerama, and what will be the amount actually levied upon it.

THE EARL OF DUNDEE

My Lords, with regard to the amount, it is estimated that the total amount of levy on all nonstandard films which are affected by these Regulations will be £250,000 on which far the greater part will come mainly from what are called Todd-AO films of 70 millimetres, which are twice the standard width of 35 millimetres. The proportion payable by Cinerama is estimated, I believe, by the Cinerama exhibitors themselves at about £60,000. The Board of Trade estimate is lower than that—it is about £40,000. But, of course, these are both estimates. Anyhow, it is a fairly small proportion of the total of £250,000 which is considered likely to have to be paid by the nonstandard films.

VISCOUNT ALEXANDER OF HILLSBOROUGH

Is that not nearly 20 per cent. of the total?

THE EARL OF DUNDEE

Yes, my Lords, that is so. The date at which the new levy begins is April 17. With regard to the remission of entertainments duty, although it does not become legal until the Finance Bill is passed, I think the duty is abolished with effect from April 10, so in effect it is abolished at the same time as the levy begins. There will have to be new Regulations, because under these Regulations, which could not anticipate the abolition of duty, there are certain respects in which the levy may be related to the amount of duty, and, as the Chancellor said in his Budget speech yesterday, it has made necessary the introduction of new consolidating Regulations after the Finance Bill has been passed. But that will not make any difference to the amount of levy payable, or to the benefit which is earned by the remission of entertainments duty.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, I am in a little difficulty, in that I have not my usual cinematograph experts behind me this afternoon for immediate consultation, but I understand that, on the Government's estimate, Cinerama is to be charged £40,000, that the estimate of the Cinerama industry is £60,000, and that the total of the levy to be raised over the whole industry is £250,000.

THE EARL OF DUNDEE

Not over the whole industry. The amount last year was £3¾ million. I thought that what the noble Viscount wanted to know was the additional amount of levy resulting from the inclusion of these non-standard films in the 1957 Regulations. I did say that it was a comparatively small item—only £250,000 altogether out of a total of nearly £4 million, and out of that it is estimated that Cinerama may be liable for something between £40,000 and £60,000.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, the noble Viscount has put up a powerful case, although I am not persuaded completely in my mind that I should vote for him in the Division Lobby. I wonder whether the matter could be delayed just a few days until we could find time to think out the answers given by the noble Earl.

THE EARL OF DUNDEE

I am sorry, but the Regulations cannot be amended. If we wanted to give effect to the noble Viscount's suggestion they would have to be withdrawn and new Regulations would have to be submitted; they are not capable of being amended in Parliament. These Regulations have been fully and carefully considered by the Cinematograph Films Council, together with the Board of Trade; and whilst I appreciate the force of the arguments which my noble friend Lord Brentford has put forward, I also feel that the case for doing this, in fairness to the cinema industry as a whole, is established, and that it would not be right for me, much as I should like to meet the noble Viscount the Leader of the Opposition, to agree to any postponement of these Regulations.

VISCOUNT BRENTFORD

My Lords, perhaps, with your Lordships' permission, I may briefly thank your Lordships very much for the interest you have taken in my argument, which is a difficult one to press, because I recognise that the owners and distributors of Cinerama are an American organisation and it is therefore not unnatural that the British representatives of the film industry in this country would desire that the contribution to the levy for British films should be payable by the American companies. If I may just confirm the reply which was given to the noble Viscount opposite, the levy is anticipated to produce about £60,000 a year from Cinerama in this country. The argument which the noble Earl put forward, that we should benefit as a result of the reduction in the entertainments tax, is I think, a double-edged one, because I know it had been hoped that if and when that occasion arose Cinerama would be able to reduce the price of its seats to the public, whereas now at least half of that benefit is simply a diversion of the public's funds to the film industry. On the other point, as to the proportion, it is true that only about one-quarter of the additional levy which is being raised will come from Cinerama, but the point is that the levy will be raised on some twenty or more additional cinemas, of which Cinerama has only one theatre.

On Question, Motion agreed to.