CINEMATOGRAPH FILMS (DISTRIBUTION OF LEVY) REGULATIONS, 1963. (Hansard, 19 July 1963)

§ THE MINISTER OF STATE, BOARD OF TRADE (LORD DERWENT)

My Lords, with the permission of the House, I should like to speak to the two sets of Cinematograph Regulations together. The Cinematograph Films Act, 1957, lays down that the Board of Trade shall, after consulting the Cinematograph Films Council, provide by regulation made by statutory instrument for the imposition on cinemas of a levy, the proceeds of which are to be paid out to makers of British films. There are before the House draft Regulations to amend further the existing Regulations relating to the collection of the levy and to amend and consolidate those relating to its distribution.

Taking first the simpler Collection Regulations, all that is proposed is that 400 levy shall be collected from exhibitors every four weeks instead of, as hitherto, each week. Exhibitors' liability to levy will continue to be calculated on a weekly basis, but actual collection will be less frequent. This will be to the advantage of the exhibitors, by whom the proposal has been made. The closures of cinemas in recent years show that many exhibitors have been finding it difficult to continue in business. They are the source of the levy, and it is right that they should be given this minor measure of relief, especially since there will also be economies in it for Customs which will, in turn, permit that Department to reduce what it has to charge producers for its collection of the levy.

The new Distribution Regulations embody altogether fifteen changes. First, newsreels are to get an increased rate of payments; secondly, a loophole will be closed in the present Regulations under which a film could obtain (this has not happened so far, but it could) double-levy life if it had both a standard (that is to say 35 mm.) version and a nonstandard one; and, thirdly, films jointly produced by British and foreign makers in accordance with the terms of an intergovernmental co-production agreement are to become eligible for levy benefits. There are nine more changes which are either themselves designed to accelerate the process of distributing payments to producers or derive logically from such changes. In addition, the British Film Fund Agency, which distributes the levy, will be empowered to recover payments made in respect of films whose registration as British quota films is cancelled within 12 months and to require such certificates as it may deem necessary in support of claims. Finally, the Agency will be relieved of what has proved to be an unnecessary obligation to pay interest into a separate bank account.

First of all, a word about newsreels on which the change is a major one. Newsreels' entitlement to levy is calculated at present in direct relationship to their commercial earnings, whereas the entitlement of other short films is calculated on those earnings multiplied by two and a half. Competition from news presented on television has largely displaced the old-style black and white newsreels and 401 cut down the number of companies producing them. The surviving companies have found, however, that cinema audiences still enjoy newsreels if they are on suitable subjects, and especially if their appeal can be enhanced by the use of colour. In view of the increased costs that the producers must incur in order thus to appeal to audiences, and not forgetting the useful job that they do in the normal course of their business by way of presenting Britain factually overseas, we think it right to treat the newsreels more nearly equally with other short films. The Regulations before the House therefore provide for the calculation of newsreels' benefit from the levy on the basis of double their commercial earnings.

The proposed admission of co-production films to levy is an important change, though not novel in principle, since Section 19 of the Films Act, 1960, already provides for Orders in Council enabling co-production films to be treated as British for quota purposes. Similar provision in respect of levy benefits can be made by subordinate legislation. The first moves towards co-production agreements with France, Italy and Germany have recently been made. The Regulations now before the House therefore include the changes necessary to enable us to offer the benefits of levy in our efforts in the forthcoming negotiations to secure the maximum benefits for British film makers.

The background to the nine changes relating to acceleration of distribution is that the British Film Fund Agency is at present taking about eighteen months after the end of each of the 52-week distribution periods to effect its final share-out of money to producers in respect of that levy year. The aim of these new Regulations is to reduce this period of eighteen months. In order to do so it is first proposed to free the Agency from the need which it finds at present to reach a final settlement with all the claimants before determining, so to speak, the rate of dividend. Henceforth the Agency will be able, subject to the consent of the Board of Trade, to avoid undue delays over difficult claims by bringing them in on a provisional basis when striking the rate of dividend and 10 adjust its account with the claimant concerned by drawing on, or paying into, the Levy Fund in 402 whichever subsequent year the final settlement falls. All this involves three changes.

The power to adjust differences in a subsequent year makes it possible and desirable to effect a further change in the form of the elimination of a provision in the existing Regulations for the creation of a contingencies reserve. This provision was originally put in as an attempted solution to the problem of awkward minor claims, but has proved unworkable. The new Regulations would overcome that difficulty. The new Regulations further provide that there shall be a standing time limit of two months after the end of the levy year for the submission of film makers' notifications to the Agency of their intention to make claims. The existing Regulations empower the Agency to stipulate the time within which actual claims must be made; the new provision will lay the onus on intending claimants to identify themselves to the Agency in reasonable time in order that it may have a definitive list of those to whom it needs to make known its requirements as to the manner and time of the submission of the claims themselves.

The changes to accelerate distribution finally include four relating to notice periods. Two of these reduce from three months to one month the periods during which the Agency may withdraw its notice of rejection of a claim for levy and may amend its notice of the determination of the earnings of a film. The other two reduce from four months to one month the periods during which the Agency's rejection of a claim for levy and its determination of a film's earnings may be disputed. The notice periods are rarely used and the existing ones have proved in practice to be excessive. I am sorry to be so long, my Lords, but this is fairly complicated.

There is only one other change which calls for explanation, and that is the one relating to the recovery of payments in respect of films whose registration is cancelled within twelve months. Section 14 of the Films Act, 1960, provides for correction of and deletions from the register of films. Owing to the large number of registrations the possibility of erroneous registration cannot be excluded. Provision is therefore made for recovery by the Agency of payments 403 made in consequence of erroneous registration, but the power will lapse once a film's registration has stood for twelve months. So if there is an error and the registration has stood for twelve months the money is irrecoverable. Moreover, this power will not apply to payments made before the commencement of these Regulations; it is not retrospective in that sense.

My Lords, all these changes have been recommended by the Cinematograph Films Council. I trust that the Regulations incorporating them will commend themselves to your Lordships, and I beg to move that these Regulations be approved.