HL Deb 09 August 1966 vol 276 cc1687-701

3.5 p.m.

Order of the Day for the House to be put into Committee read.

Moved, That the House do now resolve itself into Committee.—(Lord Champion.)

On Question, Motion agreed to. House in Committee accordingly.

[The EARL OF LISTOWEL in the Chair.]

Clause 1:

Selective employment premium

1.—

(2) Subject to subsection (3) of this section, this section applies to any employment in, or carried out from, an establishment where—

(a) the establishment is engaged by way of business wholly or partly in—

  1. (i) activities falling under any of the minimum list headings shown in Orders III to XVI of the Standard Industrial Classification; or
  2. (ii) activities by way of the manufacture from exposed film of cinematograph films for public exhibition; or
or where the establishment is certified by the Minister of Technology to be engaged in scientific research relevant to such activities as are mentioned in paragraph (a) of this subsection or the Minister of Labour is satisfied that the establishment is engaged in training which is so relevant.

LORD ARCHIBALD

had given Notice of two Amendments to subsection (2)(a)(ii), the first being after "the" to insert "production or", and the second to omit "from exposed film". The noble Lord said: I shall not detain the Committee for long on this occasion, because I put most of my arguments during the Second Reading debate yesterday. However, I think there are one or two points which I should emphasise. As the Bill now stands we have what is to my mind the extraordinary situation that the manufacturers of the raw stock, the celluloid, are manufacturers, then at a later stage the laboratories which do the processing are manufacturers, but in between there are the people who make the films, the actual producers, and they are not classified as manufacturers.

I would ask your Lordships just to look at the logic of this situation. If there were no film production, what would be the situation? When I talk about film production I am not talking only about entertainment films, because there is a vast production of films in this country beyond the making of entertainment films. There are educational films, there are industrial films, there are films made for industrial training, there are films made for export promotional purposes. Many thousands of films are made every year, quite apart from the normal, approximately, seventy entertainment films. So I am talking about the whole field of film production.

If the whole field of film production stopped, then the manufacturers of the raw stock would find themselves with millions of feet of raw stock on their hands, with which they could do nothing and which would be valueless. I am not talking about the film that they make for the amateur cameraman; I am talking about the cinematograph film which is made for entertainment films, industrial films, educational films and so on. If film production stopped, then the makers of raw stock would be left with all this on their hands, and the laboratories would be left with no work at all to do. The link between the manufacturer of the raw stock and the laboratory which processes it is the person who makes the film, and if the person who makes the film is not a manufacturer, then I do not know what the word "manufacturer" means.

May I just repeat two points which I made yesterday? Films qualify for the export rebate scheme which is confined to goods, which would seem to indicate that the Government have accepted under the export rebate scheme that films are goods. Somebody has to make the goods, and I should have thought the person who made them was a manufacturer for the purposes of this Bill. The other point is that film studios are regulated by the Factories Acts, and the Factories Acts control premises in which goods are manufactured. So I should have thought the things which were made in the film studios were goods and were therefore manufactured articles. Therefore they should come in a clause of the Bill other than that in which they are now placed. I might add that a film studio is designated as an industrial building under the Local Employment Act 1960. But if it is an industrial building under the 1960 Act, how can it be a service under this Bill? It does not seem to make any kind of sense.

Might I just add another and, perhaps, more difficult point? I think that if the Bill goes through as it is now drafted the Government may find themselves, or the appropriate Department may find itself, in considerable difficulty in interpreting the Bill. As it stands, it reads: activities by way of the manufacture from exposed film of cinematograph films for public exhibition". It is awfully difficult to know where exactly "activities by way of … manufacture from exposed film" begin and end. For example, the director of a film goes on the stage, where a set has been built on which he is going to "shoot". That set having been built, the director assembles his artistes and, against the background of that set, "shoots" his film. It is then, as I understand the Bill, an exposed film. Then it goes to other departments in the studio. It goes, for example, to the dubbing department, where various things are done to the exposed film, such as the incorporation of music, of sound effects or of some special effects. These departments are dealing with an exposed film. So presumably certain parts of the studio might be deemed to have the benefit of the premium under the Bill, while other parts might not. I can see considerable chaos arising out of this.

Going back to my example, the set has been built, the director has "shot" his artistes against the background of that set and he has finished. He then has exposed film. Thereafter the set has to be demolished to give way to another set required for a subsequent stage of the film. The demolition of the set, it might be argued, is an activity arising from the exposed film, because until the film has been exposed the set is not ready for demolition. I wish joy to the Department that has to interpret this as it stands.

I come back to my main point which I made yesterday. Film production was classified as a service under the standard industrial classification, quite erroneously. The film production industry did not make any objection because for all practical purposes, and for all other Government legislation, it was as an industry considered as a manufacturer, as a producer of goods—that is to say, as I have indicated, for the purposes of the export rebate, of the Factories Acts, and so on. So it did not object to being wrongly classified. But now this wrong classification becomes a matter of major importance to the industry. I have told your Lordships' House on many occasions that I have an interest in the film industry, but I should make it quite clear that I have no direct financial interest in any film production whatsoever. But not having objected to a wrong classification in the past should not be a good and sufficient reason for acceptance of a wrong classification now.

I could put before your Lordships' Committee the hardship case—the amount that this is going to cost the film production industry, which is in no condition to accept a high additional burden. But I am not basing my case on how much it is going to cost the industry: I am basing my case entirely on the sheer logic of the position. As an industry we have submitted our case to the Board of Trade, which is the Department which looks after our affairs. We have provided it with all the evidence as to what this is going to cost, and so on. But it is not really a question of how much the industry is going to be burdened with additional cost: it is really a case of how, in logic, it can be justified by the Government that the film production industry should be put in the position of a service when obviously it is in fact a manufacturer. It is on that basis that I beg to move the Amendment standing in my name.

Amendment moved— Page 2, line 1, after ("the") insert ("production or").—(Lord Archibald.)

LORD LLOYD OF HAMPSTEAD

My noble friend Lord Archibald has given such a lucid and convincing explanation of this Amendment that I am sure that it is necessary for me to add only a very few words in support. This may seem a very small Amendment, but of course it is one of very great importance to the film industry, and I therefore make no excuse for adding a few words to the explanations of my noble friend. The object of the present Bill is to relieve those who are engaged in manufacture from the incidence of this tax. So far as film-making is concerned, there is no dispute that organizations like Kodak, who manufacture film stock, are manufacturers. The question is: who is the manufacturer of the cinematograph film which is put before the public? Is it the organiser who produces the film—that is, the man who gets hold of the story, who gathers together the studio, the staff and the actors, and who prepares the whole production of the film? Is he the man who is the manufacturer of the film, or is it the man who, after all this has been done, has handed to him a piece of exposed film and passes it through some chemical processes in a processing laboratory? I should have thought, with great respect, that one had only to ask that question to see that the answer was obvious—that it is the man who prepares the production who is the manufacturer of the film.

My noble friend, Lord Champion, in the Second Reading debate yesterday, said that he did not agree with my noble friend, Lord Archibald, that what goes on in a film studio amounts to manufacturing, and he—that is, the noble Lord, Lord Champion—referred also to the theatre, apparently as an analogy to the cinema. Speaking for myself, I should be only too willing to accede that the theatre, too, should be exempted from this tax, but this is no part of the case that I am arguing this afternoon. What I would submit, however, with the greatest respect to my noble friend, Lord Champion, is that there really is no analogy whatsoever between the theatre and the cinema, because the cinema produces a manufactured end product, the film, and there is therefore clearly a process of manufacture, whereas there is nothing of this kind in the case of the production of a play in the theatre.

My noble friend Lord Archibald has mentioned several instances which show quite clearly that on a variety of occasions and in diverse connections the Legislature has accepted the fact that the making of films by way of production in a studio is a manufacturing process, the most conspicuous illustration being that a film studio is a factory under the Factories Act. One can hardly want a more convincing illustration.

I should like to mention to your Lordships' Committee another matter which I think equally significant. It may be recollected that under the Copyright Act 1956 a new form of copyright was introduced in relation to the making of cinematograph films. Under Section 13 of that Act it is provided that the maker of the film is the person who is to enjoy the copyright. Then the section goes on to define what is meant by the maker of a film. The legislation provides: the maker', in relation to a cinematograph film, means the person by whom the arrangements necessary for the making of the film are undertaken"— in other words, the producer. I should have thought that this again provides convincing evidence that the whole tendency of legislation is to recognise what is, after all, an obvious fact—namely, that the real maker of a film, the producer, is the manufacturer.

All I wish to add to this argument is that I think noble Lords will recognise that it would be a grave misfortune to impose this additional burden on the film industry in this way, bearing in mind the many difficult problems with which that industry is wrestling at the present time, some of which, it maybe recalled, were heard in the debate in your Lordships' House not very long ago. I should therefore like to express the hope that, even at this stage, Her Majesty's Government through my noble friends on the Front Bench might find it possible to give us some assurance that this matter will get the closest attention.

LORD GOODMAN

The Committee may feel that this matter has already been dealt with very faithfully and adequately by the informed, lucid and, if I may say so, very persuasive speeches made by the noble Lords, Lord Archibald and Lord Lloyd of Hampstead. I want to add a word for a special reason, and I have an interest to declare which is the special reason. I am the chairman of one of the largest independent British film companies. I should add that, like the noble Lords, Lord Archibald and Lord Lloyd of Hampstead the fate of this Bill will make no financial difference to me. But I regard it as of special importance to the industry that this change should be made. I would make a very vehement appeal to the Government that even at this late stage they should reconsider what is undoubtedly an anomaly, what is inconsistent and what is, if I may venture to say so, devoid of logic

There is a very sound practical ground which might appeal to them better than the other considerations that have been put forward. It is that, if they leave the Bill as it stands without taking the opportunity of amending it, without the Amendment that we have put forward, they will really leave the industry in a mess. The noble Lord, Lord Archibald, indicated that the draftsmen of this particular clause, skilful as they may be as draftsmen, did not really know enough about the film industry. The result of this clause is undoubtedly to leave a situation where certain production processes will fall on the right side of the line and other production processes will fall on the other side of the line. The division is totally arbitrary and irrational

For instance, there can be, I think, very little doubt on the true interpretation of the clause as it stands that the cutting of a film would enjoy the premium, would enjoy the rebate, would enjoy the advantages of this particular clause, simply because the cutting is an operation that takes place when the film has been exposed. I think it is unarguable that this activity relates to the manufacture of the film from an exposed film. The exhibition of the rushes of the film would similarly fall on that side of the line. One could go on and weary your Lordships with a detailed narrative of the number of processes that would come on one side of the line and the number that would, without any consistency, fall on the other because the draftsmen—who may be excused for it; for this is a mass of heavy and important legislation—didnot think of them. I venture to urge the Government to reconsider this position on the simple, practical ground that we are giving them a workable clause to deal with. If they leave it as it is it is quite unworkable.

I may perhaps put an appeal on a rather loftier plane. The film industry is in a very special position. One of the aspects that have hurt me a little about this particular Bill—I have no general views on it because those are a high political matter—is that it seems to give the impression, very unfair to the Government, that in a number of fields the Government are indifferent to matters of the mind. As Chairman of the Arts Council I know better than anyone that in the case of this Government that is profoundly untrue. I doubt whether there has been any Government with more sympathy with the arts and culture in general than this Government, and that is especially so with regard to grants towards the arts and so far as the treatment of the Arts Council is concerned.

It appears from this Bill, purely by chance, that in a number of directions where they have made an arbitratry division of all the remunerated human activities into services and manufactures, they have left out a vast field of activities—the activities of creative artists, of the human mind—which do not fit in either category. That is where most of these difficulties arise. It is quite inconsistent and unarguable to say that the theatre is a service, that the ballet is a service, that the opera is a service, that when a singer is giving a great performance at Covent Garden she is rendering a "service" in the sense in which that word is used in this Bill. Obviously, this is an unarguable contention. But if you decide to make divisions as arbitrary as that, then you must have inconsistencies of that kind. It is unfortunate, when we have a Bill which makes arbitrary divisions of this kind that, where logic demands and you have an opportunity of putting creative activities on the right side, you do not immediately seize it.

This is the case with the film industry. Unarguably, the film industry manufactures a product. At the end of the day there is a canister with film in it; somebody has made it. At the stage where it gets relief it cannot be exhibited. If you exhibit it you see nothing but blackness on the screen; at this stage relief was provided by the draftsman. But unhappily—or happily, as I think—the film achieves this result only when it is being processed in the laboratory, when it is already a finished article. As the noble Lord, Lord Archibald, pointed out in his congent and adroit intervention, at the important stage when the film is actually being made it is not accorded the provision that ought then to be accorded.

There are special reasons why, at this moment of time, the British film industry, which is suffering a heavy blow, should not suffer this unnecessary imposition. This charge may make it impossible for some companies to continue at all. There is a real risk that a large number of technicians and employees will be put out of work as a result of this entirely unjustifiable tax, unjustifiable in terms of logic and reasoning.

I therefore urge the Government to reconsider this matter. We have been able to keep the studios going by attracting to them a large number of American and other non-British film-makers brought here because of our efficiency. If these people are priced out of the market as a result of this particular imposition, which I find quite unnecessary, we may lose that which makes all the difference between the studios' continuing in operation and having to close down. I would appeal to the Government on these three grounds: that there is no logical reason for this imposition; that the clause as it stands is muddled; and that acceptance of the Amendment would save the industry from a very serious blow which need not be inflicted on it.

3.30 p.m.

LORD CONESFORD

We have heard cogent reasons put forward in favour of this Amendment. The one that struck me as most extraordinary, having regard to the nature of the Bill, was that it would make this bit of the Bill less nonsensical. If we once started amending the Bill on those lines, there would be none of it left at all. This is not more nonsensical than the rest of the Bill and I think that the Government would be in very great difficulty if they listened to this particular plea without doing a great deal more to the Bill. The noble Lord, Lord Lloyd of Hampstead, showed him-self as humane as we always thought he was by expressing his sympathy with the theatre. The noble Lord, Lord Goodman, expressed a sympathy which we all recognise with the arts in general. I cannot pretend to feel towards the film industry more affection and respect than I feel for music and the great orchestras, or for the theatre. I do not know what the Government are going to say about this Amendment. All I can say is that if they accept the Amendment they will be doing something for one particular art though they are doing nothing parallel for any other art.

May I mention one other thought that occurred to me as I listened to the arguments put forward? The Government decided to treat the printers as manufacturers. Are the printers really the sole makers of the finished article? Is there not such a thing as an author? I know that there are a certain number of noble Lords opposite—in fact I can see some of them nodding their agreement at this moment—who feel that it is quite absurd, in the case of the printers, to treat them as the sole manufacturers of the finished product. Of course the author is one of those who is a sine qua non in considering the final product. I believe that as the result of other Government Amendments the editor of The Times qualifies for a premium under this extraordinary Bill but none of our authors does, however famous their works may be throughout the world and however difficult they may find it to carry on, since they will now have to spend a great deal more money if they employ a typist. I do not wish to say anything against the plea put forward by the three noble Lords who have spoken. They spoke with force. I appreciate what they said, but they have certainly put in a plea for one particular industry which may be paralleled mutatis mutandis in many other cases, and, when they talk of the absurdity of this provision in the Bill, I can only say that it is no more absurd than the rest of it.

LORD ARCHIBALD

May I make one reply to the noble Lord, Lord Conesford? We are not asking that the writer of the original book from which a film may be drawn should be regarded as a manufacturer. We are not asking that the script writer who transforms the book into a film script should be regarded as a manufacturer. We are asking that the process of manufacturing the film should be treated as such.

LORD CONESFORD

I can only say to the noble Lord that, had he been arguing what he says that he is not arguing, I should have had much more sympathy with him.

THE MINISTER WITHOUT PORTFOLIO (LORD CHAMPION)

The noble Lord, Lord Conesford, has rehearsed arguments which were used yesterday and to which I had to reply last night. I believe I did reply to him fairly effectively, but this is a matter of opinion, and clearly the noble Lord will not agree with me. We are not talking about the generality of the Bill but rather the particular and the particular Amendments before us at the moment. I am bound to agree straight away that the noble Lord, Lord Archibald, the noble Lord, Lord Lloyd of Hampstead, and the noble Lord, Lord Goodman, have made an extremely knowledgeable and a powerful case. The noble Lord, Lord Goodman, said that the film industry was in a special position. My period in Parliament since 1945 has shown me that not only is the industry in a special position, but Parliament has been rather careful about trying to do something to secure that it shall continue to live. But that is not the point of this Amendment today.

The Amendments now before us would alter the Bill so that it would read activities by way of production or manufacture of cinematograph films for public exhibition". and this would entitle all operations in the production of the film to a premium. This, of course, is the point, the gravamen, of the case which has been put. The film industry made representations to the Government that the making of films was a manufacturing industry and should be entitled to the premium. The Government carefully considered the representations made to them by the industry and accepted that the work of producing positive copies of exposed negative film was a manufacturing process. An Amendment was tabled on Report stage in the Commons, the effect of which is to entitle the premium to those engaged in the manufacture of exposed film, of cinematograph films for public exhibition. This work is normally done by the film laboratories.

I admit that, having been faced with these Amendments, I could almost wish that the Government had not tabled that Amendment. My life might have been made a little easier this afternoon if it had not happened. But the Government did that in order to some extent to help the film industry. The noble Lords and the industry have argued that this does not go far enough and that everything involved in the production of films should be regarded as a manufacturing process qualifying for the premium. My noble friend Lord Archibald has well argued that it is illogical that the making of film stock and the production of positive copies from an exposed negative should be regarded as manufacture, and that the intervening work involved in putting an image on the film should not. The making of a gramophone record and a tape recording is classified in the industrial classification as a manufacturing activity and so qualifies for the premium.

It could be argued, and this is what is being argued, that it is illogical not to apply the same treatment to the making of films. I am bound again to argue what I said last night and what the Government have said: that the shooting of film is closely akin to the production of a play and other live shows. It seems to me that much of what was said by my noble friends about the pulling down of sets and the re-erection of other sets, the work that goes on behind the scenes in a theatre, is allied to some of the production work which goes on in a film studio. One could, of course, go into a number of these things. I wonder whether an artist is a manufacturer. He puts paint on canvas, but, of course, he is not a manufacturer; he is an artist. There are a number of arguments which one could adduce in this connection which will have some little connection with what has been said. I think the analogy here between the theatre and this part of the making of a film is closely allied as between the theatre and the making of the film.

LORD SOMERS

Apropos what the noble Lord has just said, I wonder whether he can tell me what he thinks the sales of gramophone records would amount to if there were no musicians to put any music on them.

LORD CHAMPION

Then we should have merely speaking gramophone records—and nobody would buy the darn' things! That is the only answer I can give the noble Lord. The artiste is immensely important in connection with the theatre and with all the various activities that help the public to a more civilised life. But they are not necessarily manufactures. I would not regard some of the finest artistes whom I happen to know as manufacturers, who would be entitled to qualify for premium under this Bill. The concession made to film laboratories is the only case in which premiums are being paid in respect of industrial activities not classified under the manufacturing orders in the standard industrial classification. So here an exception has been made.

LORD GOODMAN

I hesitate to interrupt, but I think it very important that the noble Lord should take advice as to what this clause means in its present state of drafting, because he seems to be maintaining the position that it is restricted to laboratory processes. My view, which is shared by my noble friends Lord Archibald and the distinguished lawyer Lord Lloyd of Hampstead, is that this is not the case. Some considerable number of production processes will quite arbitrarily be caught by the clause, and one of my appeals to the Government was that this was so devoid of any kind of logic that it would be sensible to accept our Amendment and make a logical clause out of it.

LORD CHAMPION

I must admit that I have not yet been able to look into this point. I am sure that the noble Lord is able to tell by my work in your Lordships' House that I am not a lawyer. I was going to say later on, and I might as well say it now, that the Government recognise that a powerful case has been made out this afternoon. The Government have undertaken to review the tax in the first year, with the aim, as my right honourable friend the Minister of Labour has said in another place, of making modifications if they prove necessary or desirable. We shall take into account any representations that may be made by the interested industrial organisations and we shall consult properly with the Confederation of British Industry.

What I am prepared to give to my noble friend Lord Archibald and others who have spoken this afternoon is an assurance that the Government will be ready to consider any representations about the film industry as part of this review. In addition, the Government will consider everything that has been said here this afternoon by noble Lords who are knowledgeable, in this field. Beyond that I feel I cannot go. This undertaking is given with full sincerity and with the backing of the Government, otherwise I should not be making it here. So, although noble Lords may feel that in rejecting this Amendment I cannot go so far as I ought to, this is as far as I can go this afternoon, as the result of the advice of my right honourable friends who are responsible for this Bill.

LORD ARCHIBALD

It would be quite dishonest to say that I was other than deeply disappointed by the reply of my noble friend. I think that in the course of his reply my noble friend has given away the whole of the logic of the Government's case. He has referred to the fact that the making of gramophone records is a manufacturing industry. If the making of gramophone records is manufacturing, presumably because there is a physical product at the end which can be handled, sold and exported, so equally is the production of a film a manufacturing process, because at the end there is something which can be handled, sold, exported and dealt in. The analogy with the production of plays seems to be quite the wrong one to use in this case. At the end of the production of a play one may have a pleasant memory of a beautiful production, but one has nothing that can be put in a box and sent overseas. Why there should be this illogical argument I do not know, but I recognise that the Government are not going to give way on this. I accept the undertaking that it will be looked at again within the year, and on the basis of that undertaking, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD CHAMPION

This may be a convenient moment for the House to resume for the purpose of making a Statement. I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.