§ 7.20 p.m.
§ Order of the Day for the Second Reading read.
§ THE PARLIAMENTARY SECRETARY, BOARD OF TRADE (LORD RHODES)
My Lords, I beg to move that the Bill standing in my name on the Order Paper be now read a second time. The purpose of this Bill is to extend for another three years the life of the present legislation which governs the support given to the British film industry. This support is given in three ways. First, there is the screen quota. This was originally introduced in 1927 and the quota provisions were re-enacted and amplified in subsequent legislation up to and including the Films Act 1960. Ever since 1927 there has been a requirement that cinemas must devote a specified 1126 minimum percentage of their screen time to the showing of British films. The percentage has been varied from time to time, but it has remained at 30 per cent. for first features since 1950 and at 25 per cent. for supporting programmes since 1948.
Secondly, there is the levy imposed on receipts from exhibition, which is distributed by the British Film Fund Agency. This fund, often referred to as "Eady money", began as a voluntary arrangement and it was made statutory and given a ten-year life by the Cinematograph Films Act 1957. The present Bill will add three years to its life, taking us to October, 1970.
Thirdly, there is direct Government financial assistance to production through the operations of the National Film Finance Corporation. The Corporation was established in 1949 and its function was to make loans to be employed in financing film production and distribution. £5 million of Government money was advanced for this purpose, of which about £3 million was immediately loaned to the former British Lion Corporation, Ltd. Subsequent legislation increased the total amount which the Government might advance to £6 million, and authorised the Corporation to borrow up to £2 million from non-Government sources, subject to Board of Trade and Treasury consent. By the Cinematograph Films Act 1957, the lending powers of the Corporation were extended until March 8, 1967, and the Corporation was charged with the duty of paying its way.
This is the legislative background to the present Bill. All of the legislation to which I have referred above will expire at some time in 1967, and the present Bill is designed to prolong its life, subject to one or two minor amendments which I will describe in a moment, for another three years. The reason why we are not coming forward now with substantive long-term proposals is that the Government propose to review the whole of their films policy and legislation in the light of the Report of the Monopolies Commission on the supply of films for exhibition in cinemas. Noble Lords will know that on November 2 my right honourable friend the President of the Board of Trade announced in another place that the Report had been published on October 31, and that he was inviting 1127 the parties concerned to discuss the Commission's recommendations with him. These discussions are now going on and my right honourable friend has promised to make a statement later on.
The relevance of this to the present Bill is that it would evidently not have made sense to take any major decisions on film policy until the Report of the Monopolies Commission had been received and considered. This Bill is purely a holding operation, designed to keep in being the present arrangements for long enough to enable the Government to carry out a full-scale review of films policy and to frame such legislative proposals as the review shows to be desirable in the public interest.
It may assist noble Lords if I now turn to the detailed provisions of the Bill, and I will draw particular attention to the minor amendments to existing legislation which it contains. Clause 1 extends until the end of 1970 the period during which the Board of Trade, with Treasury approval, may make advances up to £6 million to the National Film Finance Corporation. During this time the Corporation can lend money to film producers or distributors. It also extends until the end of 1970 the period during which the Corporation may borrow up to £2 million from private sources. It is made clear in the published Annual Reports of the Corporation that about £4½ million of the £6 million advanced by the Government has been lost. The Corporation's present resources are therefore about £1½ million of Government money plus what, up to £2 million, it can borrow from non-Government sources. I appreciate that the Corporation are having difficulty in negotiating loans from private sources. Indeed, the Corporation announced in October that practically all its available resources had been committed in respect of film loans already approved. It could not therefore, for the time being, entertain further applications for loans. It is, however, reasonable to expect that when, as a result of Government measures taken in the summer, our economy gets on to a firmer footing the Corporation's present difficulties will diminish and in the end disappear. Clause 1 of the Bill, then, extends the life of the Corporation on the basis of existing legislation.
1128 Clause 2 prolongs up to the end of 1970 the provisions of Section 12 of the 1957 Act, whereby the Board of Trade were empowered to give effect to arrangements for transferring the Corporation's assets and liabilities to a British company providing for film production. It also postpones until after December 31, 1970, the exercise of powers to dissolve the Corporation. The remainder of Clause 2 puts right an omission in earlier legislation. Paragraph 8 of the Schedule to the Cinematograph Films Production (Special Loans) Act 1949 gave the Treasury the power to dissolve the Corporation by Order. Sub-paragraph (2)(c) of that paragraph empowered the Treasury to include in any such Order necessary or expedient incidental or consequential provisions; sub-paragraph (2)(d) empowered the Treasury to vary any such Order by a subsequent Order. Section 13 of the Cinematograph Films Act 1957 transferred from the Treasury to the Board of Trade, with Treasury approval, the power to dissolve the Corporation by Order, but the subsidiary powers conferred by sub-paragraphs (2)(c) and (2)(d) which I have just described were not similarly transferred. This clearly was an oversight—it was only a minor one—and we are taking the opportunity afforded by the present Bill to put it right.
Clause 3 extends the levy arrangements, with no change, for three further periods of fitfty-two weeks, that is: until October 3, 1970. One of the requirements of the present legislation is that the Board of Trade must frame the regulations governing the collection of levy so that, in the Board's estimation, the yield will not exceed £5 million in any fifty-two week period. A suggestion has been made that this limit should be raised or removed altogether. My right honourable friend the President of the Board of Trade consulted the Cinematograph Films Council on the matter, and the Council's advice was that the statutory limit on levy yield should remain unchanged. Strong arguments were advanced on both sides, and the Government decided that since the proposal aroused much controversy, it would, quite apart from the merits of the conflicting arguments, be inappropriate for inclusion in what is essentially a purely holding operation. Of course, this matter 1129 will be considered as part of the forthcoming review of films legislation. Clause 4 extends until the end of 1970 the operation of the screen quota provisions. Thus Clauses 1 to 4 continue things as they are under the present enactments.
I mentioned at the beginning of my speech that the Bill contained one or two minor amendments to existing legislation, and with Clause 5 we come to the first of these. They are very minor. Section 4 of the Films Act 1960 provides that when the Board of Trade are satisfied that a cinema's weekly average takings do not exceed £125 exclusive of levy payments it is to be exempted from the quota requirements of the Act. My right honourable friend the President of the Board of Trade consulted the Cinematograph Films Council on the present Bill, and the Council recommended that the exemption limit should be raised to £150. Clause 5 of the present Bill has this effect. This is a change that could have been made by Statutory Instrument, subject to Affirmative Resolution of each House of Parliament, but to include it in the present measure is a convenient and time-saving arrangement. We estimate that the effect of raising the exemption limit in this way will be to make about 500 cinemas eligible for exemption, as compared with about 400 under the existing limit of £125. The change will benefit cinemas in unfavourable situations which find difficulty in meeting the quota requirements, and I am sure that noble Lords will approve of this small measure of relief.
The next clause, Clause 6, also brings in a change. Section 19 of the Films Act 1960 enables provision to be made by Order in Council under which films made in accordance with the terms of an international film co-production agreement may become eligible for registration as British films. An agreement of this kind was signed with France in September, 1965, and although no co-production film has yet reached registration stage two projects have been approved by the Board of Trade and by the French authorities. They will be submitted for registration in due course, and others will no doubt follow. The maximum fee payable on application for registration is fixed in the Second Schedule to the Films Act 1960 at £8 8s. 0d. The actual fee at present, 1130 prescribed by regulation, is £6 6s. 0d. Section 44 of the 1960 Act requires the Board of Trade, with Treasury consent, to prescribe fees which will secure, as nearly as may be, that the administrative costs are recovered.
As far as the registration of normal British films is concerned, £6 6s. 0d. is turning out to be enough for this purpose. But it is utterly inadequate when it comes to registration of a film made in accordance with an international film co-production agreement. Registration as a British film is a privilege carrying with it levy benefits, and this is not a matter which can be dealt with in a summary fashion. The Franco-British co-production agreement contains a large number of detailed requirements, and rigorous examination of the details of each project is necessary. It will also be necessary to ensure that the finished film has been made in accordance with the conditions of approval by the authorities. Throughout, the Board of Trade must work in close consultation with the authorities in France, and on certain matters the Board has undertaken to consult a Co-production Advisory Committee set up by the industry here to assist in dealing with the many problems which a joint scheme of this kind throws up. A great deal of administrative work is inevitably involved, and our estimate is that a maximum fee of £450 would be appropriate—and that is the figure in Clause 6 of the Bill. The actual fee will be prescribed by regulation as soon as the powers exist. We have not yet had very much experience of the work, but on the basis of what has been done so far I would not expect that it will be necessary to prescribe an actual fee as high as £450. However, experience will prove what we need to do. Experience does confirm, however, that to pilot a co-production project through the requirements of the agreement is a long and complicated procedure, and it may be that as time goes on some simplification will, in agreement with the industry, be possible.
Except for these two small changes, this Bill does no more than prolong the existing legislation for another three years. We are going to review the whole of our films legislation in the light of the report of the Monopolies Commission, and the present Bill is a necessary instrument to enable this to be done. We 1131 shall no doubt have much discussion and debate on the extent to which and the manner in which support should, in the longer term, continue to be accorded to the film industry in this country. There are many problems which require deep and cool-headed analysis. We must not become too emotional or sentimental about them. The fact is that at the present time this country is one of the major centres of film production in the world, and we should be proud and pleased about that. Whatever else may come out of our review, it will be generally agreed, I am sure, that this hard-won position must be preserved.
The longer-term decisions will not in any way be prejudiced by the passage of the present Bill. All that the Bill does is to preserve the existing apparatus of support in being while the problem of what those longer-term decisions should be is examined in consultation with the interests concerned. I hope that noble Lords will agree that this Bill is a necessary holding operation. My Lords, I beg to move.
§ Moved, That the Bill be now read 2a.—(Lord Rhodes.)
§ 7.36 p.m.
THE EARL OF BESSBOROUGH
My Lords, we must be grateful to the noble Lord for having rattled through this Bill at a tidy pace so that we can all go and have some dinner. As he says, it is entirely a holding operation—and a perfectly simple and straightforward one. Apart from some relatively minor points to which he referred, its purpose appears to be purely to prolong for another three years the life of the present legislation governing support for the British film industry, and to extend until October, 1970, the power to impose a levy on exhibitors for distribution to British film makers. As we have heard, it also prolongs until the same date the provisions relating to the quota, and raises the level up to which cinemas are eligible for exemption from the quota. As the noble Lord said, it also prescribes £450 as the maximum fee for the registration of co-production films. I am not going to take this point up with the noble Lord, as it was, I think, taken up in another place. I recognise that this is purely a maximum figure.
1132 As was said on Third Reading in another place, it does not seem that many of the recommendations of the Monopolies Commission, to which the noble Lord referred—and their Report has now been published—directly affect the provisions of this Bill or the earlier Acts which the Bill extends. But now that that Report has been published we must all hope that the full review which the Government have promised will not be long delayed. Above all, I hope that as a result of their deliberations the Government will be a good deal more realistic than they have been in the past in regard to their taxation policy. Our object must be, as the noble Lord says, to maintain a reasonable proportion of British films on exhibition in this country, and to enable the British film industry to make its maximum contribution to exports. It is clearly most important that British capital should be available to help finance the industry in this country, so that it need not be so dependent on American capital.
I hope the Government will reconsider their taxation policy so as not to inhibit the healthy growth of the industry here. In particular, it does not seem to me to make sense to inflict upon the industry such a peculiarly inappropriate tax as the selective employment tax, and in any further legislation I certainly hope that it will be possible to ease this burden. Surely, for tax purposes the industry, in view of its inherently manufacturing character and its great record in the field of exports, should not be considered purely as a services industry.
Although, as I have said, the recommendation of the Monopolies Commission may not appear to have a very strong bearing on the Bill, there are a number of important matters raised in the Report concerning the industry which merit the attention of your Lordships—in particular, whether there shall be a third distribution circuit beyond the present twin monopoly by Rank and A.B.P.C. I think that on some occasion your Lordships should look carefully at what is said in that Report. It may be possible to contend that television is itself a kind of third circuit, even if some may consider that television films are really a different kind of art form from those shown in cinemas. When television does show feature films, it shows 1133 much older ones than are presented in cinemas. In the present circumstances, therefore, some film producers may find difficulty in securing distribution of their products on the two large circuits. This is a matter which must cause concern, despite the fact that I believe that a very good case can he made out for the view that the industry would not be as strong as it is were it not for the existence of these two giants. As the Report of the Monopolies Commission says on page 87:To give the industry a new and competitive structure would mean breaking up the circuits. That would be a drastic step, the result of which would be uncertain.The Report recommends instead a series of less drastic remedies in order to ease the situation.
My Lords, I hope it may be possible for this House at least to find time for a debate on this subject. This could be done more effectively after the Government have produced their review. I gather they are now considering the Report and having further discussions with Rank and A.B.P.C. in the light of it. The Report was published after the Bill had its Second Reading in another place, and the Speaker ruled out discussion of it in the Third Reading debate there, although that debate took place after its publication. So the Commons have not really had the opportunity of discussing the Bill and the Report together. I gather that discussion would have been allowed if the Report had been published before the Second Reading. In any event, for those reasons I hope that your Lordships will find time—even if not this evening—to go into the matter in this House. I hope that your Lordships will forgive me for touching on one or two points arising out of the Report which seemed to me to be most important. Meanwhile, in so far as this present Bill is concerned, I can see no possible objection to it, and I hope that your Lordships will give it a speedy Second Reading.
§ 7.44 p.m.
§ LORD MOYNIHAN
My Lords, far be it from me to keep your Lordships from your long-awaited dinner; I do not intend to take up much of your time. I should like, first of all, to thank the noble Lord, Lord Rhodes, for putting the points of this Bill so lucidly. I should very briefly, as a working member of the industry, like to try to throw a little light on some parts of the subject which 1134 might appear obscure, and I also have two valid points to raise which do not seem to have been raised in another place on the Second Reading of this Bill.
First, the National Film Finance Corporation was founded, as the noble Lord, Lord Rhodes, clearly explained, in 1949 with Mr. James Lawrie as managing director. Its function, broadly speaking, was to act as a form of merchant bankers to the film industry and I understand that part of its capital came by way of loans from merchant bankers. In the end a maximum of £8 million was put at its disposal and, in trying to ensure that British films received the benefit of a major distributing house, it lent a more than substantial share of this capital to British Lion. As everyone knows, the old British Lion went into liquidation and the N.F.F.C. ended up some £3 million in deficit. This could happen in any business and many well-meaning ventures get off to a bad start.
Certainly the N.F.F.C. subsequently set about trying to remedy this mistake. In 1957 their then managing director, Mr. David Kingsley, left the N.F.F.C. and joined the board of the newly organised British Lion Films Limited, as managing director, in particular to liaise with the N.F.F.C. with regard to their investment. I am happy to say that by last year the N.F.F.C. had turned this investment into a substantial profit, and when they sold their stake they had recouped some three-quarters of a million pounds. These figures are in general terms; I refer to them to indicate that under the leadership of men such as Mr. David Kingsley and Mr. John Terry, the present managing director who succeeded Mr. Kingsley in 1957, the N.F.F.C. have shown that they have creative and adventuresome traits as well as being trained men of commerce protecting the Government's and the taxpayers' interests.
The reason I am suggesting that the Government should review the N.F.F.C. position, not only in relation to continuing to support this as a Government institution but in terms of granting the N.F.F.C. bigger and better opportunities to fulfil their function, is this. The Government have allowed the N.F.F.C. up to £8 million working capital. But, unless I misunderstand the present position—and I am sure that the noble Lord, Lord Rhodes, would agree that the position 1135 is very complex; and I would further admit that I am no economist—at least £2 million of that is not available for use owing to its having been irretrievably lost when the original British Lion Company, went into Liquidation. Further, unless a compromise has been arrived at of which I am unaware it is even possible that the N.F.F.C. may have to allow in their bookkeeping for interest charges.
My Lords, let us examine the present-day position of the British film industry in relation to the world at large and, in particular, to the film industries in the countries of Continental Europe with whom we propose to work if we enter the Common Market. In France, Italy, Germany, Spain and even Sweden, the Governments take an active interest in their film industries. As long as films can qualify for national quota—and their requirements, I must point out, are much easier to fulfil than are our Board of Trade requirements—the producers get subsidies. In Spain, where the cost of production is generally regarded as far cheaper than ours, the Government will contribute an average of 3 million pesetas towards the actual cost of production, which makes the producer's task much easier. He knows that he will get Government support as long as his film can qualify as a Spanish quota film. In Germany, certainly in West Berlin as opposed to East Berlin, a similar attitude prevails.
In Italy and Sweden, the Governments have a system similar to ours whereby any films produced that qualify for Italian or Swedish quotas receive a Government subsidy by way of bonus which is based on the box-office takings of the film. Unlike Spain, if the film is unlucky enough not to get a release in the cinemas, then, just as in this country, there is no bonus; but the difference is that in Italy and Sweden films, when completed, are shown to a Government panel of judges and, regardless of box-office receipts, cash prizes are awarded every year to films of merit as selected by the Government panel. In France everything is centred under one roof—it is known as the Centre Nationale—where money is allocated for pre-production loans, for production of films and by way of subsidies based on box-office takings. They also allow a proportion of their Government finance to be allocated towards the modernisation 1136 of cinemas and such worthy causes as that.
What is the present position here in England? To qualify for a Government subsidy films must be "British quota" films. This has meant that usually 70 per cent. to 80 per cent. of the labour costs had to be British; and this made it very difficult for British producers to enter into co-production agreements with other countries. Eventually the British Government entered into an agreement with the French Government for a united co-production formula, and the basis was a 70–30 capitalisation, the main bulk being supplied by the country where the film was to be produced studio-wise. No doubt noble Lords will have read that Brigitte Bar dot was filming in this country. I am happy to relate that the N.F.F.C. were responsible for contributing the 30 per cent. necessary to provide the British partnerships, and they were prepared to pay more finance for an Anglo-French co-production which has had to be postponed because of the Government's present credit squeeze. The N.F.F.C. have closed their doors to prospective borrowers, as the noble Lord, Lord Rhodes, pointed out. I sincerely hope that will cease at the end of the squeeze period. I have with me a list of the films which are being produced at Shepperton Studios, and every one is American-sponsored. Something like 80 per cent. of the films being produced in this country are American-sponsored. I ask, in all sincerity, whether such a position is healthy for our national economy when films are one of the best money-spinning industries in the world and these same films could be earning foreign currency for British companies.
Films to-day are fewer but bigger, and although they cost more than they used to do before the days of Cinerama and such-like, they certainly earn more. To keep up with the current trend and, in the modern idiom, to "keep Britain swinging" we need to compete on equal levels. I should like to see the Government allow more finance to be made available to the N.F.F.C. as and when the present squeeze is lifted, and I further suggest that all the various Government Departments which deal with film business, such as those who say whether or not a film should qualify for British quota, and those who pay out the subsidy 1137 when a British film is actually earning money at the box office, and the N.F.F.C., should all be centralised under one roof. It might be a good idea to form a group of people, possibly under somebody like Mr. John Terry, the present Managing Director of the N.F.F.C. and including representatives of both Houses. We have many noble Lords in this House who have an intimate knowledge of the business, and I think that probably in that respect we are better placed than is the other place. I should like to see all these points brought together, so that they might be dealt with by a particular group of people. Certainly we should do everything in our power to revitalise the British film industry which has earned the respect of every nation in the world.
My Lords, I should like to touch, very briefly, on the question of the Eady money, because this seems to be a very important point. What we need, I think, is for a balance to be drawn between the Americans and ourselves. We do not wish to frighten the Americans out of this country. Frankly, if we did that our industry would close to-morrow; we cannot support our own industry. At the same time, with 80 per cent. of the Eady money being paid directly to America, it seems that the balance is wrong and should be shifted slightly, or at least appreciably, in favour of British film production.
I should like to mention the problems of the supporting feature. All-British productions which formerly cost (I am now talking of three or four years ago) about £18,000 or £19,000, and which would now presumably cost, on current prices, somewhere between £25,000 and £27,000, are still definitely required, because in a recent Gallup Poll of cinema-goers, 80 per cent. of the people asked were in favour of second-feature films. It may be said that that is just because they feel they get more value for money at the box office, but it is definitely required in this country. It seems to me that both the number of people making this kind of film and the proportion of the Eady money going to them are not sufficient. This point also should be looked into by the Government.
Finally, I should like to know—although I understand that this question has been strenuously taken up by various 1138 production associations—why the film industry does not qualify for rebate against S.E.T. Surely one of the better overseas money-earners for this country are the films produced here, and it would seem to me that, pro rata, films earn more dollars, marks, francs, liras, and so on, than many exports which are allowed a rebate. If this were allowed, it would, of course, decrease the likelihood of rising costs in the film industry. I do not wish to take up any more of your Lordships' time, because the noble Lord, Lord Rhodes, both on February 2 and twice already this evening, has assured us, in the most blunt and forthright terms, that we are going to get what we want, which is a general consideration at the highest possible level of this whole matter. I, of course, should be delighted to support this Bill on the clear understanding that that will be done, and before very long.
§ 7.56 p.m.
§ LORD RHODES
My Lords, when the noble Lord, Lord Moynihan, said that I was going to see that noble Lords got what they wanted, I thought, I had said something I should not have said. But the noble Lord speedily qualified that and said that what I had promised was a thorough-going investigation into what assistance is most appropriate. The noble Earl, Lord Bessborough, whose comments we value on matters of this sort, because of his intimate knowledge of the entertainment industry and the work he has done to assist the Arts, mentioned, among the very helpful points he made, the question of S.E.T.; and so did the noble Lord, Lord Moynihan. The House will remember that the Government accepted the fact that there was a strong case for classifying film laboratories as manufacturing establishments when they made the concessions they did. But the Government did not feel that they could go any further than that. After all, this is an entertainment industry, and to go too far in that direction would be to discriminate.
I do not want to enlarge on what I have already said about the Monopolies Report, because consideration is at the moment being given to the elements in the Monopolies Report by the parties which the President of the Board of Trade has gathered together; and if there is to be 1139 another debate later on. perhaps the matter can be discussed then.
The noble Lord, Lord Moynihan, mentioned the National Film Finance Corporation. One of the main purposes of this Government review of film policy and legislation is to consider the future of the Corporation. We recognise that the original resources of the Corporation have been greatly diminished as a result of losses, amounting to£4½ million, which it has incurred, and that during the present period of financial stringency the Corporation is unable to increase the level of its loans. We recognise that, and we have ensured that the Corporation's overdraft is not cut below its existing level. We have, moreover, re-advanced to it, money repaid in respect of special preference dividends from British Lion.
The Government are confident that, as a result of the measures taken, there will be a steady improvement in the general situation. Meanwhile it would be unreasonable to expect that the film industry should be completely insulated from the effects of the credit squeeze as I am perfectly certain the noble Lord would agree. This Bill prolongs the authorisation given to the Corporation by earlier legislation to borrow up to £2 million from private sources. It is clearly desirable, as I am sure the noble Lord will agree, to arrange things so that the Corporation can resume its planned operations as soon as the general conditions are more favourable.
The noble Lord also mentioned the question of what is known as "Eady money" and the levy. There have been scores and scores of suggestions about how better to spend this money. The noble Lord has given us examples of other countries on the Continent—France, Spain and Sweden. It has been suggested that prizes should be given. The noble Lord himself, in a debate earlier this year, suggested that Eady money derived from films which have been guaranteed by an American company should be set aside for a British company. During the Second Reading of this Bill in another place, it was suggested that there should be differentiation and diversification of funds into British-financed films. And so it goes on, in and out of Parliament these ideas come up. And they are noticed.
1140 The National Film Finance Corporation, in its latest report, suggested that some limit should be placed on the amount which any individual film should be allowed to draw from the levy. I think that the noble Lord made that point. Their Report goes on to say:The levy has recently been running at approximately 50 per cent. of distributors' gross receipts from the showing of eligible British films in the United Kingdom.Authors of The Competitive Cinema made various interesting proposals. But, although the voices of critics of the existing arrangements are frequently heard, there is substantial support for leaving them as they are, too. It is argued that a ceiling on levy earnings would tend to subsidise the less successful film at the expense of the successful film, which is usually expensive to produce and requires large earnings to meet its costs. The Federation of British Film Makers have recently expressed the view that no limit should be placed on any individual film levy earnings.
The argument comes down to this. The Government intend to carry out a thorough reappraisal of the levy scheme during their review of film legislation. All the ideas for changing existing arrangements will be examined. There is no question that the levy has made a major contribution towards Britain's achieving its present position as a major film producer in the world. I was interested in what the noble Lord said about American dominance. On this, all I want to say, briefly, is that American film interests were dominant in production and distribution because Hollywood was the undisputed world centre of film production. We limited the effects of American dominance because our legislation for many years has required a certain proportion of British films to be shown and has restricted such practices as blind and advance booking of films.
This danger of dominance has perhaps diminished, though as a result of its size the American industry is bound to remain a formidable competitor. The America:, producer enjoys a home market about seven times the size of ours, I would say, and is able to recover the whole, or a high proportion, of the costs of making films in his home market. These protective provisions may therefore still be necessary, but we need American capital 1141 in this country for the production of films. The amount of work that has been provided for actors, producers and those associated with the industry has been enormous. I can assure the noble Lord that this question is very much in our minds and it will be considered in the review.
What we want more than anything else is to interest people in British films so that British money comes into the industry—and not all Government money, either. It really is about time that we took steps to see that there is a viable industry in this country without an over-plus of Government assistance. I could continue speaking at some length on this subject because I have become interested in it, but I think that I have fairly well answered the points that have been raised. I hope now that the House will consent to give this very innocent Bill a Second Reading.
THE EARL OF BESSBOROUGH
My Lords, before the noble Lord sits down, does he really think that the present situation with regard to selective employment tax in this industry is just? After all, films are manufactured. If it comes to that, not all films can necessarily be described as entertainment. The noble Lord said that they were entertainment and must be subject wholly to this tax. I am not an expert on these matters, but I imagine that the toy manufacturers who make toys entirely for the purpose of entertainment are not charged S.E.T. Is it just that an industry which is making this tremendous contribution to our exports should be treated in this way.
§ LORD RHODES
My Lords, I do not think that this is the time to embark on a debate on the selective employment tax. I think I had better leave it as it is, in the hope that a Second Reading will be given to this very restricted measure which continues the benefits we already have for another three years.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.