THE FILM INDUSTRY

HL Deb 02 February 1966 vol 272 cc368-96

3.43 p.m.

LORD WILLIS rose to call attention to the problems of the British film industry; and to move for Papers. The noble Lord said: My Lords, I beg to move the Motion standing in my name. In doing so, according to our usual custom, I should like to declare my interest. I am President of the Writers' Guild of Great Britain, which organises most of the screen-writers of this country in a professional association. I am also a director of two small independent film-producing companies which, if they are not exactly dead, are rapidly dying from malnutrition. We have progressed to this debate through dogs, lavatory basins, and gas. I do not know whether your Lordships would consider this to be a retrogression or progress. However, I think that before I go on to make what may be some critical remarks about the position in the film industry, I should like to pay tribute, from a long experience as a filmgoer, to the great entertainment that has been provided by films over the years. There can be few people in this House or outside who have not found some relaxation, stimulation and benefit from film-going and from the showing of films. I think this was brought home to me rather specially last night when I read of the death of Buster Keaton, that fabulous comedian who entertained so many of us and our fathers in the past. I remember seeing recently his marvellous film, The General, at the National Film Theatre, a film which I still regard as a classic among screen farces. On a happier note, I think perhaps one might also point to the fact that Charlie Chaplin, a man who probably has gained more honour as a British film maker and film star, is to start a film in this country. I think I can say that we have all derived tremendous relaxation and stimulation from film makers such as these.

I must say that my own particular favourites have always been Western films, and I am rather glad to see that the Western has turned up in what I think may be called the Eastern. Instead of the lone cowboy, you have the lone secret agent. Instead of a rapid gun at his hip he has a cigarette lighter that carries a flame thrower. But all the ingredients are exactly the same—the goodies versus the baddies. Long may they flourish and reign!

Any discussion of the film industry immediately draws one into a great deal of complication and into complex situations. It is in fact an enormously complicated industry, largely due to the high costs involved in film production and various other factors. I have seen tough business tycoons turn milk-white with fear when discussing the economics of the film industry; it does not seem to follow any of the usual rules of business. And your Lordships, I think, will be better able to judge the serious complications involved when I tell you, quite seriously, that the noble Lord, Lord Conesford, who is widely respected among us all for his clarity of thought, once confessed to me that he was baffled by the film industry. I think your Lordships will agree that that is a measure of the difficulties involved.

The difficulty for the outsider arises partly from the image which the film industry has created for itself in the past. It does not recognise the existence of clear, simple and direct adjectives. Everything it says and does is accompanied by a drum-roll of superlatives. You cannot have a good film; It has to be magnificent, or colossal, or even super-colossal. Generally you cannot have a simple story you can only have an epic of world-shaking proportions. You cannot simply have a film star who happens to be a good actress; she has to be mean, moody and magnificent, the most beautiful, or the most desirable, woman in the world. It is no wonder that the film industry, having run out of adjectives, has had to create a whole new vocabulary of its own. I remember a classic in Variety, that Bible of American show business, some years ago, which ran in this way: Stix nix hix pix which, translated, meant that the provinces say "No" to films that have been made specially for their benefit.

Hollywood, which, after all, is really no more than a rather dull suburb of the sprawling industrial city of Los Angeles, is presented to us as a fairyland city, the glamour capital of the world. We read of millions of dollars being spent on a single film, of stars who collect a million dollars and more for a single role. All this apparent extravagance, in my view, is relatively harmless and adds a great deal to the gaiety of nations. It is a form of showmanship which is perhaps necessary, and the public always appreciate a good circus. But, in fact, to some extent the film industry is hoist with its own petard. Having established an image of wealth and glamour, it is hard to make the man in the street believe that film producers can ever be poor, that a film can fail to make money, or that the film industry may have any problems.

There is another built-in difficulty which I think is even more important. I have referred in this Motion to the problems of the film industry. This is really an inadequate description, because film making is an art as well. In the film industry you have a unique combination of commerce and creative talent. In the present circumstances, one just cannot do without the other. Film making is such an expensive operation that the artist, the writer and the director need the resources of big business; and business in its turn cannot fill its studios or its cinemas without the work of the creative artist. This marriage is often an uneasy one, and I am quite sure that both parties would sometimes prefer to arrange a dissolution or a divorce.

In some respects the film business is rather like that prehistoric animal the dinosaur, which apparently had two brains, one in its head and one in its rear. I will not endeavour to say which is which in the arrangement in the film industry. I understand that in regard to the dinosaur Nature made this ingenious arrangement because the beast was so enormous. It would have taken too long for one brain to send a message through the nervous system. I have often wondered what happened if the two brains failed to agree and started pulling the animal in different directions. This situation is not unknown in the film industry. What is relevant to the discussion is that the dinosaur, after occupying a dominating position on earth for a long period, failed—in spite of its two brains—to adapt itself to changing conditions, and became extinct. The film industry occupied a dominating position in entertainment until as recently as fifteen or sixteen years ago, but in those sixteen years conditions have changed so rapidly that British film production, at least, has often been in danger of extinction.

A few figures will indicate to your Lordships the change which has occurred in the last sixteen years. In 1950 there were 4,600 cinemas operating in this country. In that same year, something like 1,400 million tickets were sold at the box office. In the last fifteen years over 2,500 cinemas—more than half—have been closed. And the number of admissions to the cinema fell by almost three-quarters from 1,400 million to 370 million. The number of British-financed films produced in our studios has fallen from around 70, 80, or even more per year, to about a dozen. Indeed, we shall be lucky if in 1966 a dozen British first-feature films—and I mean wholly British—are produced. This is a staggering retreat. A great deal of credit must go to many people in the industry for the way in which they have faced up to a situation which in other industries would have meant absolute disaster. Though there are signs that the decline has been halted, or at least checked, it has left a legacy of problems which must be faced, and faced with urgency, if the British film, the indigenous product which has brought so much honour to this country in the past, is to survive.

Some of these problems are not new in essence, only in extent. The British film industry has always been in danger from the sheer weight and power of American competition in films, largely due to the historical accident that both peoples speak approximately the same language, and due to certain economic factors, which I will not go into at length. In the end this has resulted in the Americans having a wide open market here for British films, and we have found it increasingly difficult over the years to get our films into the American cinemas, although this position has changed to some extent in the last year or so.

Successive British Governments have enacted legislation to give British film producers some degree of protection in this situation. The annual quota Act, which insists that a percentage of all films shown in British cinemas must be of British origin, is one of them. The present Prime Minister, when he was President of the Board of Trade, was largely responsible for the creation of the National Film Finance Corporation, which in its first fifteen years of existence helped to finance over half of all British quota films. Without that help from the N.F.F.C., British production would have been hard put to it to survive. And in 1957 the noble Viscount, Lord Eccles, who was then, Sir David Eccles, President of the Board of Trade, introduced the Cinematograph Films Act. This was based on a scheme drawn up originally by Sir Wilfrid Eady, which provides that a levy is paid on most tickets sold at cinemas. This levy is collected by Customs and Excise and paid into the British Film Fund Agency, a Government appointed body. It is still fondly known in the business as"Eady money". This money, less administrative costs and a special subsidy to the Children's Film Foundation, is divided up among eligible films in proportion to their success at the box office. There are certain exceptions, but this is the general rule.

These three measures, the quota, the setting up of the N.F.F.C., and the creation of the film levy, were all intended to help British film production, and were mainly directed to the task of preventing our own native film industry from being swallowed up and dominated by the immensely powerful American industry. Life has a habit of laughing at the efforts of legislators, and in this case it must be roaring its head off. For, by a strange paradox, most of our film legislation has had an effect which is the precise opposite of its intentions. Far from giving British film producers greater independence and finance, it has weakened them. And far from preventing American domination of the British film industry, American domination was never so complete and overwhelming as it is to-day. Variety, to which I have already referred, had this to say a week ago: To-day, the truly British feature film, by which is meant one wholly financed through British sources and distributed through British outlets, is something of a rarity … the American industry is moving into the British studio scene to the extent where to-day this influence dominates every aspect of British film production.

I could imagine the outcry if this were to happen in any other major British industry. I am not—and I underline this—taking an anti-American stand in this matter. I would say the same if the domination came from France or Germany or anywhere else. I welcome the Americans here; I welcome the work which they have brought to our studios, and the opportunities which they have given to our technicians. But I do not welcome them if it means the complete death of the indigenous British film industry. I should like to see international co-operation of this sort extended—and the recent Anglo-French production agreement is a welcome beginning in this direction. I believe that the cinema has to think in international terms to-day. This massive American participation has enabled many of our studios to stay in operation, and has given our directors and technicians the chance to make many big and exciting films which have helped to bring audiences back to the cinema.

But let us be under no illusions about this. The Americans are hard-headed businessmen and they do not invest millions of dollars here because they feel sorry for us, or for the sake of brotherly love. They make films here because it pays them to do so. They make films here because such films qualify as British quota, and this means that the producers can qualify for a fat slice of the British Film Production Fund. Variety referred to this fund in last week's issue. It estimated that something like 80 per cent. of the fund collected in 1966 would go to major Hollywood companies. This could amount to a total of around £4 million. There is absolutely no obligation to put this money back into production here; it is a bonus without strings. I submit that it is an extraordinary situation when four-fifths of a fund created to help British producers finds its way across the Atlantic.

It may be thought that this is unimportant, since these films enjoy a great success in the world market and therefore help to swell our exports. Alas!, this is rarely the case. Where a British company invests alongside the American, some earnings come back to Britain, but in the main the money and the profits remain in America and they earn very little in exports for us. It might be considered that these films help our image abroad. I am afraid that even this is not as much as we would hope. These films fly the Union Jack for quota purposes over here, but the moment they leave our territorial waters the British flag is hauled down and the Stars and Stripes is run up in its place. Perhaps the strangest example of this occurred with Lawrence of Arabia. One could not have a more British film than that. It had a British subject, a British script, a British star, a British director, and British technicians, but it was mainly financed by the Americans. But this film was entered some time ago for a film festival in South America, and was classified as the official American entry.

A side effect of the domination by Hollywood of our industry has been the fantastic increase in the costs of filmmaking. One producer told me that costs had risen by about 40 per cent. in the past five years, and a film which cost £150,000 to make in 1961 would now cost £250,000—in other words, an increase of £100,000. I myself had an example not so long ago of a star whom I approached to make a film, and who I knew had received about £15,000 for his appearance in a film a year earlier (which, to me, is not an unreasonable fee for something like two or three months work). His agent told me that his fee for my film would be £75,000. When I protested I was told that he had received this sum from an American company.

I have no complaint against the Americans for making their films here—I think that they are taking advantage of the loopholes we have created. Nor have I any complaint against the man who tries to do the best possible for himself in the way of fees for his services, but I think that the sums paid to some stars in the film industry to-day have reached the point of sheer insanity. No-one needs that amount of money. It has the effect of swelling the risks and the costs of a film to astronomical proportions, and puts the small producer in an impossible position. If the British film industry is to get back on its feet, then everyone, from stars to technicians, will have to co-operate in keeping costs within some frontiers of reality. If it can be done in France and Sweden, I am sure that it can be done here.

The point I want to make to the Government is this—and this is where I see the danger. At the moment the Americans are here, occupying our studios and bringing work to our technicians and to our other film-makers; but there is no guarantee whatsoever that they will stay. If, for economic or political reasons, they were to pull out of production here, the British film industry could collapse in a month. There are certain pressures. President Johnson is having discussions about the setting up of a fund, rather like the Eady Fund here—a levy which would have the effect of making it just as attractive for Americans to produce films in their own country as here. Also, certain trade unions in America are protesting at the fact that films are not being made in Hollywood. I believe that there is a very real danger in this respect, and it is no good waiting until the crisis is here. We ought to look at the situation now and see what can be done. Quite apart from this, it is clearly bad that our own native, indigenous film industry should be squeezed out of existence.

I believe that the Government could do a lot worse than take a look at the situation in Sweden. Three years ago the Swedish Government instituted a series of reforms designed to help the Swedish cinema, which was then in the doldrums. Their concern was to ensure a continuing production of films of a high standard which would contribute to Swedish culture and prestige. Therefore, they set up a Swedish Film Institute, financed by a levy on cinema takings, rather as ours is, but distributed in a different way. These funds are used to give general support to feature films, to award prizes for outstanding merit, to help worthwhile films which may lose money, to promote Swedish films abroad and to set up a film school.

The results were remarkably quick in coming. Within eighteen months production doubled. Established directors were able to return to production, and some young ones were given a chance. Several Swedish films have been successful at international festivals and have done well in export terms. If this can be done in a country with under 8 million inhabitants, it can clearly be done here, but it would mean the reorganisation of the British Film Production Fund along similar lines to the Swedish Fund. First, I think that a ceiling should be put on the amount of money which any one film can take out of the fund. Secondly, part of the fund ought to be placed in an annual account to provide pre-production loans or assistance to bona fide British producers, to enable them to purchase stories and develop scripts. And part of the money might be used, as in Sweden, to finance the new Film School, if the special committee which is now discussing this matter decides that one is necessary.

Alongside of all this, it is time that the Government considered the future of the National Film Finance Corporation. Legislation about this is due, I believe, in March of next year. The Corporation has done excellent service to British films, and I hope that the Government will decide to extend its life on a permanent basis and provide it with some of the capital it needs so badly. At present, its resources are reduced to under £1 million, and this could be swallowed up in helping two or three films. But in my view there needs to be some hard thinking about the function of the N.F.F.C. My own view is that the Corporation and the Film Production Fund might be amalgamated into one body, as we have too many bodies in the film industry. This new body might be given increased status and some experienced film-makers might be added to it. This new body could be given the funds and charged directly with the task of encouraging new, truly British production along the lines I have indicated, and its function would be comparable to that of the Academy in Sweden.

I have deliberately not touched on the question of the two major circuits, Rank and Associated-British, because, as your Lordships know, their position is currently being discussed by the Monopolies Commission. I do not want to anticipate their Report or the debate that we shall be having on this subject. But the issue is relevant to the debate that we are having to-day in one important sense. I think there is a great deal in the argument that the Rank and the Associated-British groups have provided some degree of stabilisation over the years. On the other hand, one cannot ignore the strong feeling among some independent producers, like British Lion, that their films are not getting the benefit of free competition in the industry. In fact, we seem to have here a situation which is something like the opposite of retail price maintenance, for in films it is the retailer who determines the price and not the wholesaler. There is no doubt whatever that the facts of the situation are that this has created a crisis of confidence, and producers like British Lion, who are jealous of their independence, have cut back their programme of local production very seriously. I hope that the Report of the Monopolies Commission will be here soon, so that we can thresh out these matters.

Linked with this is the whole question of whether it is possible to create a new third circuit. Personally, I do not see the advantage in taking the existing two circuits and dividing them into three, because it seems to me that this would only be spreading an audience for two circuits over three circuits. But I believe that there is scope for the new type of circuit which has been proposed by the British Film Institute—the creation of a chain of merit or art cinemas. There is no doubt of the growing interest among young people in the art of the cinema. This is shown by the existence of thousands of film societies, and by the tremendous interest shown in all kinds of Continental films. It is here that I think we could make most progress. It is mainly a job for the local authorities, plus private enterprise, on the lines of the circuit that was announced some weeks ago to be promoted by the Grade-Rive organisation who are setting up a circuit of small cinemas.

One of the first essentials, if such a scheme is to get off the ground, is that the closing of cinemas must, in the main, stop. It can be argued that there is a case for closing cinemas, but I think that we have probably taken the process about as far as we can. I think that the local authorities, encouraged by the Government, should now see the local cinema as an amenity which must be protected and fostered, in the same way as the local library or the local repertory theatre. Where a site containing an old cinema is being developed, in the main the local authority ought to insist, that the new development should contain a small modern cinema. I hope that the Government will carefully consider this, and give what encouragement and aid they can to the creation of this new circuit. The Grade-Rive organisation aim at 50 art cinemas in three years. If the Film Institute and the local authorities could develop a further 50, then independent producers in this country would have a positive third outlet of immense value.

I must hurry on, my Lords. I want to say only one word about the market for television films. In many respects, the production situation here is healthier than in any other field. Two companies—A.T.V. and, to a much lesser extent, A.B.C.—have broken through into the American and overseas markets in a really spectacular way, which gives hope, I think, for British film makers. A.T.V., for example, have three British-made series now running on the American networks—and I mean British-made in the sense that they are financed in the main by British money, and in fact by the company itself. Since the majority of the investment comes from the company itself, this means that this is a true export and is earning valuable dollars for Britain.

However, a television series is expensive to make, and the total cost of making a series can run in the direction of £1 million or £1¼ million. This is the amount invested when making a television film series. A.T.V., for example, I am told, have an investment of something like £5 million in four film series. But in 1965 they brought back something like 10½ million dollars or £3½ million as exports, as a result of their sales abroad, and I think that this points to a possible future market for British film making. There will, I am sure, be an increasing market for feature films, both for showing in cinemas here and perhaps for sale to television in America. I believe that the Government, if they are interested in exports, should encourage the fullest investigation of this market, and at the same time should discourage any sign of monopoly among the big television companies, so that the independent film producers can get a fair price for their products.

My final point to the Government is this. There are a number of measures dealing with the film industry which will come before Parliament in the next few months. Would it not be possible to incorporate all these measures into one imaginative and comprehensive Films Act, which would virtually give a new deal to the beleaguered film industry? I believe that if we could do this, if the Government brought in one comprehensive Bill of this kind incorporating all the various parts of the legislation, it would give a tremendous fillip to the British film industry.

Film makers over here only ask the opportunity to go on making films and entertaining the public—and I use the word "entertaining" in its widest sense. At the moment, they are in grave danger that these opportunities may be denied them, and we are in grave danger that British films—wholly British films—may, in fact, be a dying thing. I hope that the Government will stop this from happening, and I look forward to their statement on this subject. My Lords, I beg to move for Papers.

3.11 p.m.

LORD DRUMALBYN

My Lords, the House is indebted, as it always is, to the noble Lord, Lord Willis, speaking as he does with very great knowledge of this subject, for giving us such a clear and interesting survey of the film industry. He has stressed the background to this debate—the fact that the statutory powers of the National Film Finance Corporation will expire in March, 1967, unless renewed in some form by legislation. Secondly, there is the fact that the Monopolies Commission were invited in July, 1964, to report on the supply of films, with particular reference to the dominance of the two existing circuits—Rank and A.B.C.

It is not easy to discuss these two matters apart, and, personally, I should have preferred to study the Report of the Monopolies Commission before debating the whole of the film industry. But the noble Lord, I think, has made it clear in his remarks that what he was mainly concerned with (at least, I took it that he was mainly concerned with that) was the American dominance of the film-producing market in this country. That is a matter with which I hope the noble Lord who is going to reply will deal fully. I did not myself intend to deal with it. I recognise the difficulties inherent in this. After all, the Americans come into this country, give a great deal of employment and add to the economic welfare of this country to a considerable extent. And it has always been taken that, in so far as they do so, they are entitled to equal treatment with British industry in the various advantages that are offered, in the form of encouragement, finance and the like. I hope that the noble Lord will have something to say about this.

I realise that it is a very difficult position; all the more so, because of course film production does not really establish a stake in the country, as a firm coming in to manufacture does. As the noble Lord, Lord Willis, said, it is very much more mobile. It can go away almost at the twinkling of an eye. Therefore, it presents a different and a very difficult problem, and I hope that the noble Lord will be able to give us the Government's point of view in this connection.

So far as the Monopolies Commission and the N.F.F.C. are concerned, there is a time factor here. It now seems unlikely that the Commission will report in time to allow adequate consideration of the future of the N.F.F.C. before legislation is introduced, and that in consequence the Corporation's powers will have to be extended for a further limited period. Perhaps the noble Lord will tell us if this is so. But if this debate does nothing else, it will at least give the Government an opportunity of indicating their intentions, and of giving us some idea of when they estimate the Monopolies Commission will be able to report. They may even be able to raise the curtain a little on their thinking about the future of the industry.

I think it is worth while recalling that the present Prime Minister, when President of the Board of Trade, introduced in another place, on December 2, 1948, the measure which set up the National Film Finance Corporation. In doing so he said this: I am sure that we are all agreed in this House…that we all consider it highly desirable to have a healthy and active domestic film industry in this country, able as quickly as possible to stand on its own feet financially. It is desirable for many reasons—first, perhaps, because the film industry can do much to portray the British way of life and to show our national culture and way of life to ordinary people in other countries in all parts of the world. But it is important also, of course, because of its contribution to the solution of our balance-of-payments problem."—[OFFICIAL REPORT, Commons, Vol. 458, col. 2183.] I do not intend to examine the first of these reasons. The fact is that the British film industry has been producing entertainment, which people abroad have been willing to pay for, to show and to see. In consequence, it has been making a worthwhile contribution to what was then, and still is, our major national problem—the balance of payments. This is true, as the noble Lord has indicated, for films produced for showing on TV as well as in cinemas.

The question has always been how to finance film production, especially the so-called "end money". The Prime Minister said this quite categorically at the same time as he was introducing the Bill: I think it is necessary to affirm that the industry's financing must be on an entirely self-liquidating basis. There must be no question of a subsidy for film production…the special emergency arrangements proposed here should be temporary and…in a reasonable period when the industry has built itself up again and established confidence in itself, it should be able to float itself free of the special arrangements and revert to more normal methods of financing."—[OFFICIAL REPORT, Commons, Vol. 458, col. 2186, 2/12/48.] My Lords, the period envisaged at that time was, I think, seven years—and that was sixteen years ago.

Since then, great changes have taken place in social habits, and in particular in regard to films. The proportion of homes with television sets has increased enormously, and for this and other reasons the number of cinema attendances has declined very considerably, as the noble Lord indicated—a really astonishing decline. The number of cinema houses has been reduced by more than half. To draw people out of their homes to the cinema, a film has to be not only exceptionally good, but different in character from the kind of film shown on television. Not that film-making as such has suffered. I am told that it is very difficult indeed to obtain a booking at a film production studio, so heavy is the demand at present. But I do not propose to discuss the economics of producing films for television. All I would say is that I am sure the film industry is grateful that it no longer has to deal with a single monopoly buyer in this country in the television field.

The immediate problem, it seems to me, is what degree of continuing State assistance should be given to the film industry. The fact is that, even with the help of the Eady Levy, now the British Film Fund Levy, it has proved difficult for ordinary films to come anywhere near to breaking even. I see that Mr. John Davis stated the other day in the Financial Times that eight out of ten British films lose money, but that the two which do, do not often make a great film. If this were not so, the cinema industry could not survive. The question is, who can, and should, carry the loss? Put in another way, one might ask whether there are films of such high merit that they ought to be produced even if they are going to lose money; and if so, who is to be the judge? My Lords, this is not the test which the National Film Finance Corporation has to apply by law. It is empowered to advance money for the production of films which in its view have a reasonable prospect of being successful—which means making money; and the box office is the ultimate test. In the field of cinema entertainment it is the only test.

The National Film Finance Corporation has an accumulated deficit at the end of 1964–65 (we are approaching the end of another year now), of about £4.36 million, of which some £2 million was the net provision for losses on loans to the old British Lion. To keep up the appearance that the money is not lost, but only "gone before", the Treasury insist that the Corporation pays interest which practically equals the average loss of £161,500 over the years. One of the main reasons for the losses is that the Corporation has been putting up end money on films which were too speculative to attract other finance, what it calls, in its 1965 Report," lending end money for the less promising films which others are reluctant to finance". If the Corporation had not done this, there might not have been enough British films to fill the quota; that is to say, British films which cinemas are compelled by regulation to show.

The National Film Finance Corporation deserves full credit for seeking new ways of fulfilling its dual obligation to help the industry and to make ends meet. Perhaps the noble Lord will be able to tell us what has happened about the scheme by which the Corporation would put up the whole of the finance for films, in conjunction with other film producers—the so-called pari-passu arrangement, as contrasted with the end-money arrangement.

Under another pilot scheme the Corporation has gone in with Rank, each putting up an equal amount of finance, with the Corporation choosing the films to be financed and Rank distributing them. This idea has been attacked by some since they regard it as "consorting with the devil." But the main criticism of the Rank-A.B.P.C. domination is that the chance of getting a film produced depends on the whim, so it is said, of these two Corporations. The same people can hardly complain if, under this arrangement between Rank and the N.F.F.C., the decision is left entirely with the Corporation. This would seem to be an attempt on the part of Rank to meet this criticism. The test, surely, is whether this is going to help the industry. What is perhaps more open to criticism is that the Corporation seems in this scheme to be changing its rôle and to be much more closely involved in production than it has been since its early days. I wonder whether the noble Lord can tell us how the Corporation has been equipping itself to fulfil this rather changed rôle which I understood the noble Lord, Lord Willis, favoured.

In the 1964 Report, the Corporation said: The real need is for a comprehensive study on a continuing basis. The Monopolies Commission Report, of course, valuable as we hope that it will be, will not provide the continuing basis. I wonder whether the noble Lord can tell us precisely what the Corporation had in mind by this proposal. There are, of course, many questions to be answered. What is the future of pay-T.V., for example? This question seems to me very much bound up with the growing problem of financing the British Broadcasting Corporation. I wonder whether the noble Lord will touch on this point. Can we afford to wait for the result of the pay-T.V. experiment, especially in view of the fact that the experiment itself is unlikely to shed much light on the problems to be solved?

Secondly—another question: what scope is there for the merit cinema? The noble Lord, Lord Willis, mentioned that the British Film Institute has been proposing to set up a chain of merit cinemas, and I understand that Mr. Leslie Grade has also had this in mind from the private enterprise point of view. They are cinemas where films of cultural value may be shown and, it is presumed, where they may actually make money. Again, with colour television not very far off, will the cinema have lost one more of its decisive advantages, or will the public appetite for the cinema be whetted by these developments? Perhaps this is the kind of problem that the Corporation envisaged should be examined. Above all—and the noble Lord did touch on this: what is being done to make the production of films less costly and more efficient? Why should there not be a "little Neddy" for film production? This is a field in which restrictive practices and other abuses flourish perhaps as much as in any other field in the whole economy. Is there any reason why any more public money should go into film production until the industry puts its own house in order? And the first step towards that may well be to set up this form of industrial "Neddy".

My Lords, these are some of the questions to which, I suggest, the noble Lord should try to give some kind of answer, or at least indicate the Government thinking about them. I cannot say that I envy him the task. As the noble Lord, Lord Willis, said, this is a very complicated industry. He went on to say that it is an industry of superlatives. But with the impending lapse of the Corporation's lending powers it inevitably falls to the Government of the day to find the answer. Had we been in power, we should have had to do so. At least they might use the tool of the "little Neddy" which we created. I have no intention of making a Party political speech. I say this merely to discourage the noble Lord from taking a Party line. After all, it is not often we can quote the Prime Minister with approval as I have done to-day, from this side of the Chamber.

My Lords, I would conclude by saying that I believe that there is a continuing future for cinema entertainment, provided that there is the will for survival in all concerned in the industry. But I believe it should be on the basis of an independent, self-sufficient industry capable of carrying its own losses because of its own strength and efficiency. This does not necessarily mean that there is no place for the National Film Finance Corporation: it does mean that the Corporation should be regarded as a source of finance and not of subsidy.

3.28 p.m.

LORD MOYNIHAN

My Lords, I ask for the indulgence of the House as this is the first occasion on which I have had the privilege of addessing your Lordships. I earn my livelihood in this industry, and I should like to make one or two small suggestions. As I am engaged in this industry, I should perhaps declare an interest, but the points that I wish to make do not affect me personally.

I wish to propose that the present subsidy for the British film industry should be examined and, if necessary, supplemented or reallocated to give greater support to the industry as a whole. The noble Lord, Lord Willis, has touched on the question of the "Eady money". The Eady system was created to help British independent producers. It was an excellent idea; but, unfortunately, as the noble Lord has said, the idea has been thwarted. The money is not going to the British independent producers: the money is going to the Americans.

The noble Lord referred to an article which appeared this week on the front page of the "Bible" of our industry, Variety, which is an American publication, and I should like to quote from the leading paragraph of that article. It says: With the statutory Lady Levy running just fractionally below its ceiling target of 14,000,000 dollars a year, and the current payout for the last two months (November and December) hitting a new all-time high of 50 per cent. of distributors' gross, unofficial sources estimate that upwards of 80 per cent. of the fund coin will be paid out in the current financial year to American major companies". Let me give some examples of this. Your Lordships may perhaps feel slightly proud of the new craze which is sweeping the world—James Bond. One might feel that James Bond is an Englishman; that these films are English films. One would, on the face of it, be right in this assumption. Unfortunately, James Bond is an American financially. Last year, 1½million dollars was paid out in "Eady money" to the producers of Goldfinger—Americans. Also last year, 1 million dollars of "Lady money" was paid to the producers of Tom Jones—a truly typical English production. The producers were Americans. Last year, 1 million dollars of "Eady money" was paid to the producers of that excellent English film, The Guns of Navarone. The producers were Americans. This year, a predicted all-time record of 2,100,000 dollars of British "Eady money" is going to be paid on Thunder-ball. This also is going to the Americans.

There must be a ceiling to the amount of "Eady money" payable to a successful production. One does not want to impose a ceiling on success, but, at the same time, this is a system which was initiated to help the small producers. A film such as Thunderball, which is estimated to make a gross profit of 4,200,000 dollars, surely does not need the "Eady money".

There is no sign of this situation stopping. In the British studios to-day the following films are being made. At Pinewood, Farenheit 451 and Countess from Hong Kong. Both are Universal films; both are American. There is also one film, Kaleidoscope, in the same studio which is a Warner Brothers, American, film. At Shepperton to-day two films are being shot, Georgey Girl and Casino Royal. Both are Columbia films, and both of them are American. At Metro-British there are two M.G.M. films being shot, Eye of the Devil and 2001. Both of them are American. At Twickenham, Paramount have in production The Deadly Bees. This also is American. Meanwhile, even British Lion—and I am not standing here to defend the larger interests of the British film industry, but the smaller ones—sometimes have to wait two years to get one of their films into British cinemas; and, of course (and this is not so applicable to British Lion as to the smaller producers), there is no doubt that interest on monies borrowed from banks is building up considerably during that waiting period.

The British film industry has been through several crises. In fact, three studios have been closed down during the past three years, and at one time there was talk of Shepperton Studios being sold. But then the Government intervened, it was agreed that the land could not be used for any further type of development, and it was therefore saved. It is all very well for the Government to want to support British labour by subsidies from British taxes, but, whereas British-made productions, such as Private's Progress and Doctor in the House, showed a profit from British distribution only, the majority of British films reap a bad return unless they can also derive revenue from the Continent of Europe and, in particular, from America and the Western Hemisphere.

When Britain did not enter the Common Market, British purchasers were faced with the impossible task of trying to negotiate our productions with European countries when, to qualify for British quota, they had to insist on 80 per cent. of the labour used being British. Other countries, such as Italy, France, Germany and Spain, would get together and work out reasonable terms whereby one would provide actors, the other production facilities, and so on, so that they could co-finance and co-produce films. Not only did this help them finance films, but the Governments in question were very co-operative regarding quota, so that British producers trying to get release in, say, Spain were told that they could hardly expect much cooperation if they were not prepared to share in a more equitable fashion. Obviously, Her Majesty's Government have been made aware of these problems, as a formal agreement was recently arrived at on co-production between England and France. I hope that similar arrangements with other European countries will be forthcoming in the near future. There is no doubt that, speaking generally, British film producers need a Government subsidy to keep the industry going. To whom the subsidy should be applicable, and on what basis, represents quite a problem—and this, I feel, is the chief problem facing us.

It is possible that the small-budget picture may be pushed right out of the market. This might appear to be a good thing so far as some of the run-of-the-mill British second features are concerned, but I propose that a survey be carried out to investigate the possibility of Government subsidy money being made available for the purposes of sponsoring young, up-and-coming writers, directors, artists and producers whom private finance cannot be expected to sponsor on a very large scale. Thus, basically, an appeal should be made rather on the same lines as the "Save the Repertory" movement which took place in the theatre—because it is from the small theatres that the stars of tomorrow emerge. It is also practically certain that if the sponsoring of small-budget pictures could be handled in the right way, a group of these films—and the usual number is 13—would be an automatic sale to America for television, and so bring in outside revenue. The noble Lord has not, I feel, quite appreciated the fact that television is not a separate industry. When one talks of the film industry one includes all makers of films. A large percentage of programmes on television are films, and television provides a very large source of income to this industry.

In the early days, British Lion, with the help of the Government, made such films as the St. Trinian's series and Brothers in Law. Everything has changed now: the industry is now very international. It is pretty difficult for a young up-and-coming producer in this country to get a film off the ground unless he resorts to one of two things. The first is co-production with the Continent—which is, as I have just explained, apart from the recent agreement with France, practically impossible. The second is that the film should be American-backed, in which case it would cease, in essence, to be British.

I should like to draw attention in detail to something which is going on at the moment. The simplest way of raising money to make a film is to get a distribution guarantee from an American distributor with world-wide connections. This distribution guarantee is discountable at a bank. If a British producer does this and accepts the American distribution guarantee, the Americans are now forcing him to sign away his "Eady money." My Lords, this is obviously totally incorrect. The "Eady money" was produced in order to support the British and before the British can get a distribution guarantee they have to sign it away to the Americans. Could not the Eady money derived from a film which is guaranteed distribution by an American company be set aside exclusively for the British company? How this is going to be done is very difficult to decide and must be discussed; but surely this is an aim that we must have in mind.

The youth of the industry must be fostered. Let me turn now for a moment to the theatre. The repertory theatre in England has survived under Government grants, the Arts Council and so on. This is excellent. The reason why this has been done is not, as perhaps one might feel, to foist the live theatre on to people in the Provinces whether they want it or not, for quite often this fails; and they prove they do not want it by not turning up. As the noble Lord said, the ultimate decision whether a film or a play is a success must be in the box office. The reason why the Government have continued to uphold the repertory theatre is because the repertory theatre is the training ground from which the great actors and producers will come.

And this is equally applicable to the film industry. If it becomes impossible for young producers to produce films, who are going to be the producers of to-morrow? I wish to state that I am in no way connected with the examples I am about to give. Mr. Sydney Furie, who is a producer in this country responsible for the great financial success, The Ipcress File, started in this business by producing a small documentary called During One Night. Who is to say, if he had not made this documentary, that he would ever have been able to make The Ipecress File? Another example is that of Mr. John Schlesinger, who gained recognition in this business with a magnificent short documentary entitled Terminus. As your Lordships know John Schlesinger is now the darling of the film industry on both sides of the Atlantic. Recently an Irish film company proposed to me that "I should align 13 countries to make 13 documentary travelogues. I was appointed recently as an adviser to the new Government of Ceylon on the development of the film industry and I was shortly able to get in writing from 13 different Governments their acceptance of this proposal. Having done so, I was informed that there is positively no market for documentaries in this country. America has the lead in this industry in the world, and we should do well to follow their example. I would draw your Lordships' attention to the productions David and Lisa and Marty. Both these productions were, in fact. set up to encourage young people in the industry, and both were remarkably successful financially.

We must do it here as well. There are Englishmen who know how to sell such products in the United States. What is difficult to obtain is pre-production costs. It is to this that the Eady money should, in my opinion, be diverted. There is this very week a young producer who can be seen walking up and down Charing Cross Road with, under his arm, a copy of a script which belongs to him and which is entitled Up the Junction. This script is widely sought after by no fewer than eight different American producers. But this young Englishman has had the determination to refuse very large sums of money for the rights. He is trying to launch it himself. This is the type of man who, in my opinion, is worthy of the financial support of the Government. May I close by saying that it is the small people in this industry who will produce the big film makers of to-morrow. It is not the Rank but the rank and file of the industry which needs this help.

3.45 p.m.

LORD BIRKETT

My Lords, it is my privilege and pleasure to be the first to congratulate the noble Lord, Lord Moynihan, on his admirably clear and forthright maiden speech—not only as the son of a distinguished father but (and this is a great personal pleasure to me) as a working film maker whose presence within your Lordships' House is to be warmly welcomed. I am sure that your Lordships, with me, will look forward to hearing his voice more often in this House. I would also congratulate the noble Lord, Lord Willis, on his admirably clear and forthright exposition of the state of the film industry at the moment.

May I, in view of the two speeches that followed his, try to make some sort of explanation, which at this moment seems to be rather called for, about the question of finance and production? A great deal has been made of the dominance of American finance and American production within the film industry. This is undoubtedly true; but I think a very precise distinction must be made between production and finance. The noble Lord, Lord Willis, instanced the film Lawrence of Arabia. I agree it is alarming that it should be entered in a film festival as an American film. It was made, in terms of film making, directed, cast and crewed almost entirely from Great Britain; and the production of this film may therefore legitimately be said to be British. However, its finance, and therefore a very great measure of its profits, is American.

This is an important distinction, because those concerned with making films, even including the producer himself, as opposed to the working director on the floor supervising its shooting, are paid upon the budget of that film. Whatever currency it comes in, they receive a salary. The profits of a film therefore largely go to those who provide the finance; and included among those profits, as has already been pointed out today, is a share of the "Eady money". Whether a film is entitled to receive "Eady money" in the first place depends on the percentage of money which in the course of the making of the film is paid to British personnel. It depends, in fact, upon what percentage of labour costs may legitimately may be called British. That percentage may be high. There are various and rather complicated formulae for working this out; but between 75 per cent. and 80 per cent. of all costs of a film must go to British personnel and British companies for that film to be eligible for quota and eligible for"Eady money". As has already been pointed out, in the majority of cases in British film production the money is provided from American sources and is spent largely upon British institutions and British individuals, and therefore becomes eligible for "Eady money".

I am glad that the noble Lord, Lord Willis, welcomed American finance in this country as well as being alarmed by it; because I rather tend to share this slightly split view of the industry. I am myself a working film-maker and, by way of declaring an interest and almost by way of making a confession to the noble Lord, Lord Willis, I can say that I have in my time taken dollars to do it. And I have done it with little compunction, because it seems to me that, however much we may be alarmed at the prospect of our principal source of finance, American dollars, disappearing at the whim of those who at the moment put it up, and however much we are alarmed at the influence which American film makers may have indirectly upon our own films, until there is a solid and competitive alternative in British finance the film- makers in Great Britain would view with the greatest alarm anything which would deter the Americans from continuing to offer the finance they offer at the moment.

It is for this reason that I am glad the noble Lord, Lord Willis, brought up the question of the National Film Finance Corporation. I confess that I am slightly alarmed to think that its future must wait upon the report of the Monopolies Commission. Like previous speakers, I am inhibited from going in any detail into the major problems of the film industry, in so far as they concern themselves with great combines, Rank and A.B.C., and all the problems that those names usually bring up in your Lordships' House. Nevertheless, if we must wait till the Monopolies Commission report appears to know the future of the N.F.F.C., this will engender very little confidence in those British producers and financiers whom the noble Lord, Lord Willis, and others would like to encourage. I cannot help feeling that some statement of intent from Her Majesty's Government with regard to the future of the N.F.F.C. would be of immense value and encouragement to the film-makers of the country.

I am also glad that the noble Lord, Lord Willis, offered a welcome to the new small circuit of cinemas to be operated by the Grade-Rive organisation, because I do not think it is generally realised how great is the gulf for the film-maker between the two alternatives he is offered. If his film is shown on one of the two great circuits, Rank or A.B.C., he is thereby almost certainly assured of a large number of showings for his film. It may be successful or unsuccessful; cinemas may be full or empty. But at least the film will be exposed to audiences over a large section of the country. But there are many films (I have made some of them myself) which the two circuits, for good reason—and I do not for one moment blame them—did not want to show, because they felt that the films were of a minority interest: a sizeable minority, I hope, but not films which would appeal to a mass audience, which is how one must regard the audiences of the Rank and A.B.C. circuits.

The alternative open to a film-maker who has made a film of this sort is depressing in the extreme. There is no alternative circuit. At the moment there is no circuit even of a minute size on which he can show his film, and a fair number of showings is necessary if he is to have the slightest chance of making his money back on a film. What he can do is to negotiate with individual cinemas or a distributor can do this on his behalf. To noble Lords who live in London the situation may not seem as desperate as I am painting it, because in London there are a number of small cinemas, highly individual and enterprising cinemas, which show not only foreign films but also what are called "off-beat" English films. But there are very few others in the country, even in the large cities of the British Isles.

Therefore, the film-maker is faced with the alternatives of trying to make a film for the circuit which he knows will be acceptable or a film on which he takes a chance. He faces the distinction between film-making on a commercial scale and film-making almost on an amateur scale. As the noble Lord, Lord Moynihan, has so eloquently shown, the small-budget film, the adventurous film, the film of ideas, is squeezed out of existence, not so much, I think, by the demon power of the great moguls who will not look at it, but rather by the absence of anything else which will encourage it. It is for this reason that l give this Grade-Rive organisation such a welcome, for at least it is the beginning of a circuit on a small scale which will help to encourage filmmakers in this direction.

I had not intended to go so deeply into the problems of the industry as such, but had intended rather to take another tack. I say "industry" because, as the noble Lord, Lord Willis, so cogently pointed out, the "ballyhoo" which surrounds us gives little possibility of considering the industry as an art. As he rightly pointed out, the industry depends on the artist, as the artist depends on the industry. The film industry is in a special and peculiar state in comparison with other arts. It has almost no background, no history—by which, I mean that its history is never, or rarely, visible.

The noble Lord, Lord Willis, referred to Chaplin and Buster Keaton and to the classics of the past. I think that every art depends upon its classics to a certain extent. Certainly film-makers do, and if audiences are to become more excited and more interested in films, this must depend on the background and the classic history of the cinema. If we take music, people who want to hear the symphonies of Beethoven or the concertos of Mozart are liberally supplied. There are libraries and bookshops throughout the land. There are art galleries in every big provincial city; and nowadays there are even books which are miniature art galleries in themselves. Classics of the drama, not only of the past but also of the present, may be seen in London and also in provincial theatres all over the country.

In the cinema, what do we find? There are few cinemas which specialise in reviving old films, with one notable exception, to which I will refer in a moment. If anyone wants to see a particular old film, the chances that he may find it at a revival cinema are infinitely small, not because the films provided are the wrong kind, but because there is such an immense number of films. Old films can be seen, but their showing is entirely haphazard, and anybody who wishes to find a particular film faces an almost insuperable problem, except in one particular place—that is, the National Film Theatre in London. I am glad that the noble Lord, Lord Willis, made a point about the future of the British Film Institute, because the National Film Theatre is run by the B.F.I., and run, I think, admirably. Its programmes are immensely popular and varied. It provides numerous cycles of classic films which everybody would like to see, and also programmes of recent films, gathered together in groups, so that comparison may be made, both with the past and with current film-making.

It is on comparison that standards are based. If we want a standard of filmmaking and of film appreciation in this country, then we must look to the standards of film-makers and of audiences. We cannot have these standards without a sense of comparison. Increasing knowledge and increasing capacity to compare critically are the only ways in which standards of films can be maintained and increased. The National Film Theatre caters for this need admirably, but it is alone in this country in doing this on a permanent basis. I am not ignoring the admirable work of the film societies, which show films in great variety in numerous parts of the country. But this is essentially a private, a club, membership that does it of its own accord.

It was noticeable, I thought, in the Government's first White Paper on the Arts, and indeed in the Arts Council's recent Report for the year, that an immense emphasis should be placed on the Provinces and the part they will play in artistic development. In the world of the theatre and of music, the prospects for the Provinces are more and more exciting and encouraging every day. The British Film Institute has undertaken a survey of the Provinces to see what interest there would be in starting in the Provinces similar theatres to the National Film Theatre. The results were extremely encouraging, and there are already plans under way in some large cities for the construction of cinemas like the National Film Theatre, with a permanent repertory of films of classic or historic interest. In other places cinemas will be added to existing buildings, or film programmes tailored into an artistic programme for a week, or perhaps a month. This is something which I feel we must encourage, and in particular I would urge the Government to provide the British Film Institute—which I hope they will agree amounts almost to the film section of the Arts Council—with enough funds to encourage this regional development.

The regions themselves will do much. I am told by those who undertook this survey that the reluctance which is often spoken of by many local authorities to spend anything like the sixpenny rate which they are allowed upon entertainment in the arts was not so noticeable as they had feared. There was a lot of excitement among local authorities; and it is from local authorities and local sources that the majority of this building must come. However, a certain amount of capital will be needed to be administered by the British Film Institute for this purpose.

I have one further point about the efforts of the British Film Institute in this direction. It has now acquired and built up a large archive of old films—indeed, of films of all ages—and it is largely due to the generosity of a great many film-making companies that these prints are available. Unfortunately, the Institute has scarcely enough money to take copies of these and make them available for showing. If funds are not available for this purpose, we shall have a frozen archive, a kind of national museum whose doors are never opened; because films can be widely distributed only by making copies, and this is an expensive business.

On both those grounds I would urge the Government to treat with the most sympathetic consideration the British Film Institute's needs in this direction, because this is something which will affect both the public and the film-makers. And I hope that this will work for better standards in the film industry. It has been suggested that the sort of programme that I have been describing—that is to say, starting out of the National Film Theatre and the film societies—and the thought of the Grade-Rive circuit, can in some way provide a hope for the independent and, perhaps, the young British film-maker. Whether together in a commercial sense, or together and separately, I should not like to say, because I have no knowledge of how these things may turn out. But in both ways I believe that there is here a hope for the future, and it is one that I trust the Government will strongly encourage.