CINEMATOGRAPH FILMS (COLLECTION OF LEVY) (AMENDMENT No. 5) REGULATIONS 1967 (Hansard, 6 June 1967)

§ LORD WALSTON

My Lords, I beg to move that the Cinematograph Films (Collection of Levy) (Amendment No. 5) Regulations 1967, a draft of which was laid before the House on May 5, be approved. It may be for your Lordships' convenience if at the same time I speak to the Cinematograph Films (Collection 274 of Levy) (Amendment No. 2) Regulations, a draft of which was also laid before the House on May 5.

Your Lordships may recall that the Films Act 1966 prolonged until 1970 the legislation relating to the support which is given to the British film industry. Section 3 of that Act extends for three additional periods of 52 weeks—in other words, until October, 1970—the requirement of the Cinematograph Films Act 1957 that a levy be imposed on exhibitors for distribution to makers of British films. The present Regulations are due to expire in October, and the effect of the Regulations before the House will be to make the present Regulations, subject to two changes affecting collection of levy which I will come to in a moment, coterminous with the governing legislation.

The levy is collected by Her Majesty's Customs and Excise and distributed by the British Film Fund Agency in accordance with Regulations made by the Board of Trade. Various proposals have from time to time been made for changes in the distribution of the levy, and these will all be examined during the review of films legislation now being undertaken. I think your Lordships will agree that to make drastic changes at this stage would be wrong, as it would in effect be prejudging the outcome of the review. Therefore, the effect of the Distribution of Levy (Amendment No. 2) Regulations will be solely to prolong for another three years, exactly as they are, the existing arrangements for distributing the levy. This means that the British Film Fund Agency will continue to distribute the levy in proportion to the earnings of eligible British films, exactly as has been done in the past.

Similarly, the Collection of Levy (Amendment No. 5) Regulations also prolong the existing arrangements for three years, but in this case two small changes are proposed. The first is that the exemption limit—that is to say, the amount which an exhibitor may take in any one week without incurring liability to pay levy—would be raised from £350 to £400. The second proposal would give additional relief to exhibitors whose takings are marginal above the exemption limit: in other words, to introduce a form of sliding scale. At present, an exhibitor who takes slightly more than £350 pays as levy the whole of the excess 275 of his takings over that amount up to the point at which the excess equals levy at the standard rate, above which he pays the standard rate. Under the new regulations exhibitors would pay 25 per cent. of the excess over the new exemption limit of £400 until the levy at that rate reached the standard rate. The reason for these changes is that it has been shown that the levy is an appreciable burden on some exhibitors and is likely to contribute in some way to the closure of cinemas. Our licensing records show that there were over 100 cinema closures last year.

I think the proposed changes will give a considerable measure of relief to exhibitors, and particularly to the small exhibitors. Especially important is the removal of the disincentive to effort and initiative which is inherent in the present arrangements, in that exhibitors pay the whole of their takings between £350 and about £380 as a levy. In future they will pay only 25 per cent. of the excess over £400 until takings of about £600 have been reached. The reduction in levy yield as proposed has been estimated at about £300,000, or somewhere in the neighbourhood of 6½ per cent. of last year's yield.

I am glad to say that British studios at the present time are very busy and I do not believe that this small reduction in yield of the levy will affect film production in any way adversely. On the other hand, I do believe that the reliefs proposed may enable some cinemas, which would otherwise have closed, to remain open. Of course, it is in the producers' interest, as well as in that of the exhibitors, that there should be as many cinemas as possible available to the public. I may say that the Cinematograph Films Council were consulted and recommended these proposed changes. I believe and hope that noble Lords will agree that these proposed Regulations will provide a satisfactory basis for the collection of the levy in the present circumstances, and I commend them to the House. I beg to move.