§ 7.3 p.m.
§ THE MINISTER OF STATE, BOARD OF TRADE (LORD BROWN)
My Lords, I beg to move that the Cinematograph Films (Distribution of Levy) (Amendment No. 3) Regulations 1968 be approved. With the permission of the House, I propose also to speak to the Cinematograph Films (Collection of Levy) Regulations 1968. Drafts of both these Regulations were laid before the House on June 12. I should perhaps remind noble Lords that the levy is imposed and distributed for the benefit of makers of British films under regulations made by the Board of Trade under the Cinematograph Films Acts 1957 and 1966. Her Majesty's Customs and Excise collect the levy, the proceeds of which are distributed by the British Film Fund Agency, a statutory body established under the 1957 Act.
The Cinematograph Films (Collection of Levy) Regulations 1968 consolidate and amend the existing Regulations which were made in 1960 and have already been amended five times. The opportunity has been taken to consolidate the regulations into a single instrument, and this, I am sure, will be helpful to everyone concerned with them. The new Regulations alter the existing Regulations in four respects only. Except for these four changes, they are simply a consolidation of the Regulations now in operation.
The most important of the changes is in the standard rate of levy, which has been since 1960 one-ninth of the excess of each admission charge over 11d. Regulation 3(1) prescribes that from July 14 the rate will be one-ninth of the amount by which each payment for admission exceeds 1s. 6d. In other words, the non-liable portion of each admission charge is increased by 7d. It is estimated that this increase will result in a reduction in yield in a complete levy year of between £600,000 and £700.000. We estimate that, even with this reduction, the levy yield in a full levy year will still not be far short of £4 million. Moreover, since film-hire charges or rentals are paid on box office takings net of 248 levy, the exhibitors will not retain the whole of this amount. The change means, of course, that their takings net of levy will be higher, but so, and as a consequence, will be the amounts paid in rentals. The extent to which British films will earn increased rentals will depend on the extent to which makers of British films produce box office successes.
Another relevant consideration is that, as noble Lords will know, eligible British films receive levy in proportion to their rental earnings in Great Britain. The distribution rate which is given by the British Film Fund Agency in its annual reports, tells us to what extent levy receipts have augmented rental earnings. From 1960 to 1964 the Agency paid levy at rates varying between 40 and 46 per cent. of rentals. Since then the rate has steadily increased to 49 per cent. in 1965, to 53 per cent. in 1966 and to 56 per cent. in 1967. We estimate that at the new rate of collection it is probable that the percentage will still be around 50 per cent.
In determining the yield of the levy the Board of Trade are statutorily required to pay regardto the prevailing economic circumstances of both exhibitors and makers of British films as well as the prevailing level of production of such films.At present, film production is continuing at a high level. The studios are busy. In June, 24 feature films were being made in British studios or on location. The situation in the exhibition sector is less happy. Cinemas continue to close at the rate of 100 or more a year. The decline has continued for a considerable number of years. Since 1960, when the present rate of levy was set, the number of cinemas has fallen from over 3,000 to under 1,800, and admissions from 501 million to 265 million. Although box office takings have progressively declined except for a temporary recovery in 1964 and 1965, the amount paid in levy has gone up. The Cinematograph Exhibitors' Association asked that the non-liable portion of each admission charge should be raised from 11d. to 1s. 10d. The Cinematograph Films Council considered this proposal and recommended an increase to 1s. 6d.
There are various causes of the decline in cinema admissions and takings, and of course nobody suggests that the 249 burden of the levy on exhibitors is the main reason. None the less, the levy reduces the income of the exhibitors so that they have fewer resources available for modernisation and other purposes. We believe that the right course, and the course that in the long run will be in the best interest of the producers, as well as of the exhibitors, is to reduce the burden of the levy on exhibitors generally, and accordingly we have decided to adopt the figure recommended by the Council. I hope that the reduced rate of levy will not only save some cinemas from closing but also permit more expenditure on renovation and modernisation which will make cinemas more attractive to the public and more competitive with other kinds of entertainment.
§ LORD WILLIS
My Lords, the noble Lord mentioned that 24 films were being made in British studios. Can he say how many of them are being financed by British money and how many of them by the owners of the two big circuits in this country who stand to gain most from this remission of levy?
§ LORD BROWN
My Lords, I am sorry but I should require notice to reply to that question. I can tell the noble Lord that an average of approximately 75 per cent. of the finance going into some 70 major British films each year is American. In the case of the less expensive films, the proportion of British finance is high—about 50 per cent. I cannot give the precise information for which the noble Lord has asked, but I will try to get it before the debate is over.
My Lords, the next amendment, new Regulation 3(2)(b)(ii), will afford relief to exhibitors whose takings vary widely according to the season of the year. Levy, although paid monthly, is assessed weekly. This is necessary because film rentals are calculated after deducting levy paid from box office takings, and rentals are normally calculated weekly. No levy is payable in any week when the takings do not exceed £400. Weekly assessment of levy liability thus means that exhibitors with widely varying takings —for example, those owning cinemas at seaside resorts—may pay substantial sums in levy during the summer months, even though their average weekly takings 250 throughout the year are below the exemption limit of £400.
The effect of the new Regulation will be that levy will be payable only if both takings in the relevant week and average takings from the beginning of the levy year to the end of that week exceed £400. This arrangement is easy to understand and simple to operate. In calculating the average, any weeks in which films are not shown will be disregarded. It would obviously be wrong for an exhibitor who closed his cinema when the summer season had ended to benefit to the same extent as an exhibitor who kept his cinema open. Since the new relief is related to average takings from the beginning of each levy year, it will come into operation on October 6.
The third change is a very small one, but one which will be helpful to exhibitors. Regulation 4 allows them ten days, instead of five days as at present, in which to pay the levy. Lastly, the provision under which an exhibitor's levy liability is limited to the level of levy plus entertainments duty operative in 1960 (when entertainments duty was abolished) is to be revoked. It has, I understand, never been used and is obsolete.
The new Collection of Levy Regulations are to come into operation on July 14 except for the relief for exhibitors with widely varying takings which will come into operation on October 6, which is the beginning of the next levy year.
The Cinematograph Films (Distribution of Levy) (Amendment No. 3) Regulations 1968 make a number of amendments to the existing Regulations. Paragraph (1) raises the rate at which levy is distributed to makers of eligible British newsreels from twice to two and a half times the standard rate. The makers of these films are facing serious problems—in particular, increased costs and the need to produce a greater proportion of their films in colour. Their films play an important part in presenting British news and achievements to audiences overseas as well as to those in this country. The amendment places newsreels on a par with other short films as regards the rate at which the levy is distributed.
Paragraphs (2) and (5) go together. Under the existing regulations the makers 251 of British low-cost films—that is, films with labour costs not exceeding £20,000—receive levy at two and a half times the standard rate until rentals reach the labour cost of the film or £15,000, whichever is the lower. Above these limits levy is paid at the standard rate. Production costs have risen since 1959 when the present limits were set, and paragraph (2) raises the £15,000 limit to £18,750 and paragraph (5) raises the £20,000 limit to £25,000. The increases proposed are not commensurate with the cost increases. The reason for this is that we think it important to retain a powerful stimulus to efficiency and economy. If they are to qualify for levy earnings at this higher rate, producers of low-cost films have to keep a sharp eye on costs.
Paragraph (3) replaces the existing Regulation 6(3)(b). The object of the latter was that makers of non standard eligible films—for example, makers of British 70 mm. films—should be entitled to receive levy for the same length of time as the makers of 35 mm. eligible films registered as British quota films. Regulation 6(3)(a) lays down in effect that the levy life of an eligible British quota film should be the same as its quota life under the Films Act 1960. The opportunity has been taken to redraft Regulation 6(3)(b) to bring it into line with Regulation 6(3)(a). I fear that that is rather a complicated paragraph, and perhaps I can boil it down by saying that the object of that part of the Regulation is simply to bring into effect what was intended when the last Regulations were introduced, though unhappily it was not achieved. There is really no change in intention; only a change in effect.
Paragraph (4) adds a new class of films to those which are ineligible for levy payments. Section 20(3) of the Films Act 1960 states in effect that British films containing more than 10 per cent. of photographs derived from another film will not be registered as quota films except on the recommendation of the Cinematograph Films Council. Paragraph (4) applies this restriction to eligibility for levy payments. Under the existing Regulations a short film shown on television outside the United Kingdom within twelve months of its registration is ineligible for levy. This restriction does not apply to long 252 films and it will be of some small assistance to the short film makers if it is removed. Paragraph (6) amends the definition of "television film" so that the showing of short films on television overseas within twelve months of registration will no longer disqualify them from entitlement to levy payments.
The amendments to the Distribution of Levy Regulations are to come into operation on October 6, except that the redrafted Regulation 6(3)(b) will become operative on July 14.
My Lords, the Cinematograph Films Council have been consulted. They have recommended all the changes in both the Collection of Levy Regulations and the Distribution of Levy Regulations. I believe that the proposed Regulations are in the best interests of the industry as a whole and commend them to the House.
§ Moved, That the Draft Cinematograph Films (Distribution of Levy) (Amendment No. 3) Regulations 1968, laid before the House on June 12, be approved.—(Lord Brown.)
§ 7.16 p.m.
§ LORD DRUMALBYN
My Lords, I should like to thank the noble Lord for his careful explanation of the purposes of these two Orders. I have no criticism to make of their effect and I recognise at once that it is very difficult to match the interests of the exhibitors on the one hand and the producers on the other. One has to bear in mind that the levy was raised for the purpose of stimulating production of films in this country. I thought the noble Lord, Lord Willis, intervened to point out that the majority of the finance for films made in this country—certainly main feature films—comes now from overseas, which is quite true. That is of benefit to this country inasmuch as those films are made for an international market and are, after all, British exports when they are made. So one has to bear in mind—
§ LORD WILLIS
My Lords, with respect I should like to point out that I think the noble Lord is under a misapprehension there. If a film is made here with American money the profits of that film are paid in America to the American company and do not benefit this country by one dollar, except for the employment given.
§ LORD DRUMALBYN
Yes, my Lords, except for the employment given. That is the point. It is giving employment here. Also, as most of these films have a British basis they are making known abroad the British way of life at the same time. So I think there are decided advantages, and we certainly do not want to discourage the production of films in this way.
At the same time, it is quite true to say that the exhibitors have been having a pretty hard time one way and another. As the noble Lord has said their box office takings are down and the levy payments that they have had to make have been going up. In addition to that they have had this extra tax, the selective employment tax, and other burdens to compete with. The noble Lord mentioned the amount of closures that are running at a pretty steep pace. It is only fair that the interests of the exhibitors should be recognised in this way, especially as I think it is reasonable to regard the basic level from which levy is collected—that is, the 11d. at the present time—as a moving base rather than a fixed one. I think we have kept this fixed for rather too long, because the average cost of a seat over the period has pretty nearly doubled. That being so one would have expected the lower level to have been raised more or less proportionately.
I think the Government have reached a very fair compromise in this. The fact that the levy should continue to run at about £4 million is satisfactory. The whole purpose of the levy was to raise something, and originally it was set at between £2 million and £5 million, or between £3 million and £5 million. At any rate, it was of that order. It could have been, of course, that if we had let things run as they are the levy would have gone on beyond £5 million, and it could be argued that the real value of that has changed. But, all the same, I think one has to keep this balance between exhibitors and producers, and I agree with the noble Lord in commending these Orders to the House.
§ LORD PEDDIE
My Lords, my comment is in the form of an inquiry. At present the exhibitor is called on to pay a levy in any week in which his takings exceed £400. We have been informed 254 that there will be no change in that provision, with the exception that it will be averaged over the year. I wonder whether my noble friend has any information about what is likely to be the difference in the amount of levy collected by adopting the averaging principle?
§ 7.21 p.m.
§ LORD BROWN
My Lords, perhaps I might answer that question before we proceed further. It is very difficult, as the noble Lord will understand, to make an accurate assessment of figures of this sort about the main result of the action taken to alleviate the position of these cinemas which have variable takings, but the best figure we can quote is about £30,000 per annum.
§ LORD LLOYD OF HAMPSTEAD
My Lords, I should like to thank the noble Lord for his clear exposition of these Orders. I do not quarrel with the proposition that some exhibitors in this country, especially among the smaller ones, may be in need of some relief in relation to the imposition of the levy. Nor am I going to say anything about the question whether the producer side of the industry has been adequately consulted or its interests adequately taken into account, because there are those present in your Lordships' House who are far better informed on these matters than I am.
The point I wish to refer to briefly is whether it is appropriate for the Film Fund to suffer a substantial reduction of the order of 15 per cent. without provision at the same time being made for the establishment of a National Film School, either wholly or partly out of that Fund. May I remind your Lordships of a few salient facts? As long ago as June, 1967, a Committee, of which I had the honour to be Chairman, reported to the Government their unanimous conclusion that there was a need to establish a National Film School immediately. This is not the moment to enlarge upon the merits and importance of this project from the point of view of both the film industry and the cultural and economic interests of the country generally. It is hoped that time will be found for discussion of these matters when the Motion which is now down for debate is eventually reached.
All I wish to say now is that this was the unanimous finding of a Committee of 255 17, including leading film industrialists such as Mr. John Davis and Mr. Robert Clark, the Secretary General of the Association of Cinematograph and Television Technicians, Mr. George Elvin; Mr. John Terry, the managing director of the National Film Finance Corporation, and producers and directors of the calibre of Mr. Carol Reisz and Mr. Carl Foreman. In its Report the Committee stated its view that the annual income of the school should be supported from the British Film Fund, and detailed reasons were given for this. True it is that some members of the Committee thought that only part of the income, rather than the whole, should come out of the Fund, but a substantial majority were in favour of either the whole or not less than 75 per cent. coming out of the Fund. It was also pointed out, on the basis of the Fund then being some £5 million, that even when the school was fully extended under optimum conditions the estimated annual amount would be in the region of £150,000 which represented only about 3 per cent. of the Fund.
It should also be noted that in the Report of the Cinematograph Films Council, submitted as recently as March, 1958, concerning the review of films legislation, the Council, while expressing the view that in their opinion it would be wrong for the annual cost of the school to be met entirely out of the British Film Fund, recommended that the running costs of a National Film School should be met partly from the levy. Be that as it may, here is a clear acknowledgement by an authoritative body that a substantial contribution to the running of a National Film School should come from the Fund.
In the meantime, what has been the position of the Government? Without any unequivocal public pronouncement having been made, though a number of approving noises, if I may so describe them, have been made in another place and elsewhere, indications have been given that the stumbling block is finance. Those concerned with the initiation of this project are, of course, no less mindful of the present financial climate than is the rest of the country. On the reasonable footing, therefore, that the important thing is to get the project started even 256 if this means sacrificing the optimum features proposed in the Report, there has been and it is no secret, a good deal of discussion about how the project might be launched on a more modest financial basis than that set out in the original Report. To this end practical proposals have already been advanced which would certainly reduce the annual cost of the project to less than half of the figure put forward, quite rightly I think, on the assumptions contained in the original Report.
I am not going to weary the House with details of this matter at this stage. I mention these points merely to provide a background for my present complaint, which is that the Government have now seen fit to make a proposal for the reduction of the Fund by something between £600,000 and £700,000 per annum, a sum approaching 15 per cent. of the total amount of the levy, without, apparently, taking a passing glance at the needs for a National Film School and the modest claim of such project on the Fund, or at any rate, indicating how the Government proposed to deal with the situation. What is particularly distressing to those who have concerned themselves with this problem is that a fraction of this very large sum by which the Fund is now to be reduced would suffice to get a film school launched and run for several years.
I quite understand, my Lords, that some exhibitors have been in difficulty, having regard to the general decline in attendances at cinemas, and it is right and proper that their views should be considered. At the same time, it is fair to point out that the present proposals are being made irrespective of the profitability of particular cinemas and, as has been pointed out in another place, it is possible—and indeed likely—that some of the most profitable cinemas will gain the most. Indeed, it is worth pointing out that the opinion of the Cinematograph Film Council on which this Order is based was in itself by no means unanimous, because if one looks at paragraph 12 of the 13th Annual Report of that Council, of March 31, 1968, these words are to be found:In view of these considerations"—that is the decline in attendances—some members thought"—257 I repeat, some members thought—that the burden of levy on exhibitors should be reduced.The Report goes on:Against these arguments, the view was expressed that any reduction in the amount of the levy would be inadvisable. The general opinion was that a reduction was desirable.We are not told in the Report how many formed that view or how general was "general" for that purpose, but clearly there were dissentients.
Also, I would suggest that a picture has been painted of the industry as containing two distinct elements, one of which, the producers, are all doing rather nicely thank you, while the exhibitors are universally suffering. I suggest that this is a rather tendentious view to anyone who knows anything about the real situation of the industry in this country at the present time. Moreover, it tends to encourage that separatist disposition of the exhibitors who are apt to deploy the case that their interests are really quite distinct from those of film production. The fact is that exhibitors depend on the production of good quality films in order to have an appropriate product to display in their cinemas; and without these there would be no business for them to conduct. Their interest is very much the same as that of all other spheres of the industry, which have a common interest in improving the supply and quality of suitable films for exhibition.
It is idle, therefore, to suggest that the exhibitors have little or nothing to gain from a National Film School whose purpose is to improve the quality of the supply of films produced in this country. On the contrary, they have a profound interest in such a development. I venture to suggest that they would have as much to gain as any other branch of the industry by a deflection of the modest proportion necessary for this purpose, from the massive annual sum of nearly £700,000, in order to help to achieve the institution and establishment of a National Film School in this country.
I therefore deeply deplore the fact that the Government, in making their present proposals, have done nothing to recognise the legitimate claim of the National Film School upon a portion of the British Film Fund or to place on record not just their cordial support of such a scheme which, like a vote of thanks to the staff at the annual general meeting 258 of a company, is of little practical worth in itself, but to indicate either that they recognise that, despite the proposed diminution in the overall total of the Fund, that Fund is still quite substantial enough to bear this further modest obligation or, alternatively, that they Ere prepared to finance this project from some other source.
At a time when we are all busy reading and studying the far-reaching proposals of the Fulton Report it may not be irrelevant to mention the immense disadvantage that flows from any proposal which does not fall neatly and squarely within the province of one single Department of Government. One of our difficulties in getting this, as I think, very valuable project on its feet is that it calls for the co-operation not only of the Department of Education and Science, which is its natural parent, but also of the Board of Trade and of the Treasury. I will say nothing now of the stony-hearted third member of this trinity, but I hr ye remarked on previous occasions that one of the unfortunate consequences which have flowed from the fact that the film industry is the concern of the Board of Trade is that that Department is rather apt to look upon the film industry as if it were nothing more than a commercial concern, whose products might just as well be loads of pig-iron as feature films embodied in strips of celluloid.
My Lords, of course, the film industry is a great industry and there are great commercial interests involved. But it is also something more than this. The project of a National Film School is, I think, an imaginative one, which will do much to bridge the unfortunate gap between these two conceptions, as it has succeeded in doing in most other important film-producing countries. My plea to-day therefore is simply that the Government, in the midst of their many other preoccupations, should not lose sight of this very urgent project which could do so much to help resolve some of the most intractable problems of the film industry as a whole, among which I certainly include exhibitors, and at the same time make a serious and inspiring contribution to the cultural life of this country.
§ 7.35 p.m.
§ LORD GOODMAN
My Lords, I have an interest to declare. I am the chairman of a film production company. I 259 debated with myself whether I ought to speak in this debate, and arrived at the conclusion that provided I discharged the onus of extreme moderation, and also made sure that I stated only the facts as I understand them, it would be wrong for one with specialised knowledge to be debarred from speaking just because he had an interest. Therefore, I hope that the House will forgive me for speaking.
I should like emphatically to support what the noble Lord, Lord Lloyd of Hampstead, has said. The moderation with which he said it is commendable, and even surprising, because he discharged the task of chairing. An extraordinary Committee of varying talents, representing every form of interest in the industry, and bringing it unexpectedly—for nobody believed that this conclusion would come about—to a unanimous conclusion. And the noble Lord is to be congratulated on that achievement. It must be especially galling to him to discover, after the unanimous conclusion had been reached, and as all of us in the industry believe, that a Film School is and has for a long time been a necessity to the industry, the recommendation should be put on one side, pigeon-holed and totally disregarded by the Board of Trade.
I should be interested to know to what extent the Board of Trade has consulted with the Department of Education and Science, which set up the Lloyd Committee, because it looks as if one Department was pulling one way and another Department pulling the other way. All I can say to the noble Lord is that it seems to be the case for saying: if you undertake onerous duties, make sure you are paid for them. If you undertake these on a voluntary basis, the only effect will be that in the end your efforts will turn out to be completely futile, as many people have already said in this Chamber.
That aside, I think that it is unfortunate that a Committee of this distinction, having arrived at a conclusion of this importance, should then have it completely overlooked, without a side glance at it. It looks as if the only possible source of providing this School is being eroded and encroached upon without any consideration, of, and certainly no refer- 260 ence to, the need for maintaining the Fund in relation to the provision of a Film School. I should have thought that a Film School was a much higher priority than the need for the Fund in relation to the exhibitors' cry to reduce the levy.
I should like to make a few observations on a slightly wider front. This is a difficult question, and this is a Government to which one is very hesitant to make critical remarks about the film industry, because, but for the activity of the Prime Minister in his previous role as President of the Board of Trade, I do not believe that we should have a British film industry to-day. The British film industry is largely dependent on two devices, the National Film Finance Corporation and the Eady Levy, both of which, I believe, are attributable to the Prime Minister when he was President of the Board of Trade. Even so, where criticism is necessary one has to make it. I do not share the view the Minister has put forward, that this proposed change is in the best interests of the industry; nor do I think that he has told us the situation. I am not suggesting that this is from any motive, because he could not have treated the matter with greater frankness; but, perhaps because of pressure of his duties, he cannot be expected to be aware of it.
There are in this country something like 1,900 cinemas. Of those, over 1,000 do not pay levy at all because they do not have the requirement of taking £400 a week. It is left to fewer than 900 to pay levy. The major number with which we are concerned, and those most vulnerable to the possibility of closing, will not be in the least affected or aided by a reduction of the levy. On the contrary, a reduction will be a positive disadvantage to them, because these are the cinemas which rely on the provision of good films to stay open. What we are doing is to make the Fund available for a supply of good films the less by that extent. We are doing a positive disservice to the 1,000-odd cinemas not paying the levy in ensuring that the supply of films that will keep them alive will the sooner dry up.
The second consideration is that of the 900-odd cinemas that remain, something between 600 and 700 belong to two, or at the most three, circuits. I am delighted that these circuits exist, as they are most 261 worthy organisations and render great service to the industry. To-day they are extremely prosperous, for a number of reasons. They have engaged in other activities and have T.V. licences. They are enjoying an era of considerable prosperity. One of these circuits was the subject of an immensely active take-over battle recently. Clearly, the takeover presented a considerable amount of allure to people, and no one was deterred from wishing to take over this vast circuit by the prospect of paying too much levy. If I may say so, not the slightest whisper exists in relation to these organisations that they will shut their cinemas, or ought to shut their cinemas, because of the present levy position.
You will not be assisting the exhibition side of the industry in the least in relation to these cinemas by taking £700,000 from the levy Fund and giving it back in the form of a donation to the industries concerned. I think this is an unthought-out proposal, simply because, unhappily, in the forms of government that exist, many proposals are not thought out: people do not have the time or the opportunity to think them out, or they do not have the knowledge to think them out. But certain it is that I do not believe that this proposal is in the least degree for the benefit of the film industry. The production side of the industry at the moment is precariously prosperous, and this is so, as was rightly said by the Opposition spokesman, because of films that are being made in foreign sources.
I do not think the noble Lord, Lord Willis, when he intervened, was in the least at variance with the noble Lord who spoke from the Opposition Benches. I think they both intended to say that this was a good thing; and I think, from the point of view of the British film industry, it is a very good thing. It keeps our studios occupied, it keeps our scriptwriters occupied, and it keeps our actors engaged. It contributes, as I say, to the precarious prosperity that exists.
What brings people here? I think that there are two major factors, and possibly there may be three. Strangely enough—and this, I think, will be a great comfort to many of us—I think they find the trade union conditions that prevail here in relation to the industry less onerous and less difficult than those 262 in many other parts of the world, and I think this should be said. I think that, more importantly, from a financial point of view, what brings them here is first, the attraction of the Eady levy, and secondly, that they can derive certain fiscal and taxation advantages. But, above all, it is the attraction of procuring easy money on films which they are able to make on British qucta films.
I think it is extremely imprudent, when the prosperity of the production side of the industry is so very much reliant on the provision of this levy, that it should be arbitrarily altered in this fashion, without sufficient thought and consideration being given to the possible implications. I believe the implications can be very serious for an industry which has suffered considerable vicissitudes over the years. It can change almost in a moment. The film industry has suffered enormous hardships and privations. There was a time (perhaps no one knows better than the noble Lord, Lord Willis, who has been intimately acquainted with the industry for years) when many people working in that industry had the greatest insecurity of employment, and did not know from week to week whether they would be employed and how long employment would last. We have at long last tried to better that situation and to correct it, but, as I say, it is precarious; and we have tried to correct this largely because of this ingenious device which was introduced by a Labour Government some years back. I urge the Government, even at this late hour, to consider whether there should not be fun her reflection on this, not from the point of view of advantaging the producers, not from the point of view of ensuring that some benefit comes to one side or the other, but from the point of view of ensuring that the industry as a whole does not suffer.
I venture to make these concluding remarks. I think it would be quite invidious to say that the production side of an industry is more important than its exhibition side. But the production side of an industry sounds further than its exhibition side. The films made in this country are shown not only in the 1,800 cinemas in this country, but in perhaps 180,000 cinemas thoughout the world. These films produce an image and a picture of the whole country; they are a 263 part of the nation's culture. It is, I venture to think, of high importance, if not of the highest importance, that that culture should be maintained at a high, good and worth-while level. This appears to be a modest change, introduced in most disarming terms with, if I may say so, a brief and perfunctory explanation from the Government, and it would look as though something was being done of no real consequence. I think that something is being done that may be of very real consequence that ought to be avoided, and I would urge the Government, even at this very late hour, to reconsider.
§ 7.44 p.m.
§ LORD STRABOLGI
My Lords, I should like to agree with the noble Lord, Lord Goodman, in saying that something of great consequence is being done by the Government, but to disagree with him in saying that I support these regulations. Like the noble Lord, I have an interest to declare as I have interests in the film industry on the exhibiting side, but I speak entirely for myself. When this levy was first devised by the Prime Minister, as the noble Lord, Lord Goodman, said —a fact which is often forgotten, and I think the film industry owes a tremendous debt to the Prime Minister for this—it was definitely laid down that the levy should not impose an undue burden on the exhibitors. The rate of levy has remained unchanged since 1960. During this period cinema attendances have halved and the number of cinema licences has been reduced by one-third. On the other hand, since 1960 the levy percentage of box office receipts has risen from 6 per cent. to about 8 per cent.
It is no good driving cinemas out of business by maintaining the levy at an unrealistic rate. If cinemas are forced to close down there will be no levy at all. Therefore, I would submit that it is in the best interests of the film industry that the levy should be paid in this kind of way. I think the Government had a very difficult decision to take vis-à-vis the exhibiting side and the producing side, and I think this was probably the only way which they could decide and I support these regulations for that reason.
I should like to add a few words to the urgent plea of my noble friend Lord Lloyd of Hampstead for the National Film 264 School. I agree with him that the time really has come when we must decide about this film school—this great project which was so well advocated in the Report of the Committee sitting under my noble friend's chairmanship. Indeed, if I may be personal, thirty years ago, in 1938, my late father asked the Government when a National Film School was going to be established, and I am still asking that question. I must disagree with my noble friend, however, in that I do not think this film school should be financed entirely by the levy. I accept the argument put by the noble Lord, Lord Goodman, that this is a large sum which may in the end be denied to the National Film School; but I do not think that this sum should be used for the National Film School. I consider that the school should be financed partly by the Department of Education and Science, and the remainder as to one part by the exhibitors, another part by the television industry, both I.T.V. and B.B.C., and the third part by the advertising industry.
I realise that this is perhaps not so convenient or so easy to operate as the whole finance coming from Eady levy, but I think it is much fairer. After all, as films and television come closer together, and advertising standards continue to improve, all media are going to benefit by this National Film School. But the main thing is to get it going, and I must urge the Government to make a decision on this quickly, and to tell us what they have in mind so that the matter does not drag on another thirty years and some other noble Lord in the future will be asking the same question that I am asking now.
§ 7.48 p.m.
§ LORD WILLIS
My Lords, I just want to thank the noble Lord, Lord Goodman, for making it quite clear that the purpose of my intervention earlier was not to indicate that I object to American investment in British films here. On the contrary, as he has stated, it gives a great many people a great deal of work, and in that sense perhaps I should declare a small interest, inasmuch as I have been working for an American company for the last three months. On the other hand, I very much deplore the fact that while the British film production fund 265 was set up to encourage British production (and I think the original intention was indigenous British production), the fact is that some of the big companies that could, and should, be doing more in this direction have not been doing so much. In fact, the company with which the noble Lord, Lord Goodman, is associated I think has been dragging its heels in this direction in the last three or four years, and I was pleased to read recently that they have decided to get going and make some British pictures.
I should like to say, also, that I think there is a case for some relief to exhibitors, and in that sense I would partly agree with my noble friend Lord Strabolgi. But I think the noble Lord, Lord Goodman, made a powerful case when he pointed out (and this has been overlooked) that 1,000 cinemas which do not come up to a certain level of takings do not pay any levy at all. So that the hardest pushed are not helped at all by this relief. I think some attention may, and should, have been given to adjusting the levy in some way to help the middle grade of cinemas, but the fact cannot be overlooked—and I think it is fair to them to say that they never asked for this—that the majority of this relief will in fact go to the owners of the two big circuits. It is not going to provide the great relief that we have been told about, to hard pressed independent exhibitors. In that sense, therefore, while accepting that some adjustment ought to have been made, I accept what the noble Lord, Lord Goodman, said that this is hasty, ill-thought out, ill-contrived, precisely because insufficient thought has been given to it and because there has been insufficient consultation with people in the industry.
I should also like to support the plea made by the noble Lord, Lord Lloyd, for the National Film School. It is a scandal that not by one whisper have the Government indicated their attitude to this matter. How can they possibly ask busy men to sit round and discuss what they are assured is an urgent and important problem, and then to prepare a report, when absolutely nothing is said or done by the Government? Why was there not, either in another place or here, a word of apology from the Government about the adjustment of the levy and the fact that no attention has yet been given to the 266 film school, in spite of the recommendations made by the Committee under the noble Lord, Lord Lloyd?
I agree with my noble friend Lord Strabolgi that it would be unfair to ask the cinema to bear the whole burden of the National Film School. It would help the talents of many young people, and also help two or three industries, and I think my noble friend's suggestions of how it could be financed are important. But some small proportion might have been taken from the levy, and I would ask the Government to give a firm assurance that before any further adjustment is made in the levy they will make a statement about their policy so far as the Film School is concerned.
Finally, I was much amused by the tribute paid by the noble Lore, Lord Drumalbyn, to British pictures and the fact that we export the British way of life. I was speaking to-day to an American producer who told me that two of our pictures which show the British way of life in all its glory—"Poor Cow" and "Up the Junction"—have just "died the death" in America.
§ LORD MITCHISON
My Lords, I am in a condition of disinterested ignorance about the film industry. That is no doubt appropriate in a Legislature. It is only in the Fulton Report that some doubt has been thrown upon its appropriateness in the Ministries. But I listened to what was said about a National Film School with attention and agreement. This was apparently a departmental Committee which was set up at the instance of Miss Jennie Lee. I do not know the precise form of it. The Government have a terrible habit of setting up Committees and then accepting their recommendations only if they happen to suit the Government. Not only this Government but every Government acts in this way, and it is really all wrong. If you are going to have a Committee set up and reaching conclusions, especially on a matter of this real importance, then you can either agree and accept them, as the Government have done with suspicious promptitude over the Fulton Report—and only a "working lunch" is needed; I could tell about that —or else say that the matter can be accepted in part, refused in part or refused entirely. I do not think that a complete refusal is the right 267 course with a Committee that has been set up in this way. Constant delay amounts to a consistent refusal.
I have had a Question on the Order Paper since May 8 asking about the Departmental Committees set up by the Government, and that Question still remains unanswered. I have taken steps to put down five more Questions in order to try to discover what has happened. It must be perfectly clear that if a Departmental Committee is set up and its conclusions are not in accord with the views of the appropriate Ministry, then it is forgotten. The Government must have lost count of the Departmental Committees they have set up, and no doubt they have forgotten about this one. But as one of my noble friends indicated, the position is ten times worse when two Departments are concerned, as in this case.
I still remember with great admiration the speech made at Scarborough by the Prime Minister. One of the things he was urging was a closer link between technical advances, scientific views and industry, and I should have thought that in an industry such as the film industry it was right that everything possible should be done to promote a higher standard in film making. I say this with great respect to noble Lords concerned in the industry. I am merely a filmgoer and all the best films I see are by no means British; they usually come from some other country. In my opinion we need a film school. The fact that we need one is recognised in the Report, and I am ashamed of the Government if they are unable to say that in principle they agree and that they will look into the matter. I hope that somehow or other they will get a National Film School on its legs.
I listened to what was said and I agree with it completely. I am convinced by it, and I hope the Government have not forgotten their own Departmental Committee to such an extent as to have failed to instruct or to remind my noble friend Lord Brown of the position when he moved this Order, because clearly it has a very close connection indeed with the Committee. If he is not able to tell us what the Government policy is on the matter of a National Film School, perhaps he would consider 268 not pressing the Order for the moment but come back with it a little later, with a statement as to what the Government are going to do.
I take no part in disputes between the producers, on the one hand, and the exhibitors, on the other, but I should have thought they were equally interested in producing and showing good films. I should have thought that it was to the advantage of this country, particularly at a time when there is a little more question about our standing in the world than there has ever been before—and I am talking not only about this Government but also about previous Governments—that in a matter of this kind we, who have not been slow in the Arts but who have often not been sufficiently recognised in the Arts, should take care to see that our film industry is improved by every reasonable means, among which I would certainly include a National Film School.
§ LORD LEATHERLAND
My Lords, I was rather disturbed to hear my noble friend Lord Mitchison say that he was ashamed of the Government because they had not taken any action to set up a Film School.
§ LORD MITCHISON
I did not say that, my Lords; I said I was ashamed because they had failed to consider it.
§ LORD LEATHERLAND
Very well, to consider the suggestion. What is the position of the world we face to-day? We face a situation of economic difficulty in this country. We are trying to grapple with that, on the one hand, by increasing productivity and, on the other hand, by trying to regulate wages, profit and dividents, and surely that takes precedence over such matters as setting up a film school.
We are living in a world in which we are confronted with calamities, in Vietnam, in Biafra and in other places, and again in my view the relief of suffering in such places must take precedence over the setting up of a film school. We have heard from some noble Lords who have expert knowledge of the film industry. I would like to look at this from the point of view of an ordinary person who sits in the five-and-ninepennies. My general view is that salaries in the film industry over the years have been far too 269 high. Far too much money has been wasted in paying fancy salaries to starlets and "sex kittens", or whatever you care to call them, and the industry itself should have regulated its procedures much more sensibly and satisfactorily and provided the money with which to undertake this film education out of its own resources.
The British film industry is always telling us that it is a competent industry, and surely it should have been capable, like the other industries that are setting up training schemes of one kind an-another, of taking this matter in hand itself and financing it out of its own resources, even if it needed to accumulate those resources by paying less fancy salaries to the people engaged in the industry. Day by day in the newspapers we see that many of those people have either spent all the huge salaries they have earned and gore bankrupt, or gone bankrupt because they have failed to pay income tax and surtax on their huge earnings, or spend half the year abroad in foreign climes to dodge British taxation to a large extent altogether. I do not think the film industry deserves to be featherbedded, although I do believe it has great potentialities, if competently managed, not only for providing decent entertainment for our people here but also helping in a very big way in the export market.
§ 8.2 p.m.
§ Loan BROWN
My Lords, I am grateful to the noble Lord, Lord Drumalbyn and the noble Lord, Lord Strabolgi for welcoming this Bill. It is one of the commentaries one can make on the liberal attitude of this House that most of the criticism seems to have come from my noble friends. The noble Lord, Lord Willis, asked for certain figures with regard to current films in progress. I am sorry I cannot give them but I will see that he is provided with them in writing.
May I come straight away to the question of the Film School. The House has taken the opportunity to debate something that does I think lie a little outside the terms of the Regulations in front of us, but that is their choice. I do not want to say anything in commenting on what they have said or to give any indication at ail of the attitude of Her Majesty's Government to the 270 formation of this Film School. I do not want to give any indication that the outlook is sombre or rosy, because it is not my duty to-night to give that information. This is a matter for consideration and will have to be a matter of future legislation. The point was raised entirely on the question of finance. I think it would be a great pity if a move in this way with regard to the regulation of the levy as between exhibitors and producers had to wait on every occasion for future thoughts about such matters as film schools.
I think it is not right to say that these Regulations are hasty and ill-contrived, as the noble Lord, Lord Willis, said, merely because they do not take account of something which is still sub judice. Equally, I do not agree with the noble Lord, Lord Goodman, who I must admit is a wonderful protagonist for the film industry, and for whose interest in the arts I have every admiration. I do not agree when he says the Board of Trade has totally disregarded the Film School, because it is not the object of these Regulations to consider the matter of the Film School—though the question of the levy will have a future bearing. It is not my object this evening to argue for or against the way in which a Film School should in future be started It is another matter and I must ask the noble Lord, Lord Willis, to excuse me altogether from giving the undertaking for which he asked, namely that there should be no further alteration in the levy until the matter of the Film School has been decided. I know I must sound very difficult but it is necessary to keep separate the matter of these Regulations which have to be looked at from time to time and other matters which, although they have a bearing in connection with the levy, are separate and distinct things.
Perhaps I should remind your Lordships that the percentage of box office paid in levy under the original Act and ensuing amending Orders has run from 1960 to 1967 at 5.9 per cent. 6.5, 6.7, 6.9, 7.3, 7.5, 7.6, 7.6. I think that any group of exhibitors placed in a situation where there is a rising percentage of their box office takings paid to the producers is entitled to have the situation looked at. In matters of this sort the Board of Trade is rather in the position of Solomon. It is not a matter that is 271 conducive to hard logic, it is a matter of fine judgment. But I would claim that whereas the Board is in a totally unbiased position on this matter, with great respect to many who have argued for a different course they are, with their deep and commendable interest in the film schools and the quality of the films produced, in a somewhat biased position; they want a film school, they want to back producers, they want better films.
Some people are not as sympathetic to the distributors; some are. There is always argument and we are put in the position of having to exercise Solomon's judgment. I think we have come to the best balanced position we could have and we have the backing of the Cinematographic Films Council in doing so. We set them up to advise us and we have taken their advice. They are the correct body to give advice and I think it would be folly for us to turn this advice down. On these grounds I commend these Regulations.