HL Deb 17 July 1978 vol 395 cc108-11

7.43 p.m.

Baroness STEDMAN rose to move, That the draft Cinematograph Films (Collection of Levy) (Amendment No. 6) Regulations 1978, laid before the House on 5th July, be approved. The noble Baroness said: My Lords, this brings back memories of a year ago when I was struggling to understand what the Cinematograph Films (Collection of Levy) was all about. The Cinematograph Films Act 1957 provides for a statutory levy (popularly known as the Eady Levy) to be paid by cinema exhibitors in Great Britain for eventual payment to makers of British films and other organisations to do with the British film industry.

The levy is collected by H.M. Customs and Excise from box office takings and is paid for distribution to the British Film Fund Agency, a statutory body established under the Act. The rate at which levy has to be paid is prescribed in the Cinematograph Films (Collection of Levy) Regulations 1968, as amended, and is currently one-ninth of the price of admission in excess of 12½p, the calculation being made net of VAT. This portion of the net admission price which is not liable to levy had stood at 7½p since 1968, until it was increased by order last year. The regulations also provide for certain exemptions, the most important of which is in respect of cinemas whose takings in any particular week, or whose average weekly takings (calculated from the beginning of a levy period), are less than £900. Each successive period of 52 weeks constitutes a "levy period".

The yield from the levy has been in the region of £5 million each year for some years past. This yield has remained more or less constant because the rise in prices has been balanced by a significant decline in the number of people who now go to the cinema. In recent years large numbers of cinemas have closed, and in many areas the public are effectively denied access to cinema films. Despite the relief which was given last year, many cinema exhibitors are operating either at a loss or at an unacceptably low margin of profitability. The trade associations concerned have therefore made representations that exhibitors ought to he afforded some further relief from levy liability. The Department of Trade not only has a statutory obligation, in Section 2(3) of the Cinematograph Films Act 1957, to pay regard to the prevailing economic circumstances of both exhibitors and makers of British films in deciding the level of levy, but also has to consult the Cinematograph Films Council. This has been done and the Council has recommended, in view of the pressures exhibitors are under, that the total amount which would otherwise be payable by exhibitors should be reduced by £1 million.

In recommending the particular methods for affording this relief, the Council were mindful of the importance of giving help where it would be most effective—primarily the smaller cinemas which attract smaller audiences. But they also had to have regard to the damage to the production industry if larger cinemas operating on a marginal profit were obliged to close because the department has a parallel statutory obligation to take account of the economic interests of the makers of British films.

It was the Cinematograph Films Council's recommendation that the two methods provided in the proposed regula- tions would combine to achieve the best effect for all concerned. First, total or partial exemption from payment of levy is at present allowed when a cinema's takings in a particular week fall below £900, or, as I have said, where they fall below an average of £900 a week over the whole of the levy period. Obviously the main beneficiaries of this exemption are the smaller cinemas, though regrettably larger cinemas sometimes fail to attract big enough audiences in the course of a week to take even these small amounts. The Council recommended that this exemption figure should be raised from £900 to £1,100, thereby increasing the number of cinemas who would pay no levy at all in any one week or more. It has been estimated that this increase should benefit the exhibitors to the order of some £650,000.

The second method is that any exhibitor paying a levy only does so at present on a percentage of the price of the cinema seat in excess of 12½p. Further benefit can accordingly be given to the exhibitor by raising this levy-free portion of the seat price. The Council recommended that this levy-free portion should be raised by a sufficient amount to increase the relief afforded by some £350,000. It is of course not possible in advance to be exactly certain about the number of cinemas in the coming year which will be left paying levy once the exemption figure has been raised to £1,100. Thus there must be an element of estimation in considering how much the levy-free portion ought to be increased. It is estimated that an increase from 12½p to 17½p should produce approximately the desired relief.

It is in the light of the economic circumstances of exhibitors and the advice of the Cinematograph Films Council that these draft regulations now come before your Lordships. Their purpose is thus to reduce the amount of levy otherwise payable by exhibitors by approximately £1 million, and to do that, as I have said, by increasing from 12½p to 17½p the portion of the payment for admission net of VAT which is not liable to levy and by increasing from £900 to £1,100 the amount by reference to which total or partial exemption from payment of levy is allowed. I commend this order for the approval of the House.

Moved, That the draft Cinematograph Films (Collection of Levy) (Amendment No. 6) Regulations 1978, laid before the House on 5th July, be approved.—(Baroness Stedman.)

7.50 p.m.

Lord TREFGARNE

My Lords, the noble Baroness began by saying that she remembered the occasion a year ago when we were considering a very similar order to this, when the figures were raised, if I remember rightly, to £900 and 12½ pence, which we are further increasing tonight. I remember that occasion, too, because I spoke from this Box, as I am doing tonight. One of my noble friends, who shall be nameless, was not able to be here, and this morning—surprise, surprise!—he is not here again; he is on his way to America. So here we are once more.

However, undoubtedly this order is of merit. I hope it will commend itself to your Lordships. It will, I think, increase the chance—and I fear it is only a chance—of some of the very small cinemas, which I think serve a very useful social purpose being able to stay in business and provide the sort of facilities which in small, more remote communities are so very desirable. My only doubt is whether in fact the increases are sufficient to achieve that purpose. However, as the noble Baroness has said, it is to some extent a question of suck it and see, because it is not possible in advance to predict quite how many people will be attending these smaller cinemas and therefore how much more or less levy they will be obliged to pay. So let us wait until this time next year and see how things fare.

May I say in parentheses, finally, that this order, the Collection of Levy order, is an interesting and useful one. Perhaps we shall soon be discussing the Distribution of Levy order—another very interesting subject which may perhaps be coming before us in the near future. In the meantime, I hope your Lordships will approve this order.

On Question, Motion agreed to.