HL Deb 31 July 1981 vol 423 cc926-35

2.15 p.m.

Lord Lyell rose to move, That the order laid before the House on 30th June be approved.

The noble Lord said: In some respects the issue that we have before us today is a technical one, and I hope the House may agree that I should delay them slightly and explain, first, what the quota relates to; secondly, some of the history of the quota; and, thirdly, how the system operates in practice.

Since 1927, and subject to provisions for exemption and relief, exhibitors of standard 35mm films have been required to show British films for a percentage of their total playing time. For what are called first feature films, the percentage relates to the number of days on which films are exhibited in the cinema, and for supporting films the percentages relate to the showing time of such films. The provisions were extended to include Community films when the United Kingdom entered the European Community in 1973.

Over the years, the level at which the quota has been set has varied considerably. For example, for what are now known as first feature films the percentage in 1938 was a mere 12½ per cent; for the early 1940s it was raised to 15 per cent; and in 1948 it went up to 45 per cent. In 1949 there was a reduction, first of all to 40 per cent., and in 1950 to 30 per cent., and it has remained at that level ever since.

The order that we are debating this afternoon would take the figure back to the earlier level of 15 per cent. Not surprisingly, there are conflicting views within the cinema and film industry as to the merits of this particular system. For it to operate, it is necessary for each cinema in the country to keep a quota record book in which full details are entered week by week of the films being shown at the cinema, and their playing time. At the end of each year those books are duly certified, and they are then forwarded to my department where they are checked for accuracy and for the achievement or non-achievement of the quota.

The relevant Act of 1960 provides penalties for exhibitors who do not meet the quota requirements or who fail to make the appropriate returns. As your Lordships will see, I have here an example of the annual returns for one cinema in a distant part of England, and it has some fascinating entries in it. I also have here a book with the blank forms that have to be filled in by the representatives of exhibitors in cinemas throughout the United Kingdom.

There does exist a system of consideration of cases before any failures to achieve the quota are prosecuted, and as a result of those procedures, since 1956—which is quite a long time ago—there have been no prosecutions, although there have been extensive numbers of failures to meet the quota. For example, in 1980, which is the latest year for which we have records, about 22 per cent. of all cinemas failed to reach the quota levels. This absence of prosecution is largely due to the fact that the relevant Act provides that it should be a satisfactory defence of failure to achieve quota if the exhibitor can show that it was not commercially practicable to comply with the requirements.

This point, and the long absence of any prosecution, are quite relevant when considering the level at which the required quota achievement should be set. As some Members of your Lordships' House may know, the Films Act 1980 deliberately introduced provision for the Secretary of State for Trade to make an order completely suspending the quota arrangements. That provision was introduced in recognition of the difficulties to which the quota arrangements give rise, and earlier this year we had in mind that particular provision. My right honourable friends sought advice from the Cinematograph Films Council and various representative bodies in the cinema and film industry as to whether such a suspension should be introduced. I have to tell your Lordships that the Cinematograph Films Council was, as a majority, in favour of a suspension, as were organisations representing cinema exhibitors. The order has been considered by the Joint Committee on Statutory Instruments. They requested a further memorandum on these consultations with the Cinematograph Films Council.

On the other hand, the organisations which represent the film producers and the unions for people who work in the film-making industry were against suspension. Thus, we can see that there is a strong conflict of views within the entire industry as to the appropriate course of action which should be taken by the Government. These considerations need to be undertaken against a total background where we have a steadily declining number of people who go to the cinema, a steadily reducing number of cinemas in operation and a falling percentage of films which qualify as quota films being made.

Over the past 10 years—if we can take one example—the number of British first feature quota films registered as such has reduced from 90 to 41, and the percentage that such films represent of all first feature films registered has reduced from 23 per cent. to 16 per cent. The situation is even more striking when we consider British films currently in production and thus those which will be available for meeting quota requirements with effect from January 1982. That is the period to which this order relates. There is every indication that British quota films registered in 1982 will be fewer than half those registered during the current quota period and there could be fewer than 20 quota films in all. There is thus a very serious danger that, if the quota requirement is maintained at its present level, virtually every cinema in the country would be in danger of failing to meet these particular requirements.

Having regard to all these considerations, it is our view that the right course is to aim for a compromise between the present situation and the concept of total suspension. I would therefore commend to your Lordships the proposal that the figure should be set at 15 per cent. both for first feature films and for supporting films. This matter will of course be kept under review and the situation will be monitored very carefully. If and when my right honourable friends are satisfied that the quota might reasonably and fairly be reviewed with a view to an increased figure, then of course we shall have no hesitation in taking such a step. I commend the order to your Lordships.

Moved, That the order laid before the House on 30th June be approved.—(Lord Lyell.)

2.23 p.m.

Lord Ponsonby of Shulbrede

My Lords, I should like to thank the noble Lord, Lord Lyell, for so fully explaining the purpose of this particular order. As the noble Lord said, there is a considerable division of opinion within the industry as to whether the action proposed by the Minister is the right course of action. As the noble Lord said, the Cinematograph Films Council were in favour of an experimental suspension of the quota. Organisations representing film producers and the unions were all against the suspension of the order. Basically, it is a situation where those who make films are against a suspension or reduction of the quota while those who show films are for a suspension or reduction of the quota. This has necessarily meant that the Minister has had to make her own decision on what to do. She has taken the decision, as the noble Lord told us, to halve the quota for first feature films from 30 per cent. to 15 per cent.

I must question whether this "judgment of Solomon" by the Minister is the right one. Certainly the Second Standing Committee on Statutory Instruments which considered this order last Tuesday, 28th July, was almost equally divided about the proposed order, with seven members of the committee voting in favour and six against. One member would seem to have abstained. I think we must question whether this decision is the best for the British film industry. There is undoubtedly a very real anxiety in the production side of the industry about the whole welfare of the industry. I submit that it is not only a question of quota but it is a psychological matter as much as anything. If a quota exists, the attention of exhibitors is drawn to the importance of maintaining the British film industry. There is a danger that if you reduce the quota to a level below the average level of current fulfilment, the exhibitors will tend to "trade down" to the quota; that is, the maximum becomes the minimum.

Our primary concern must be to protect British involvement in film-making. The protection afforded by the quota was undermined in 1973 when, as the noble Lord reminded us, the quota was extended to include EEC films, and of course as each new member joins the EEC that quota is even further diluted. Indeed, the effect of halving the quota must be considerably greater than it appears on the surface, because of this. Added to that, there is a further devaluation in the effect of the quota because, as many large cinemas have been divided into smaller ones, an individual exhibitor is able to count towards his quota the same number of points for a film shown in the smallest mini-cinema in his group of individual cinemas within a total cinema, even though that mini-cinema may seat only 10 people, as against a film shown in another part of the same building where there may be 500 or more seats in the auditorium. That has added a further devaluation to the value of the quota, and then on top of that the Government are proposing to halve a devalued quota.

My Lords, this is not good enough. If the Minister feels the quota is unreasonably high she should have reduced it to an attainable level. By imposing a low quota, she is inviting further trading down. I am also concerned about the position of independent exhibitors who cannot get access at reasonable cost to popular and profitable British films. This action of the Government will not help them in any way. The order seems to be positively harmful to the needs of film producers and to offer no solace to the needs of independent exhibitors. I wonder whether the noble Lord can say what the Government are intending to do to help the British film industry.

Lord Jenkins of Putney

My Lords, the noble Lord, Lord Lyell, introduced this Motion in such reasonable terms that one might have cause to wonder why it was that this order caused such an uproar when it was debated in another place. I think it is rather unusual for the Standing Committee on Statutory Instruments to be the scene of such furious debate as occurred when this was debated in another place and for the Motion to have gone to a Division which, as my noble friend pointed out, was a pretty close-run thing. Therefore, we need to ask ourselves why it is that a matter which has been put before us as a reasonable and proper thing to do should have caused such dissension elsewhere when it was examined.

There are a number of reasons for this, and some have been touched on by my noble friend who has just spoken. There is a fundamental division in the British film industry, as between the makers of films and the presenters of films; as between the producers and the distributors and exhibitors. The interests of the exhibitors have always been geared to the idea of showing any film. They have always resented the idea of there being any British quota at all. They want freedom, which is understandable from their point of view. They do not want to have to fill up forms and so on, and want to be free to show whatever film they wish to show without any restriction whatever. On the other hand, the producers want an assurance that there will be a native British film industry.

Governments of various complexions have, over the years, always taken the view that it is in the interests of this country to preserve our own British film industry, so that in this area we have something to say to the world. It might reasonably be argued that, whereas the film was at one time a major world influence, it is less so today. That is not entirely true, because there is a considerable cross-current between film and television, and the impact of television throughout the world is very considerable. But it is true that the cinema film has been in decline for a number of years, particularly in this country, which is partly due to the excellence of our own television programmes; people are not forced out of their house if they want to see a decent film. Quite often—though not on every evening—they can see something worth looking at on one of the three television channels.

This division in the industry was reflected in the advice tendered to the Minister, because, as I understand it, what happened was that there were two meetings of the Cinematograph Films Council, which advises on these matters. On one occasion, the exhibitors were in the majority and they advised the abolition of the quota. On the next occasion, there was a full representation of the production side of the industry and they advised that the quota should remain as it is at present. So the Minister was faced with conflicting advice. As my noble friend said, she took the judgment of Solomon on it and, in this case, decided to kill the baby. Instead of deciding that she would choose this one or that one, as Solomon wisely did, she slashed it down the middle. There is a grave danger that this will have the effect of killing the baby.

One must consider what happened in 1980. It has been said that 22 per cent. of cinemas failed to reach their quota, but of course 78 per cent. of cinemas reached their quota. Therefore, there seems to me to be precious little case, in a situation where last year 78 per cent. of cinemas reached a 30 per cent. quota, for saying that this year the quota is to be halved. This is an extremely pessimistic view of the possibilities of the British film industry and it is a view which is not shared in the production industry.

The production industry feels that by taking this action the Government have—as Alan Sapper, the Secretary of the Association of Cinematograph and Television Technicians, said—slapped the production industry in the face. There are grounds for believing this, because the Minister has estimated that in one year's time an industry which got fairly close to the 30 per cent. quota will be accommodated by a 15 per cent. quota. That is an unreasonably pessimistic estimate of an industry which is again beginning to exhibit that artistic excellence which has characterised the British film industry. A number of films, including "Chariots of Fire" and "Gregory's Girl", are meeting with great critical acclaim. I believe that, with a reasonable degree of encouragement from the Government, the British film industry would be capable of a resurgence. That is why there was such anger in another place. Another reason is that the Minister for Consumer Affairs who presented the matter in the other place was somewhat more abrasive than the noble Lord opposite in her presentation of the argument. I do not think that this helped. I would not, however, wish to place the whole of the blame upon the Minister. She is, after all, the Minister for Consumer Affairs. As the Minister for Consumer Affairs she is naturally orientated towards the distribution and exhibition side of the industry rather than towards the production side of the industry.

This illustrates something which is fundamentally wrong, and has been wrong for many years, in the approach of successive Governments towards the film industry. We have here a Minister who deals with the film industry as one of a number of other responsibilities spreading over a very wide field. Instead of that, the film industry ought to come under the control of the Minister for the Arts. I was inhibited from saying that very forcefully and very openly when I was Minister for the Arts, because I should have been accused of empire-building. However, it is a very sensible proposal, which I commend to the Government. At the moment, responsibility for the film industry is divided. The Minister for the Arts is responsible for the British Film Institute. Therefore the art film comes under the Minister for the Arts—an artificial division from the commercial film, which, as we have seen, is the responsibility of the Minister for Consumer Affairs. However, television, which is now very closely associated with the film industry, comes under the Home Office. So we have the extraordinary situation of three different Ministers and three different departments who are responsible for different aspects of the same industry.

I do not believe that we shall get a rational and reasonable approach to the problems of the film industry until we mend that situation and have one Minister who is responsible for television, radio and both areas of the film industry—the art film and the commercial film. Until we get that approach, we shall not have a Minister who is able to spend enough time upon bringing the various parts of the industry into a coherent whole and who is able to persuade them that if they want to save the British film industry they must work together and be able to deliver to the Minister coherent advice upon which he can act. If they do that, it is my belief that there will be a considerable future for the British film industry. There is not such a future for it in the proposal to reduce the quota to 15 per cent. I believe that the anger which this has aroused is justified.

I was encouraged to hear the noble Lord say that the Government will be prepared to look again at the quota if they find that problems arise from it. The difficulty about the 15 per cent. quota is that it discourages the production industry and encourages the producers to say that there is no need for a quota. In other words, it has in itself a depressing effect. A 15 per cent. quota might bring about the very thing which a 15 per cent. quota envisages. I am therefore very worried about it.

When the Minister replies, as I think he will in a moment, I hope he will be able to say that the Government regard this as an experiment, undertaken possibly as a result of conflicting advice, and that they will be prepared to look at it again pretty rapidly if they find that the consequences are those which I have indicated and which I fear.

2.40 p.m.

Lord Annan

My Lords, I do not know whether the Minister will forgive me if I intervene for one moment to say that I believe there is a great deal to be said for what the noble Lord, Lord Jenkins of Putney, was saying. However, there is some doubt in my mind as to whether or not he was proposing a Ministry for all visual media, and I think that is a very important point; whether he was actually arguing in favour of a Minister of telecommunications, et cetera. If so, I think that is a dangerous thing and I hope the Government will not follow any such pattern.

On the other hand, this co-ordination could be done with a little goodwill, but one of the great difficulties with which the film industry is faced, and indeed has been faced with over many years, and one of the disincentives to investment in this industry I regret to say is largely due to the activities of the ACTT in the industry and the great dis-economies which their regulations have imposed upon the industry.

2.42 p.m.

Lord Lyell

My Lords, I think we should be grateful for the interest and indeed for the comments which have been expressed by the noble Lords, Lord Ponsonby, Lord Jenkins and Lord Annan. The latter's weighty presence brings a tremendous depth and breadth of experience to one side of the entertainments industry. I hesitate to say video industry, but this is beginning to have an interesting connotation.

The noble Lord, Lord Ponsonby, raised a number of points and of course he is absolutely correct in pointing out that there were a number of divisions of opinion as to whether the action which we propose in the order is correct. The Government feel that, on balance, the action that we are taking is the correct one in the light of the conditions which we have experienced and indeed in the light of the opinions which have been expressed to my right honourable friend. My right honourable friend the Minister will be interested to hear of the comments made by the noble Lord, Lord Jenkins, and also by the noble Lord, Lord Ponsonby, as to the judgment of Solomon. I shall convey the noble Lords' opinion about killing the baby to the Minister, who I think the noble Lord, Lord Jenkins, believed was a trifle more hurried or more in the traditions of another place rather than of the conduct of deliberations here.

I think the House will agree that the decisions which had to be taken were something akin to the decision which had to be taken by King Solomon those many years ago, and we believe that the Government have made a reasonable attempt at taking the correct decision. Of course, at the conclusion of my speech I pointed out that the Government would be prepared to review this action in the future if we felt that there was a strong case for the conditions to be changed.

The noble Lord, Lord Ponsonby, raised the very serious problems of the British film industry and particularly of those who are involved in producing films. Of course, the Government want to see a healthy British film industry but the Government are of the opinion that the best way to provide help, particularly financial help, to the industry is to see how the Eady levy (which is appropriately and quaintly named after its founder and is the industry's own money) could be extended to search for any ways in which more private venture capital could be encouraged into the industry and into making more British, and indeed quota, films on the basis of commercial judgments.

The noble Lord, Lord Jenkins, pointed out that there were many very good and enjoyable and commercially successful British films. But of course this brings us to the main division in opinion in the British film industry—the whole industry, not just those making films. We come to the problems of the distributors. Of course, one man's meat may be another man's poison. Alas, it is the distributors who have to be persuaded that a film is commercial.

Lord Ponsonby of Shulbrede

My Lords, before the noble Lord leaves the question of the Eady levy, could he say, if he has the figures to hand, how much that levy is producing for the film industry now as compared with, say, 20 years ago?

Lord Lyell

My Lords, I regret that I do not have the precise figures to hand. I know that the levy is at the moment in funds to the tune of approximately £6 million, but I am afraid I do not have what I would call the ebb and flow, the income and expenditure of the levy. If the noble Lord would allow me to inquire, I shall certainly let him know as soon as may be during the Recess.

Lord Jenkins of Putney

My Lords, will the noble Lord be so kind as to allow me to press him on one point with regard to this? He spoke about the question of choice in relation to films. Will he agree that the fact that the exhibition work is largely in the hands of what is called the "duopoly" is responsible for the fact that the independent British producer has great difficulty in getting a proper outlet for his films?

Lord Lyell

My Lords, of course the noble Lord, Lord Jenkins, with his enormous experience, is in part correct, but I think that he will know that there are other problems apart from what he called the duopoly. He is in part correct; I would agree with him to that limited extent.

The noble Lord, Lord Ponsonby, asked me one more question about what could be done to help the British film industry, above all the makers of British films, to encourage them in their efforts. Very favourable tax considerations have been given, certainly in the last Budget, and in the Finance Bill this year. First of all, there is tax relief for loss on investment which might be made by an individual. That is in the 1980 Finance Act. That is aimed at, among other things, the British film industry and individuals who would wish to invest in commercial ventures, such as making films which may not be immediately of commercial attraction. There are also the business start-up schemes. There is indeed a change of practice, which has been introduced since August 1979, which permits the immediate write-off of all expenditure against current trading profits of film production companies on any expenditure incurred in producing films. This is, we hope, reasonable encouragement on the financial side to the British film industry.

The noble Lord, Lord Jenkins, and I think the noble Lord, Lord Ponsonby, used the word "pessimism". Well, surely a good British film would not necessarily be shown just because of the quota. I think this was suggested earlier. If a good British film has commercial potential certainly it will be shown regardless of quota. The distributive side of the industry, and indeed the entire industry, would agree that there is an overall shortage of good commercially attractive films from anywhere in the world.

The noble Lord, Lord Jenkins, asked me about films and particularly about films which might be shown on television. I understand that around four times as many films are shown on television as in the cinema during an average year. So that shows that television is a very important medium. I am sure that the noble Lord, Lord Annan, would be interested in that set of statistics and the importance of the television industry as far as the film industry, both British and worldwide, is concerned. I am entitled to say to your Lordships that further consideration certainly will be given to the arguments that have been advanced to my department that exhibitors of films on television of whatever form should, or might one day, make payments into the Eady Fund for the levy. That is a hypothesis, but certainly the Government would keep an open mind were the matter to be raised.

I have a figure here which the winged messengers have brought to me which will certainly be of interest to the noble Lord, Lord Ponsonby. Twenty years ago, in 1960 the Eady Levy Fund stood at £3.9 million; as of 1980 it stands at £6.1 million. I understand that the Eady levy may stand at any point between £2 million and £12 million. So it seems that at its current level, this levy fund has the power to do some good and to assist the film-making industry—indeed, all aspects of the industry. Of course, how the money is spent is a matter that must be agreed by the industry itself.

The question of divided responsibility has been raised. I think that the noble Lord, Lord Jenkins, mentioned the Minister for Consumer Affairs. It was questioned whether it should be the Minister for the Arts. Indeed, the noble Lord, Lord Annan, raised one or two questions on this matter. However, I must say to all three noble Lords that the allocation of ministerial responsibilities is and will continue to be the prerogative of my right honourable friend the Prime Minister. Many of us—and especially myself speaking from this Dispatch Box this afternoon—see the force of many of the arguments. We think it would be more to the point to take action to ensure that the advice given by the industry to Ministers is much more widely based than at present. Indeed, my right honourable friends in various departments are taking that matter into consideration at present.

I think that the noble Lord, Lord Jenkins, also raised a query as regards further help to the film industry and I hope that I can give him some assistance on that matter. In fact, the note which I have refers to television and I have already covered that matter. The question was raised of consumer affairs and why should the film industry come under the aegis of the Minister for Consumer Affairs. The curent concentration by exhibitors is on a very narrow sector of the populace. I understand that the vast majority of filmgoers are between the ages of 14 and 24. I do not know exactly why that should be so. I, and no doubt other Members of your Lordships' House, may well have our opinions as to what is carried on in cinemas apart from viewing the film, eating popcorn and expressing one's opinion. However, that statistic is confirmed by the exhibitors and so it appears that the Minister for Consumer Affairs would have legitimate interest in this narrow band of 14 to 24 year olds.

From what I have gleaned from the comments of various noble Lords, I think that I have covered most of the points that have been raised by the three noble Lords who have been kind enough to take part in our deliberations. I shall read carefully what has been said this afternoon, and if I have missed any points I shall write to noble Lords. I certainly promise to write to the noble Lord, Lord Ponsonby. I commend the order to your Lordships' House.

On Question, Motion agreed to.