HL Deb 22 December 1982 vol 437 cc1072-81

11.39 a.m.

Lord Lyell rose to move, That the draft order laid before the House on 7th July be approved.

The noble Lord said: My Lords, I beg to move that the House approves this order. The draft order has been considered by the Joint Committee on Statutory Instruments. I am given to understand that they have made no comments on it whatever. I hope that your Lordships will bear with me if I explain first what the quota applies to. Secondly, may I briefly refer to something of its history; and, thirdly, to the way that it works at present.

Lord Hale

My Lords, may I ask whether we have reached the pneumoconiosis order? I wish to say a few words on that.

Lord Lyell

My Lords, if the noble Lord, Lord Hale, will bear with us, he may have a little while to wait. I have to deal with another order after this one, and then I think my noble friend also has an order. Therefore, it will be a little while before the pneumoconiosis regulations are before the House.

Lord Hale

My Lords, I am anxious to ask a question on the pneumoconiosis regulations.

Lord Lyell

My Lords, we are discussing the Films (Suspension of Quota Requirements) Order. That is what I am attempting to explain to your Lordships. Your Lordships may wish me to give a dissertation on pneumoconiosis, but I would rather leave that to the specialists and, above all, to my noble friend who will be with us ere long. If the noble Lord, Lord Hale, will bear with us, we might consider what goes on in the film world and even go back to 1927.

Since 1927, and subject to various provisions for exemption and relief, cinema operators in the United Kingdom showing standard 35mm film have been required to show British films for a percentage of their total playing time. For first feature films, the percentage relates to the number of days on which films are exhibited in each cinema; for supporting films the percentage relates 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.

There are, not surprisingly, conflicting and strongly held views on the effectiveness of the system; but possibly there is less doubt about the administrative burden placed on already hard-pressed cinemas. For the system to operate, it is necessary for every cinema in the country to keep a quota record book in which full details of films shown are entered week by week, including (your Lordships will be pleased to hear) playing time of the films. At the end of the year, these books, duly certified, are forwarded to my department where they are checked for accuracy and quota achievement.

The relevant statute provides for penalties to be imposed on exhibitors who do not meet the percentages, or who fail to make returns; but there is a system for examination of quota failures by the Cinematograph Films Council. Despite the extensive number of failures, there has, in fact, been no prosecution since 1956. In 1981, for instance, about 24 per cent. of cinemas failed to achieve quota without any action being taken. The Films Act 1960 provides that it shall 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, and it is now considered highly unlikely that any prosecution for failure to achieve quota could succeed.

There has been wide variation over the years in the level at which quota has been set. For first feature films, the level was 12½ per cent. in 1938; in the early 1940s it was 15 per cent. and in 1948 it was raised to 45 per cent. In 1949 it came down to 40 per cent., and then in 1950 to 30 per cent. For this year it was reduced to 15 per cent. The order now before the House would suspend these quota requirements, and cinemas would be entirely free to make their own decisions.

I hope your Lordships will bear with me if I put these figures into their relevant context. It is thought that at the end of the 1940s, 1½ billion people—and, for this purpose, I am using the American style of 1,000 million people—went to the cinema each year. This year, cinemas will, as things are going, be lucky to get 65 million attending. The position on the number of films made is no better. In the late 1940s American film production reached around 250 a year, and films made in the United Kingdom were 80 or 90 a year. This year American production could be less than 100 and United Kingdom film production could be as low as 25. I would remind your Lordships that there are nine days to go, and these are not final figures for completions. However, we believe that these figures will be in the right direction.

It is against this background, and, above all, the continuing collapse in cinema audiences, that the Government have decided that it would be wrong just to wait until the end of the year before reviewing the question of quota. Consequently, we have considered carefully the arguments for and against quota and have consulted the Cinematograph Films Council. We have, as a result, concluded that the economic position of the cinema is so poor that immediate action to remove the administrative burden of quota is essential.

It is not, however, expected that cinemas' behaviour with regard to the showing of British films will change dramatically. In fact, the very low number of films likely to be available overall will, inevitably, give a strong position to British films. The very favourable tax regime for British films over the next two years should increase the proportion of such films in the lower overall number, making the position even more favourable. While I appreciate the arguments of those who support the continuation of screen quota at a high level, I think that the film industry must have the courage to make a break with what we call the psychological props of the past, and seek a new direction.

No one would pretend that video, cable and satellite will provide a magical overnight solution to the problems of the film industry, but—and this is hypothesis—if piracy can be controlled and a suitable regulatory structure devised they could present a very real opportunity to the film industry in the medium-term. Equally, one cannot simply ignore the plight of the cinemas and, above all, those who work in them. Everybody who works in the film industry deserves help as well, and suspension of quota represents a small step in the right direction. My Lords, I commend this order to the House.

Moved, That the draft order laid before the House on 7th July be approved.—(Lord Lyell.)

11.47 a.m.

Lord Ponsonby of Shulbrede

My Lords, I thank the noble Lord, Lord Lyell, for explaining this order. It was about 18 months ago that he came to your Lordships' House and pleaded for an order to reduce the amount of the quota from 30 to 15 per cent. I agree with his movement of this order today more in sorrow than in anger. The fact that exhibitors have had continuing difficulty in achieving even the reduced quota of 15 per cent., and the fact that there have been no prosecutions since the previous order was laid, underline the difficulty which exists because of the present state of the British film industry.

But one should look upon the laying of this order as an action of despair, rather than as a positive action to help the British film industry. I do not think—and the noble Lord did not produce any evidence to this effect—that the existence of a 15 per cent. quota was in any way damaging the industry. It was a target to which exhibitors could work. The fact that there had not been any prosecutions did not invalidate the fact that there should be a target for exhibitors to work towards in the showing of British films. Futhermore, a target brings to their notice the fact that they should try to show that percentage of British films.

I consider the laying of this order premature at this time, while there is a major ministerial review of the film industry under way. This review could involve—and, indeed, one hopes that it might involve—an extension of the Eady levy system to cover television films and films shown by cable. Alternatively, the review might suggest that the Eady levy should be done away with. It is a regrettable fact that, allied to decreasing cinema audiences, a decreasing amount of Eady levy has been available to the industry. If the Government were concerned about the vitality of the industry, I am sure they would be looking in the direction of extending the areas to which the Eady levy applies rather than to abolishing it. The review will no doubt cover the question of the role of the National Film Finance Corporation. The review could suggest an enhanced role for the National Film Finance Corporation, or it could suggest that the corporation should be abolished.

I wonder whether the noble Lord, Lord Lyell, could say anything about the Government's intentions concerning the vitality of the British film industry as a whole. It seems to me that in moving this order today the noble Lord is adopting a piecemeal approach to the problems of the British film industry, and that it would have been better to wait until the results of the review were known and until one could see whether or not this is an appropriate part of the package. I regret that this order has been laid today.

Lord Beaumont of Whitley

My Lords, the most that anybody can find to say about the order is regret, and even that in a not tremendously convincing tone. It was notable that although the spokesman for the Labour Party in another place went through the motions of regret, none of his colleagues who spoke greeted it as anything other than an absolutely inevitable result of the situation which has occurred in the film industry over a large number of years. There are cases to be made for not doing away at the moment with the quota. The case which the noble Lord, Lord Ponsonby of Shulbrede, made—that we are in the middle of a review of the film industry—seems to me to be a very good one, but it would possibly have more force if any of us had much hope that anything much will come out of that review. That point was made by my honourable friend Mr. Clement Freud, who said that in the intervals while waiting for the real successes in the film industry—the blockbusters—to come along, we might as well have British rather than American mediocrity to fill those intervals. There is a case for that, too. But one way or another, no one will very much mourn the quota, not least because one point upon which we on these Benches agree with the Government is that, if there is a bit of needless form filling to be done away with, we would rather that it was done away with.

The really unfortunate thing behind the order today is the disregard which the film industry has suffered ever since the war. The real core of the problem, as we in the Liberal Party have identified it—and I think it is widely accepted by a large number of people—is that the film industry is under the Board of Trade and not under a Minister for the Arts. It has to do with a large amount of money. It has to do with exports and imports. One sees the reason why it was at one time put under the Board of Trade, but the decisions which have to be made about investment in the film industry have much more to do with the arts than they have to do with the straightforward decisions of merchants. Whether you are dealing with small and successful films like "Kes" or with the great big blockbusters like "ET", the fact is that they are very much dependent upon a certain vision of the film-makers: a vision which the organisations and departments which are set up to forward commercial ventures in generality are not really able to apply. I do not believe that we shall have a flourishing film industry again until films are transferred to a Ministry for the Arts, or whatever it may be called.

The film industry has got into a very sad state. In a way, we have suffered from some of our advantages. One of the great advantages that we in this country have in all matters of culture is the English language. The fact that we share it with the Americans means that it now spreads all over the globe and that it is the governing language in a great many places where art of all kinds is shown. Particularly when art depends upon the spoken word, as is predominently the case in the film industry, that should be an advantage. Alas! it is not. It enables us to sell off our film industry, which is basically what we have done over the last few years, to the Americans, because it is transferable in a way which is not open to the French and the Germans. They have been able to keep their film industries going at a much more reasonable level because they are dealing with a single language situation.

We should have been able to resist the disadvantage of the common language. We should have been able to keep our film industry going. We are still capable of producing wonderful films. In the last couple of years we have produced at least two or three which prove what our film makers can do. But the dead hand of commerce is on the industry, particularly the dead hand of the Board of Trade. I do not lay this in any way at the door of any particluar Government. It has gone on in the same way ever since the war. But the fact remains that if the film business could be taken away from the Board of Trade and moved to a Ministry for the Arts it would stand a far better chance of flourishing, which I am sure we all hope it will do.

Lord Drumalbyn

My Lords, may I ask my noble friend two simple questions? First, while the Ministerial study is taking place, will records be kept of what the cinemas are showing? Will each cinema have to show how many British films it shows, how many American films it shows and how many films from other countries it shows? Secondly, what exactly is meant by "a British film"? I am afraid I am a little out of date because it is some years since I have had to deal with the subject, but there were co-production agreements. Does a film which is produced in conjunction with another country—say, France or Italy—rank as a British film for the purposes of the records kept, or are records to be kept separately for different countries? It would certainly make the planning and consideration of the whole future of the film industry very much easier from the governmental point of view if records were to be kept and, if necessary, slightly amended to make them more meaningful.

Lord Jenkins of Putney

My Lords, I must apologise to the noble Lord for having missed the first minute or two of his opening statement. As a result, I am not quite clear about the position relating to the Cinematograph Films Council. As I understood the noble Lord, he said that the council had been consulted but he did not say what its response was or whether it had agreed to the abolition of the quota as an immediate step. If there was no immediate agreement to the abolition of the quota, this would add weight to the view of my noble friend Lord Ponsonby of Shulbrede that this measure may be premature and will best be dealt with as part of a general review of the film industry and film industry legislation—something which one presumes is almost ready to be brought before both Houses of Parliament.

One is sad about the abolition of this quota—not that one is in favour of restrictive legislation in principle, but the British film industry has survived a very difficult situation. The quota has given an element of protection to our home industry and, in a difficult time, the industry has continued to produce products of high international repute. Even in our present plight the British film industry ranks high in the world and has recently received the highest possible acclaim in the United States of America. It is rather sad that the film which achieved that distinction, "Chariots of Fire", was financed almost entirely with American money and that very little British money went into this essentially British film, which will give a very good return.

It seems very sad that the City cannot be persuaded to take a chance on the film industry. It is a chancy industry and a good deal of money has been lost in it in the past; but the Americans were prepared to take a chance on "Chariots of Fire" and they have profited as a result of their enterprise. It is rather sad that British financiers appear to have cold feet in this respect.

All this adds point to a proposal I put forward some time ago. As the noble Lord, Lord Beaumont of Whitley said, the British Film Institute has become responsible for an increasing proportion of the activity in the industry. Unfortunately this is due to the decline of the commercial element, but there is no doubt that, relatively speaking, that part of the British film industry which is already under the aegis of the Minister for the Arts is becoming more significant. Not only is it active in its own art films area, as it is called, but it has also created a great deal of spin-off in both the commercial film and television areas as well.

There is increasing pressure for the transfer of ministerial responsibility and for the whole of the film industry to be under the aegis of one Minister. We are now moving into the situation where the film industry can no longer survive on a purely commercial basis. That seems to me to be the point at which the Minister for the Arts ought to step in if we are to maintain a film industry which is capable of surviving because we cannot maintain an effective commercial film industry unless the industry as a whole survives. Having said all that, I do understand that the case for the quota is by no means as strong as it used to be. At one time there was an undoubted case to be made for the proposition that the exhibition and production sectors of the industry depended upon the existence of a quota. With the decline of the entire industry and particularly the British element of the industry, the necessity for that quota is much less apparent.

But as my noble friend has said. I feel that this abolition is rather premature. As the noble Lord, Lord Beaumont of Whitley, has said, there is a certain lack of indignation about the place. We are not furious but we are upset. We are sorry about it.

I can only hope that, as a result of the more general approach which the Government are going to bring to this matter, we shall be able to put the British film industry on its feet not only in respect of production and distribution but also in the exhibition area as well. It has gone through a bad time. It is an industry which has earned us very considerable repute abroad. The Government owe it to the industry to do what they can to ensure that the British film industry survives in the future.

12.05 p.m.

Lord Lyell

My Lords, we are all very grateful for the interested and vivid response we have had from all parts of your Lordships' House. The noble Lord, Lord Ponsonby of Shulbrede, mentioned that there had been no prosecutions going back for quite a while. This was just one of the factors which entered our minds in considering whether the continual administrative burden of keeping up these film quota books should really be laid upon the cinema owners or not.

The noble Lord, Lord Ponsonby of Shulbrede, made several other points. First, I should stress to him the low number of films which become available for distribution each year. I mentioned 100 films as an approximate figure for the United States' industry and around 25 for the United Kingdom's film industry. Even if these numbers are completed, it depends on the commercial success of, perhaps, a very small number of these films as to whether or not the cinema industry, first, and the British film industry, secondly, will enjoy a healthier financial climate than they have in years past.

We do not have the figures for the achievement of the quota relating to the 15 per cent. level, which is the level we are hoping to abolish from today. The figures quoted for 1981 related to the level of 30 per cent. I would stress again the low overall level of the supply of films. Indeed, the statutory defence available to exhibitors is that it reduces very markedly indeed the effect of the quota and the administrative burden still remains.

Several of your Lordships asked me about the review of policy. I am sure that Members will have read some of the rather dramatic press reports on the subject of the Eady Levy, which suggested that my honourable friend the Parliamentary Under-Secretary of State had decided to abolish it. I should stress that that was just one of a wide range of options which have been put to him—including the option of extending the levy to television films and video films. I am sure that my honourable friend will be happy to receive representations on this matter from those who have expertise and, above all, the benefit of professional experience to impart to him. I know that he hopes to reach some conclusions by the spring of next year—including a decision on the whole question of the levy as well as the role of the National Film Finance Corporation.

I should like to stress also the financial benefits which are achieved by the film industry. The exports of the British film industry for 1981 amounted to £30 million. We believe that that compares very favourably with the export of British television material, which was valued at one-third of that figure, in the region of £10 million. The noble Lords, Lord Jenkins of Putney and Lord Beaumont of Whitley, raised the question of ministerial responsibility. Indeed the noble Lord, Lord Beaumont of Whitley, called it in his very colourful way the "dead hand" of the Department of Trade. For as long as I am in that department there will be no "dead hand" there—least of all belonging to my noble friend the Secretary of State, or indeed the other Ministers, or the people who work there. The noble Lord and your Lordships will be aware that the very success of the British film industry is tied up as well with finance and practical considerations as much as the artistic content of films.

So far as ministerial responsibilities for the British film industry are concerned, the allocation of these is entirely the prerogative of my right honourable friend the Prime Minister. We would see the force of some of the arguments, especially from the noble Lord, Lord Jenkins, who has considerable expertise in this area. I would think that more to the point would be action to make sure that the Government ceases to interfere quite so much with the film industry, which we regard as grossly over-regulated by any standards.

My noble friend Lord Drumalbyn asked me about the 1982 records. These will be completed and analysed, but I would stress that they will not be so collected for 1983.

Lord Beaumont of Whitley

My Lords, before the noble Lord the Minister moves on, he has said that he and his colleagues regard the film industry as being grossly over-regulated by any standards. Would he care to give some examples? Now having done away with this particular quota, what else is there in the film industry which is ripe to come under the pruning hook? Presumably he has not made such a wide statement without being able to produce some other candidates.

Lord Lyell

My Lords, I will reply to the noble Lord, Lord Beaumont, but not yet. May I find some fruitful examples and let him have them in writing? I was attempting to reply, in tennis terms, to his first service. He was trying to drive me deeply to the back court, and I will send him a high lob which may take some time to arrive; it may come by cable, video, pigeon post or ministerial post. I will attempt to find some interesting examples of how the Government believe that we do interfere, possibly a little too much, in the film industry. We have attempted with this order to relieve one of the pinpricks and administrative burdens. I shall certainly endeavour to discover any more of the more esoteric burdens and duly inform the noble Lord.

Lord Ponsonby of Shulbrede

My Lords, before the noble Lord leaves that point, is he trying to anticipate the results of the review and will the review in fact produce the answers to the question the noble Lord, Lord Beaumont, has asked?

Lord Lyell

My Lords, I fear that the noble Lord, Lord Ponsonby, is possibly anticipating not only the review but what I might have to say. I certainly would not be anticipating the review. Your Lordships know me as a Scot, maybe not a canny one; I would never bet on a hypothesis as to what is in the minds of the review body, nor indeed of my right honourable and noble colleagues. I think that, if we may allow the review to continue, we shall no doubt be fascinated to see what conclusions it comes up with.

If I may continue to answer, the second point raised by my noble friend Lord Drumalbyn was the question of British films. When we consider the quota for the cinema screen, my noble friend is quite right, we should keep in mind just what the word "British" means in this context. Broadly, we believe it means that films made here are British if they provide substantial benefit to our industry. These films do not have to be financed here, nor do they have to be films reflecting possibly British life and manners. I would enlighten your Lordships—the noble Lord, Lord Jenkins, may know this, but certainly I did not—by saying that "The Empire Strikes Back", which I have had the pleasure of taking some of my younger relatives to see, and "Superman", which I have not yet seen—it is not shown daily in your Lordships' House—are two British films.

The quota for British films has also to include European films, of which, I am sure your Lordships would agree, some are of merit and some not; indeed my note says, many not. One noble Lord's poison is another noble Lord's or Baroness's meat. But in the context in which my noble friend was asking the question, "British" does not mean what many might wish it to mean. The quota records distinguish between British and other Community films and indeed foreign films. Registration records will show for 1983 the number of films registered, but not necessarily analysed according to to whom and where they were shown.

The problem of consultation with the Cinematograph Films Council was raised. I am sure your Lordships will agree that we have to recognise that on this subject different parts of the film industry would wish to see different solutions. The council itself is composed of representatives of different parts of the industry, and on issues such as the one we are discussing the members tend to vote in accordance with the view of their parent organisations. Also the discussion and the vote tend to vary widely according to who may or may not be present. In this instance the members discussed the proposal to suspend the quota, and the conclusion was reported along with the views of two members who were not able to be present. We are satisfied that we have had the views of all the major interests represented on the council.

Lord Jenkins of Putney

My Lords, can the noble Lord clarify that? Is he really telling us that the Cinematograph Films Council was not unanimously in favour of this proposal? Is that what he is saying?

Lord Lyell

My Lords, I do not know whether a vote was taken or exactly what the views were. I stressed that we have taken these views into account. I shall endeavour to find such information as I can as to what their views were. I do not know that we, in the popular parlance, "bugged" the room or the negotiations, but I shall endeavour to find out what the views were and communicate with the noble Lord briefly.

I have possibly wearied your Lordships with somewhat lengthy explanations of this fairly simple order. I would ask your Lordships' indulgence. 'We have strayed over "Superman", and "The Empire Strikes Back", and other things, but I am sure your Lordships with your traditional indulgence will accord me a little licence in such matters. Indeed, regular attenders among your Lordships are very rarely able to leave your Lordships' House to see the fruits of the work of the great British film industry, but possibly we might be able to do so over the next two or three weeks. I hope I have answered most of the questions raised. If I have missed any, may I write to the noble Lords who raised them, in addition to the two noble Lords to whom I have already promised to write?

On Question, Motion agreed to.