HL Deb 19 July 1984 vol 454 cc1643-52

4.26 p.m.

The Chancellor of the Duchy of Lancaster (Lord Cockfield)

My Lords, with permission, I will repeat a Statement on the British film industry made in another place by my right honourable friend the Minister of State for Industry and Information Technology. The Statement is as follows:

"With permission, Mr. Speaker, I should like to make a Statement on the film industry.

"The British film industry is undergoing a renaissance. We are fortunate to have so many talented producers, writers, directors, and actors; and outstanding technical skills in film making. Several companies in Britain have achieved commercial success in quality films. Channel 4 has effectively encouraged the thriving independent production sector.

"However, cinema attendances have continued to decline dramatically. From an annual average of 338 million in the 1960s they have dropped to 66 million in 1983. In the same period the number of screens declined from some 3,000 to 1,300.

"Against this background we have drawn up the following proposals which are contained in the White Paper published today.

"Our first and most important conclusion is that the outdated Eady levy on cinema receipts must be ended. Introduced to recycle money from the cinemas to the producing companies, it has become an extra tax on seats which cinemas cannot afford. Its revenue in real terms has fallen by six-sevenths. It is an elaborate and unfair burden on the industry's weakest sector. The Government propose to bring in legislation to end this in 1985, and at the same time to wind up the British Film Fund Agency, the Cinematograph Films Council, and the Naional Film Finance Corporation. The legislation will also repeal eight Acts of Parliament and twenty-five statutory instruments relating to films.

"I have considered carefully the case for extending an Eady-type levy to television or to videos. I am, however, convinced that no sort of recycling mechanism is sensible. A levy on TV could lead to an increase in the BBC licence fee and ITV companies are already paying a subscription to Channel 4 which will be financing film making at a level of £8 million a year. In its review of copyright, the Government are still examining the question of a levy on blank video and audio tapes to protect copyright owners and we intend to invite further comments on this.

"I have been able to make satisfactory arrangements to replace the money which the Eady levy raised.

"Revenue from the Eady levy has in the past provided finance for the NFFC, which has done valuable work to encourage emerging young talent in the British film industry. It has contributed to many notable films including 'Gregory's Girl' and `Another Country' and fostered talent which has come to the fore in such international successes as `Chariots of Fire' and 'Local Hero'. The valuable contribution made with Eady levy finance will in future be secured by a new company in the private sector whose shareholders will initially provide contributions of over £1 million annually. The Government, in addition, will make £1½ million a year available for five years to co-finance low- and medium-budget films to be made in Britain. A further £500,000 a year for five years is to be made available to help in the early stages of the development of film projects. The new company will therefore be able to deploy more than double the resources which NFFC has had in recent years.

It is an important new deal for the British industry.

"The National Film and Television School is well respected and enjoys an international reputation. We have secured independent funding for five years which will more than replace the current level of the Eady contribution. The noble Lord, Lord Wilson of Rievaulx, and the Interim Action Committee on the Film Industry recommended updating the equipment at the School and the Government will provide £250,000 for this purpose in 1985–86.

"The British Film Institute Production Board also receives a small Eady contribution and I propose, in consultation with the Cinematograph Films Council, to see whether a final payment out of the Eady levy can be made.

"During the passage of the Finance Bill through Parliament, my right honourable friend the Chancellor of the Exchequer made two amendments specifically to help the film industry. First, qualifying investment in film projects will now come within the scope of the Business Expansion Scheme. This will be a valuable incentive to equity investment in film and will help the small producers who have lately gained the confidence of the City.

"Secondly, in addition to the measures announced in the Budget, my right honourable friend has announced that films will have a further option to write off expenditure on a cost recovery basis against income as it arises, instead of spreading it over the income-producing life of the film. The industry will therefore not normally pay tax on its profits until all expenditure has been written off. This will give a greater measure of certainty for those investing in films.

"I am very pleased that the industry is pressing ahead strongly with plans for British Film Year in 1985. This will focus attention on film in education and industry as well as in entertainment. In particular, it will aggressively promote the sales of British films overseas.

"Our policy is to free the film industry from Government intervention and from an intrusive regulatory régime dating from the days of the silent films. Our policy will clear the way for the industry to operate in a more confident framework and to consolidate upon its success".

That, my Lords, completes the Statement.

Lord McIntosh of Haringey

My Lords, I should like to express our thanks to the Minister for repeating the Statement made in another place. I wish I could say the same about the availability of the White Paper itself. My honourable friend in another place was supplied with a copy of the White Paper by the Minister's right honourable friend some time ago, and yet when I went to the Printed Paper office at 2.15 this afternoon I was told that the White Paper was embargoed until 3.30. I think the House will agree that this makes it extremely difficult for the Opposition to make the kind of effective and constructive comments that we like to make on Statements of this kind. It is particularly galling that this should be the case because we have been waiting two years, since July 1982, for this White Paper.

No fewer than three Government Ministers have tried to deal with this admittedly difficult problem, and have failed to do so. I wonder whether the Minister will agree that the incentive finally to come up with a White Paper has arisen from something which is quite remarkably omitted from the White Paper and from the Statement; that is, the abolition in the Finance Bill of 100 per cent. capital allowances. I wonder whether the Minister will agree that that has been widely seen by the film industry as being a body blow to investment in films of a much greater significance than any of the measures which are being put forward today. Before I forget to do it, I think it is necessary to pay tribute, on one particular aspect, to the protection for the British Film School at Beaconsfield and for the money that is to be given for renewing the equipment there.

The Minister referred in the Statement to the outdated Eady levy. It is certainly true that the Eady levy arose in a very different situation in the cinema, when receipts in the cinema itself were virtually the only receipts available to the film industry. But will the noble Lord not agree that the situation is now very different and that a great part of the film industry's receipts come from open network broadcasting, from cable and from video, and will eventually come from direct broadcasting satellite? Does he not agree that the rational thing is not to abolish such a levy but to bring it into line with modern circumstances and to have it coming from all the sources of income to the film industry?

The Minister referred to the new arrangements for depreciation, which are to be cautiously welcomed. But the British Film and Television Producers' Association made a specific request, to which he did not refer, for depreciation allowances of 50 per cent. on completion, 25 per cent. on first showing and 25 per cent. in the next year. I wonder whether the Minister can tell us how his proposals, as announced in the Statement, compare with that request, and whether it is his view that the BFTPA is likely to be satisfied with the arrangements that he is proposing.

The Minister referred to the replacement for the existing levy, rather as if the Eady levy was equivalent to the National Film Finance Corporation. In fact, the Eady levy produced £4.8 million in its last year and the National Film Finance Corporation received only £1.5 million of it. I wonder whether the Minister would care to comment on whether the up-to-£1½ million from private sources and the £1½ million from the Government are likely to equate to the total amount available from all public sources, which has been the case in the past.

I wonder whether the Minister would like to comment on the lack of reference to international experience in this matter—a remarkable omission from the White Paper, when we are likely to be the only country in the world without secure support for our national film industry. For example, in France there are a large number of fiscal devices available to help the film industry, such as relief for refurbishing cinemas, relief for training expenditure, allowances for low budget films and funds for additional prints. Since many of these measures are largely self-financing, I wonder whether the Minister would undertake to look at opportunities of that kind, in addition to the proposals that he is making.

The fundamental point about this Statement is that the facts of what it is introducing are not matched by the rhetoric of the Statement itself. In paragraph 7.2 of the White Paper we read that, it is … not surprising that prospective financial backers are reluctant to take further risks by commissioning unknown film makers"; and yet in paragraph 7.3 we read that the Government's policy is to be firmly based in the private sector. Is there not a conflict between those two statements, and is that conflict resolved by the measures now proposed? I wonder whether the Minister will bear in mind that, so far as the film industry is concerned, it is security of income over a period of years that is necessary. These measures, which involve a commitment by the Government for five years and a commitment by the private sector for three years, in no way match the security which has been available in the past from statutes.

4.40 p.m.

Lord Beaumont of Whitley

My Lords, I, too, should like to thank the Minister for repeating the Statement. As is so often the case with this Government, the energy and enthusiasm with which they wield the axe is not completely matched by the thoroughness with which they do the replanting. Most Members of your Lordships' House will agree that the Eady levy was unsatisfactory in a great many ways and that it is not at all a bad thing that we should be moving on from it. However, the question is whether the Eady levy is going to be replaced by anything which is more satisfactory. We shall have to wait and see.

We, too, should like to wait and see the White Paper—of which, unlike the noble Lord, Lord McIntosh of Haringey, I have not had any sight—before making up our minds on this question. However, I see from the Statement that recycling is rejected. I believe it has been rejected too easily. In particular, I see that the Government are still considering the question of blank tapes. Do I gather from the way in which the Statement is worded that the possibility of using a levy from blank tapes to recycle money back to the film industry has not necessarily been ruled out? I should be glad of an assurance upon that point.

Finally, and most importantly, if the Government are clearing the undergrowth in the industry, will they not also clear the forest in the Government? In other words, if simplification is to take place, is this not an ideal opportunity to unify the whole of the film industry under one ministry, preferably that concerned with the arts, and stop it being divided between the Board of Trade and the department with responsibility for the arts, as it has been so unprofitably divided for so long?

I hope that we shall have an opportunity to debate the White Paper. It is quite clear from the announcement made earlier today that a debate cannot occur in the immediate future. All I can say is that that is a very great pity and that your Lordships should be given an opportunity to debate this matter as soon as possible.

Lord Cockfield

My Lords, I am grateful to both noble Lords for their comments. I am sorry that the noble Lord, Lord McIntosh of Haringey, should give such a grudging welcome to what is an imaginative initiative by the Government—one which, in fact, offers the developing film industry an extremely helpful deal.

As one of the Ministers who has in the past been responsible for these matters, let me assure the noble Lord that the time taken to deal with these issues has nothing whatever to do with the somewhat devious motives that he tried to impute to the Government. It was due to a desire to consult the widest possible range of opinion. The noble Lord will find embodied in the White Paper a long list of bodies and distinguished individuals who have been consulted, who have made their views known, and whose views have been taken into account.

I am very sorry about the point which the noble Lord raised about the availability of the White Paper. I shall certainly look into it. There are certain practices and procedures to be followed and I shall certainly inquire to see whether or not something has gone wrong.

Perhaps I may say first of all that the arrangements which we now propose modernising go back in some instances as far as 1927. They relate to a period and an era which has long since passed. In the early 1950s, in the cinema-going days of the noble Lord, Lord McIntosh of Haringey—and mine, too—the number of attendances at cinemas exceeded 1,250 million per annum. That figure has now fallen to 66 million per annum. I do not suggest that this is due to the fact that your Lordships who used to go to the cinema are now tied down in your Lordships' House. It is due to a complete change in the social habits of our people. It is not surprising that a system which was created to deal with the circumstances which existed many years ago is now out of date and desperately needs modernising.

May I make this comment about the Eady levy. It is perfectly true, as the noble Lord, Lord McIntosh of Haringey, says, that it now raises approximately £4½ million per annum, which is only a fraction, in real terms, of what it used to be. But something between one-half and two-thirds of that money goes back into the pockets of the distributors, many of whom, or most of whom, are American controlled. The amount of money which actually comes back into British film production is very little. The finance now being made available under these proposals for the National Film Finance Corporation is more than double what it was under the old Eady levy system. It is for this reason that I was somewhat perturbed that the noble Lord, Lord McIntosh of Haringey, felt that we were dealing with the film industry in a less than generous manner. The noble Lord paid tribute, of course, to what is being done for the National Film and Television School. I am glad about that. I am glad that its future has been secured.

The simple truth of the matter is that the Eady levy had proved, over time, to be completely unsatisfactory. Moreover, the legislation which deals with the Eady levy and the NFFC expires next year, anyway. Therefore something to replace it was going to be essential. May I say also that at no time has the lifetime of the Eady levy ever exceeded five years. In other words, it has had to he renewed at five-yearly intervals. Therefore the fact that the arrangements for the NFFC extend also to five years is no less a period of guarantee than existed under the Eady levy.

However, the most important point of all is that immense new opportunities are now opening up in television. The Statement refers to the fact that Channel 4 is spending £8 million a year on films. We have direct broadcasting by satellite to come. There will be cable broadcasting. The bodies responsible for the regulation of both of these have, as part of their remit, a requirement to give special support to the United Kingdom film producing industry. The future of the film industry lies in these expanding markets, and I am very glad to be able to say that the industry is showing a spirit of enterprise which puts the noble Lord, Lord McIntosh of Haringey, somewhat in the shade. It is this spirit of enterprise which offers great hope for the future.

The noble Lord, Lord Beaumont of Whitley, referred specifically to blank tapes. The point was dealt with in the original Green Paper, I think it was, on copyright. We have now said that there will be a further period of consultation. We are looking to people to put forward their views on this very important and, if I may say so, somewhat contentious matter. We can decide what to do only in the light of those representations.

The noble Lord also suggested that we should have a single ministry for dealing with films, in somewhat the same way as we have a Minister for the Arts. Questions of organisation of government are matters for my right honourable friend the Prime Minister. I shall of course draw her attention to what the noble Lord has said.

Finally, I should like to pay tribute to the part which has been played in all these matters by the noble Lord, Lord Wilson of Rievaulx, who, as chairman of the interim action committee, has done so much to ensure progress in this field. We look forward to his continuation in office as a spur and an encouragement to the rest of us.

4.50 pm.

Baroness White

My Lords, as a former member of the Cinematograph Films Council, which is to be abolished, may I say how glad I am that its advisory duties are to be taken over by my noble friend. May I also pay a brief tribute to the late Sir Wilfred Eady, because although times have now greatly changed, and I accept that the present arrangements are less than satisfactory, nevertheless when the Eady levy was introduced—and it has lasted a considerable time—it was a very ingenious method, devised by one of the most resourceful people the Treasury has ever produced, of protecting the British film industry against retaliation by the very much larger English language industry of the United States.

Lord Cockfield

My Lords, I am most grateful to the noble Baroness for what she says. The Cinematograph Films Council of course did a very good job of work in the years in which it existed, but most of its functions were concerned with regulatory matters, and these will now disappear. Its advisory functions will be subsumed in a new body in which the Interim Action Committee will take the lead.

Lord Lloyd of Hampstead

My Lords, as chairman of the National Film and Television School and a member of Lord Wilson's Interim Action Committee, I should like to say that I welcome a number of features of the White Paper, which obviously I have not had a chance adequately to absorb as yet, but I am bound to say also that I have some reservations which I do not think I can expatiate upon at this stage. All I can appropriately do now is to ask one or two questions.

I should like to say that I recognise—and it is widely recognised—that the Eady levy has outlived its usefulness. One's only real doubt is whether the Government have done enough by way of replacing it. At least one derives a little encouragement from what the noble Lord the Minister tells us when the says that consideration is still being given to the whole question of a levy on blank tapes. This, in the view of many people connected with the film industry, is thought to be a very practicable avenue by which necessary funds for the film industry can be assured. Those of us who are connected with that industry look forward to the appearance of the Government's consultative paper. In that connection, I would ask when it is anticipated that this paper will appear.

The next specific question I should like to ask is in relation to the body which is to continue the function of the National Film Finance Corporation. As I understand the White Paper, it is the Government's notion that although it is to be replaced by a commercial organisation (a commercial company) that body is to proceed on lines similar to those of the NFFC, for which they express considerable approval in the White Paper. From my knowledge of its activities, I can certainly testify to the fact that the corporation has done an extraordinarily good job and in many ways one regrets its passing. In particular, I refer to the resignation of Mr. Mamoun Hassan, its director.

We are told that the National Film Finance Corporation is to be replaced by a commercial corporation representing various unspecified organisations and, of course, everything is going to depend upon who is to run this new body. All we are told here is that it will be the usual company organisation, with an independent chairman. I presume this means that the Government will nominate the independent chairman, but one wonders who will appoint the board, since the company is to deal with some £1.1 million a year and yet will also have at its command considerable public funds. One hopes, therefore, that the membership of the board will be carefully considered and will not be governed by purely commercial considerations.

My second point is in relation to the film school. Naturally, I very greatly welcome the warm way in which the Government have expressed their support for the school, and I welcome, too, their admiration —which I know is widely felt both here and abroad—for its quite remarkable achievements, if I may say so, over very few years since its foundation. We are told that the Eady levy money—roughly £500,000—is to be replaced by a subvention from three sources —namely, the cinema, the independent television companies, and the BBC—but we are not told in the White Paper how this money is to be assured. For instance, what organisation at present exists among the cinemas to guarantee that they can produce whatever is to be their proportion of the money? We are told that what is proposed should ensure the payment of some £600,000 a year for five years, and I, and I am sure your Lordships, should like to know exactly by what process and what mechanism is this to be assured.

Lord Cockfield

My Lords, I did, of course, have the great pleasure of meeting the noble Lord, Lord Lloyd of Hampstead, when, as Secretary of State for Trade, I saw a number of members of the Interim Action Committee, and we discussed many of these matters. Many of the points he raises are, of course, matters of detail, and I accept that they are important matters. I shall note what he has said and ensure that his points are followed up.

As to the consultative document on blank tapes, there is yet no date fixed for its publication, but we of course realise the extent of the interest in it.

So far as the composition of the board of the successor body to the National Film Finance Corporation is concerned, it is important to remember that this will be a private sector company and that it will derive a great deal of its finance from the private sector. The Government will approve the chairman, and there will be a Government director; otherwise the members of the board will be appointed by the industry itself.

With regard to the film school, the replacement finance is rather more generous than the amount of the Eady levy which it has hitherto received, the figures being of the order of £600,000 against £500,000. We appreciate the immense value of the school and the contribution it has made.

Perhaps I may also pick up one other point and join the noble Lord in the tribute which he has paid to Mr. Mamoun Hassan, the director of the NFFC, who has done an outstanding job in this field but who feels that he now wants to get back into film production. It will be awfully important to ensure that whoever succeeds him is a man of real quality.

Lord Auckland

My Lords, obviously, without a sight of the White Paper it is difficult to comment very much on this Statement which, judging from what has been said, I generally welcome. Is my noble friend aware of the number of cinemas which have closed down, in particular in the provinces. The closures deprive people, particularly those who live in areas where Channel 4 cannot always be received.

As a consumer perhaps I may ask my noble friend to pay tribute to the enormous work done by the Rank Organisation over the years in this area, especially in regard to exports. I urge him to take up the point made by the noble Lord, Lord McIntosh, about refurbishing some of our cinemas. In the area of Surrey where I live five cinemas have closed down and so only our local repertory theatre shows films. While one can see these films on television, it is surely desirable—bearing in mind the enormous potential of the cinema industry and in particular, if I may say so, the Pinewood Studios—that the British film industry is helped, not necessarily by subsidy, but by as much encouragement as possible. I hope that the White Paper, which will, no doubt, be seriously studied, will be debated as soon as possible.

Lord Cockfield

My Lords, I am grateful to my noble friend for what he says. Perhaps we are beginning to wander a little wide and, as he himself has said, the most valuable thing would be for us all to study the White Paper. The removal of the Eady Levy is a specific measure that will help the cinemas. The simple truth of the matter is that the essential habits of our people have changed so dramatically, and many of the developments to which he referred are a reflection of those changing social circumstances.

Both my noble friend and I—and, no doubt, the noble Lord, Lord McIntosh, too—were brought up in an era when there was no television and when the cinema and the theatre (if one was lucky enough to live in a place where there was a theatre) were the main forms of entertainment and, often, of instruction. We now have television, we have the explosive growth of video, we have cable, and we have DBS. Our institutions have to reflect these changes.

Lord McIntosh of Haringey

My Lords, the noble Lord the Minister in his first reply saw fit to contrast the enterprise of the film industry with my personal lack of enterprise. I may assure him that I will resist any temptation to make personal comments about him.

Lord Cockfield

My Lords, I am awfully sorry if the noble Lord thought that I was making a personal comment; my remarks were not in any sense intended to be a personal comment. But if the noble Lord will reread his remarks, he will find that he exhibited—if I may use the phrase—a lack of enthusiasm for the Government's plans which he may find entirely justified but to which I felt it perfectly legitimate to refer. I assure the noble Lord that there was never any intention of any kind of making a personal comment.