Films Bill

HL Deb 21 February 1985 vol 460 cc748-81

8.30 p.m.

Lord Lucas of Chilworth

My Lords, I beg to move, that this Bill be now read a second time.

Two months ago we were given the opportunity, by virtue of a short debate initiated by the noble Lord, Lord Lloyd of Hampstead, to discuss the White Paper on film policy which was published in July 1984. Much has happened since then. The Films Bill, which is based on the policy outlined in the White Paper, has completed its course in another place and is now before us for consideration.

The body which will succeed the National Film Finance Corporation has taken shape more clearly, and a copy of the heads of agreement between the proposed participants in the successor body and the Government has been laid in the Libraries of both Houses. There have also been significant events in the fortunes of the industry. Sadly, more cinemas have closed. On the other side, British films have had some major successes and are well represented in the recently-announced Oscar nominations. It is therefore against this background of changing fortunes within the industry that I should like your Lordships to consider the purpose of this Bill.

The key is the Eady levy; introduced in the middle of the century, it was seen as a means of redistributing money from the flourishing exhibition sector to the then weaker production sector. Similarly, the quota system introduced in 1927 had sought, albeit indirectly, to foster the production of British films, by ensuring that a specific proportion of films shown at cinemas had to be British. Both measures—the levy and the quota—required a whole raft of regulations and controls for their enforcement. At that time, with annual box office admissions running at a level of nearly 1,300 million in the early 1950s, it was thought that the exhibition sector was well capable of standing the strain imposed by these heavy administrative burdens.

Now the position is reversed. Cinemas are struggling to survive. Box office admissions slumped in 1983 to less than 70 million a year and at least 18 cinemas with a total of 36 screens have closed since the White Paper was published last summer. The amounts raised by the Eady levy have dwindled, and the portion going to British film makers (or their nominees) fell from £2.7 million in 1982–83 to a provisional figure of £1.6 million in 1983–84. On the other hand, the production industry is booming. Studios are full and British films are scoring major successes in both at home and abroad. The Oscar achievements of "Gandhi" and "Chariots of Fire" may well be repeated this year, since eleven Oscar nominations for "A Passage to India" and seven for "The Killing Fields" are indicative of the new areas and markets that are opening.

The House will be aware of the opportunities offered with the advent of cable and satellite broadcasting services. Less obviously, perhaps, the recent innovation of video to promote pop records has quickly established a sizeable new sector in the market. For the first time the British record industry's awards this year included a category for the best pop music video. As my noble friend Lord Mersey observed during our debate on the White Paper, we are now acknowledged as world leaders in this field. It is pleasing to be able to report that the award was won by a video made here in England at Shepperton Studios.

It is entirely right and sensible that if the fortunes of the different sectors within the film industry have changed, Government policy should be adapted to reflect that change. Accordingly, we have decided to sweep away the burden of registration, licensing and quota, and to abolish the Eady levy. Furthermore, in response to the Monopolies and Mergers Commission's report, the Government have announced plans to investigate the effects of relaxing the barring arrangements that many independent cinemas claim deprives them of fair access to profitable films. It would be optimistic to think that these actions could bring back the huge cinema audiences of the 1950s, but the Bill will provide some relief to the hard-pressed exhibition sector.

Before deciding to abolish the Eady levy, we considered how this would affect the production sector and the specific bodies which had benefited from the proceeds of the levy. The immediate beneficiary of the levy has been the National Film Finance Corporation. This is financed by an annual grant of £1.5 million from this source. The NFFC is generally recognised as having performed well in its aim of assisting the development of the production sector by part-funding low- or modest-budget British films. By providing crucial "up-front money" it has helped over the years to produce such classics as "Genevieve" and "The Third Man", and, more recently, films such as "Gregory's Girl" and "Another Country". We have decided that this work should continue, but with two significant changes.

First, the NFFC will be dissolved and replaced by the British Screen Finance Consortium, a private sector partnership financed between private and public sector monies. We believe that this will help to improve the commercial edge of the investment decisions. We believe that it will enable those directly involved in the industry to play a greater part in helping to develop new talent. The partners in the consortium will be Channel Four Television, Rank, Thorn EMI, and members of the British Videogram Association.

A copy of the heads of agreement between the prospective partners and the Government has been placed in the Library. The House will appreciate that this document takes account of a number of points raised during our earlier discussions and in another place. It provides significant safeguards regarding the use to which the Government's financial contribution may be put.

Secondly whereas the NFFC's annual external funding since 1981 was £1.5 million, the new body will have available twice that amount: £1.1 million from the participants, and, for five years, a contribution of £1.5 million from the Government, and additionally £0.5 million from the Government for the management of the project development scheme and the production of short films.

There is one fundamental aspect in which we do not expect the NFFC's tradition to change; namely, the type of film that will be supported. The NFFC's role has always been to support British films aimed at the commercial market, but it has also focused on assisting new and rising talent in the industry. Another important part of the production industry is the non-commercial film-making sector, for which the Government provide substantial support through the various grants made by my noble friend Lord Gowrie from the budget of the Office of Arts and Libraries. But the function of the NFFC and, in the future, of the new consortium is concerned with commercial filmmaking and with the one important part of that sector where we believe there is at least initially a case for special subsidy; namely, low- and modest-budget British films, including "shorts", especially those made by new talent, and of course the project development to which I have referred.

Besides the National Film Finance Corporation, the Eady levy also provided an element of funding for the National Film and Television School, and for the British Film Institute (BFI) Production Board. We have considered the needs of these bodies, and have made arrangements whereby the school will receive £600,000 annually for five years (more than it has received in the past from the Eady levy) from the BBC, the independent television companies and the cinemas. In addition, the Government have already undertaken to make a special grant to the school of a quarter of a million pounds to improve its television facility. As regards the BFI Production Board, we have endorsed the recommendation of the Cinematograph Films Council that in this final year of the levy the board should receive a sum from the levy equivalent to three times the grant it would have expected.

That is the background to this Bill and what it seeks to achieve. I should like now to outline briefly two of the most important clauses. I do not intend to weary the House by going through every part of the Bill in detail, particularly as many of the clauses are clearly described in the explanatory and financial memorandum, but I wish to offer a short explantion of the major features.

Clause 3 of the Bill deals with the NFFC. It enables the Secretary of State, with the approval of the Treasury, to dissolve the NFFC at any time after the Eady levy is terminated. It provides that upon dissolution any of the corporation's property or rights may be vested in the Secretary of State, who shall deal with them in such manner as he thinks fit for any purpose connected with the British film industry. It further provides that such rights may be transferred to a British company or partnership on condition that it uses its best endeavours to encourage the production of British films on a commercially successful basis. Thus, this condition will apply to the transfer of the NFFC's portfolio of rights and interests in films, estimated to have a total value of about £600,000 a year, to the British Screen Finance Consortium.

Clause 3 also provides that if upon dissolution of the NFFC any of the corporation's liabilities are vested in the Secretary of State, they may be transferred on agreed terms to the NFFC's successor. The purpose of this provision is to enable forward commitments to film producers made by the NFFC to be taken on by the BSFC, together with enough cash from the NFFC's assets to meet those commitments. It is our intention that any assets remaining after the NFFC has been dissolved, and after provision has been made for meeting liabilities, should be transferred to the British Film Fund Agency for distribution to eligible British film makers. Finally, Clause 3 empowers the Secretary of State by order to repeal the National Film Finance Corporation Act 1981 when the NFFC has been dissolved.

Clause 5 is particularly important. It enables the Secretrary of State to give financial assistance to the successor to the NFFC. This will take two forms. First, there is the provision of £1.5 million annually for five years for co-financing the production of British films; and, secondly, £500,000 annually for five years will be provided for project development work and for the production of short films. The House may be aware—as certainly will be those noble Lords involved in the film industry—that the provision in respect of "shorts" was inserted recently by the Government, in recognition of the valuable role of shorts in enabling new producers to "cut their teeth" on a modest project and the need to replace the stimulus provided by the Eady levy to the production of shorts. This clause therefore sets the framework within which public finance for the production of low-budget commerical films will operate.

I do not pretend for a moment that this Bill will solve all the film industry's problems, or bring audiences flocking back to the cinema. There are no magic remedies here. However, I believe that the Bill is based on a realistic assessment of the problems and that it offers a most sensible way forward. It is universally recognised that the Eady levy is an anachronistic burden on a struggling sector of industry. The Government are committed to abolishing it at the earliest possible date and the Bill makes this possible.

We could have stopped at that, simply leaving the beneficiaries of the levy—and particularly the NFFC—to collapse or to find alternative funding elsewhere. We have not, as has been suggested, walked away from the problems. We have sought an opportunity to continue the work and tradition of the NFFC, and have made arrangements to expand its funding and to enhance its commercial edge by placing it in the private sector. We have made arrangements for the funding of other bodies dependent on the levy for part of their income. This Bill is based on a careful appraisal of the needs of the commercial film industry and provides the framework within which the industry can operate to advantage in the future. I commend it to the House.

Moved, That the Bill be now read a second time.—(Lord Lucas of Chilworth.)

8.47 p.m.

Lord McIntosh of Haringey

My Lords, there are a number of things in the early part of the noble Lord's speech with which I think all Members of your Lordships' House will agree—his tribute to the recent achievements of the British film industry in world markets and world esteem, and his hopes for the success of British films in this year's Oscars. We all share those hopes. I fear, however, that our welcome for this Bill goes no further than that.

There are many aspects of this Bill with which we are profoundly unhappy and which we believe show a failure not so much of analysis of the past—for with much of that we agree—but of constructive analysis and prescriptions for the future. I shall not attempt to summarise in the time I have available anything more than the bare bones of film policy over the period since 1927, when I suppose we may say a Government film policy started in this country. The three major elements of it have been the quota set up by the 1927 Act and allowed to fall into disuse in 1983; the Eady levy, to which the noble Lord has referred at some length; and the National Film Finance Corporation, together with the various elements of arts funding which was also referred to.

The only point that I want to make about that combination of measures is that they were all carried out in the context of the film industry being a private-sector industry, a commercial industry. There has never been any suggestion, certainly not from this side of the House, that there should be anything other than a commercial film industry. We believe that the need for flexibility, the need for innovation, the need for risk taking make this one area where commercial interests, suitably safeguarded—and I make that point very seriously—make it low on the list of candidates for nationalisation. Perhaps. I may put it that way.

There have been public sector film industries of great success. I think of UFA in Germany in the 1920s, for example, but that is not to say that there are not countries and times when the public sector film industry can be of great importance. I think also of the National Film Board of Canada and I have no doubt that there are other examples which will occur to noble Lords who are more experienced in the industry than I am. But it is the point that there must be suitable safeguards to a commercial film industry, and it is that view which is paramount in our objections to this Bill.

The major happening over the last 20 or 30 years which has transformed the film industry is well known to us all: it is the advent of television and the fact that the television audience for "moving pictures", if I may use the old-fashioned term which describes both, is 20 times the audience in the cinema. I will not go over the other effects which that has in terms of the sources of possible financial support for the industry, but will only repeat the wise words of my honourable friend Mrs. Dunwoody in another place when she said that we were talking here not so much about the film industry as about the production industry serving both film and television and also, of course, potentially serving cable and direct broadcasting by satellite. We have to think of the production industry, with which we are most concerned, in the context of television as well as in the context of film.

I turn now to the National Film Finance Corporation, which is to be abolished and replaced by the British Screen Finance Consortium. I am grateful to the noble Lord for the information, which I did not have before, that the heads of agreement are in the Library; and I shall certainly study them in great detail. But, of course, the point about those heads of agreement is that they are not in statute and they could be changed at any time. Consistently during Committee stage in another place it was pointed out to the Minister by his own Back-Benchers among others that the British Screen Finance Consortium is not independent: it consists of Channel 4, two of the major distributors and the British Videogram Association. I am not accusing them of malice of any kind: far be it for me to do so, certainly when they are contributing this money. But it is not independent of the interests of the production side or of the audience in order to represent the interests of the production side and the audience for films and for television.

The safeguards, as I have said, are not enshrined in statute, and we shall attempt in Committee, and as the Bill goes through this House, to see that they become statutory. There is no assurance of either the creative or the financial freedom for this consortium which we should like to see. There is no adequate recognition in statute of the responsibilities which go along with the fact that this consortium is taking over public assets. After all, we are talking about an annual income from the portfolios of some 750 films which have already been financed in this way. Above all, there is no continuity and there is no assurance of continuity after a finite period of years for which promises have been made. We on this side of the House will seek to see to it that there is an authority which achieves the objectives which may well be set out in the heads of agreement. We shall also seek to remove the provision in Clause 3 which says that the conditions for this British Screen Finance Consortium are such conditions (I quote) as [the Secretary of State] thinks fit". But, above all, the issue about the replacement for the National Film Finance Corporation is that it does not have enough money. The noble Lord and his right honourable and honourable friends have made comparisons with Eady money now. Of course, that is very easy to do. It is a fact that the proceeds of the Eady levy have declined consistently—that is shown very clearly in the graph at the back of the White Paper—but that does not mean that the level reached in the last few years is an adequate level for the support of the British film industry. For example, if we look at the period from 1958 to 1966, the Eady levy was producing something like £18 million a year at 1984 prices. That is a level which not only seems reasonable in the sense that at that time it was producing a successful film industry, but it is also a level—and this ought to be most important to this Government—at which there might be a serious chance of getting consistent City funding for the film industry. But we ought to be thinking about the gearing of financial support for the film industry rather than the penny-pinching, cheeseparing comparisons with the totally inadequate 1984 level.

It is also true that, apart from the money provided by Channel 4 for productions and promised for the rest of its first five years, the support from the television contractors has been minimal. Yes, they have been buying films, but they have been buying films at a fraction (so small a fraction that it is insignificant) of the original cost of production and at nothing like the level of financial support that might be thought to be necessary, even if you take the analogy of printing run-on costs. These are derisory amounts—something like £6,000 to £7,000 an hour, when the production costs of new drama for television is more in the region of £80,000 an hour. So we on this side of the House will support whatever amendments are put forward to provide for a levy which will replace the Eady levy, not at the level it is now but at the level it was at the time when it was most effective.

I do not have any particular decision at the moment as to the basis on which that levy should be. I think that needs a great deal more discussion. I confess that I am prejudiced at the moment in favour of the amendment moved successfully by Mr. John Gorst; namely, that the levy should be based on the size of the television audience which views the films. But something of that sort will have to be introduced into this Bill if it is going to provide anything like adequate support for British film production. Then there is also the possibility, not of blank video and audio cassettes, which were referred to in this week's Green Paper, but of a levy on pre-recorded cassettes, which is a matter of justice as well as of prudent financial provision.

Then we come to the question of fiscal incentives, and I would remind your Lordships that it was only in 1983 that the Government gave an assurance of five years' continuity for the fiscal incentives for film production which had been introduced in 1979. It took only 12 months for them to go back completely on that and to return virtually to the position where films are treated as plant and machinery. As my noble friend Lord Willis said in the debate just before Christmas, which I unfortunately missed because I was in hospital, films are not produced by plant and machinery. Films are not produced like sausages, where you have a successful product and it goes on selling. Once you have produced a film you sell it once and perhaps you have some international and television sales, but then you have to start again with the next item of investment. To treat it as plant and machinery (even if there were further provisions, as I understand there may be, for writing off on current account as income accrues, or for what is called cost recovery, which I do not fully understand) is simply not adequate.

There is no reason why the film industry should not follow, in terms of fiscal incentives, the analogy of the oil industry, where exploration and drilling are still permitted to be a special case and to have 100 per cent. capital allowances. Here, perhaps, I may say very briefly that it is an absurdity to think that the Business Expansion Scheme is going to fill the gap. It is not only a matter of the maximum amount that is possible from any single investor. One might think, looking at "angels" in the London or Broadway theatre, that a consortium could be made up with a number of people contributing £40,000 a time, although the amounts involved in film are much greater than they are in theatre. But it is the lack of continuity of production companies which is going to be the death blow of any attempt to have the Business Expansion Scheme fulfil the role which the Government seem to think it will.

Then there is the question of training. There have indeed been some indications of continuing support for the National Film and Television School. The noble Lord, Lord Lucas, has just referred to a figure of £600,000 per annum for five years, and I welcome that. It was referred to by a Government spokesman in another place as being a dowry; and one of my honourable friends said that it was more like an alimony. I deny the analogy. An alimony continues. The only true analogy is the death benefit. That provides once for current expenses and then it is no more. If you compare the provision for training in this country of £600,000 a year for the National Film and Television School, with the kind of provision which is made in, for example, France where £22 million a year is made available for training, marketing and promotion, you can see that this is not exactly generous treatment.

It is necessary to say very briefly, because a number of times the noble Lord used the phrase "British film", that according to the schedule we are not talking about British films at all. In paragraph 4 there is a definition, which is completely acceptable to the European Community, that "British"' means a member of one of the member states of the Community. In other words, a German film produced in Italy with French money could qualify as a British film. I accept that there are some safeguards in paragraph 5(3) of the schedule, which refer to the amount of work taking place in the country. But the point here, surely, is that no other country in the Community has knuckled under to the European Commission in the way that we have done. They all keep what we would normally understand as being a reasonable definition of a national film industry, and they have all kept to themselves the right to provide para-fiscal help to their own film industries—that right which we have so nobly denied ourselves.

It all comes down to whether we are talking about film as a culture or as a business. I think that we have to do both and the Government are failing on both accounts. They are connected. The external earnings of the British film industry last year were of the order of £93 million and the spin-off from that, in terms of the prominence given to our culture, and the opportunities given to us to provide exports of manufactured goods and services and to attract tourism, are very great indeed—in fact, incalculable. So even taking it purely in business terms, we have an asset here whch it would be criminal to endanger, let alone to throw away.

The noble Lord referred to there being no magic remedies for the film industry, as if he were repeating the famous phrase of his right honourable friend the Prime Minister: "There is no alternative". I think we shall be able to show the House and the Committee in due course that there are many alternatives to the solutions proposed by the Government. There are many alternatives which have been successfully adopted by other countries which have a keener appreciation of the cultural and business benefits of a flourishing film industry.

With notable exceptions, we are not too surprised if there is a failure to understand the cultural need for a film industry or the role of film in our national culture. That does not surprise us too much when we have seen the level of grants being given to the Arts Council. What really offends me is the lack of business judgment shown by this Government in the way in which they have simply—to use the noble Lord's own phrase, which he then denied—walked away from the real problems of the film industry.

9.4. p.m.

The Earl of Winchilsea and Nottingham

My Lords, at this stage of the Bill, I should like to direct my remarks to possible fund-raising methods in addition to those proposed by the Government, which could quite easily be employed to assist the funding of British films. In 1984, there were over 4 billion individual viewings of films transmitted by all four television channels. This staggering figure is based on reasonably accurate rating mechanisms that are used by television companies to work out the number of viewers watching a particular programme.

The showing of a feature film, even a first-run feature film, on television is probably the cheapest way available to a programme planner of filling in 90 to 120 minutes of television transmission time. It is also probably the most popular type of programme. The price paid by TV companies for the screening rights for films works out on average at about £63,000 per film for first-run films. This figure dramatically declines to between £6,000 and £7,000 if old, already shown-on-TV films are included in the general package of films and filmed series negotiated for. When the vast audiences for films on television are taken into account, plus the very high costs involved in the production of even a low budget feature film, it can be fairly said that television is not paying a fair price for the high quality product it is getting and large profits are made from films shown on television.

Furthermore, television is constantly drawing on a rapidly depleting library of films. In 1984 alone, there were about 1,584 films shown on all TV channels. The buying of films for television is done by only two men—one for the BBC and one for the ITV companies. This rather cosy cartel normally operates on a gentleman's agreement, which effectively keeps down to artificially low levels the prices paid to film companies. This agreement occasionally goes up in smoke, as we saw recently involving the American film series "Dallas".

So what can be done to ensure that fair prices are paid? Several suggestions have been put forward. One is based on the rating mechanism already mentioned, whereby a charge of 0.25 pence per viewer of film on television would be made, payable by both the BBC and ITV, and paid annually into a central fund which could then be distributed to the film industry. This could have the effect of increasing the TV licence fee, but only by, it is estimated, 28 pence and it would account for less than 1 per cent. of the ITV companies' total expenditure on programmes. Another suggestion is the imposition of a 10 per cent. levy applied to the total film budgets of all four TV channels, which amount to £100 million annually. This would also produce the same amount as the first suggestion; namely, around £10 million. Of course it could be argued that the introduction of such a levy would result in fewer feature films being shown on TV. Since broadcasters pay much less for bought-in material, including feature films, than they do for in-house productions, the effect on broadcasters' use of feature films is, despite their protestations, unlikely to be considerable.

But the TV companies are by no means the only source of possible support that could be available to the domestic film industry. The incentive which was removed in the Finance Act 1984 was responsible for attracting City investment, without which it would be extremely doubtful whether the great film successes of recent years which have already been mentioned—"Gandhi" and "Chariots of Fire"—would ever have been made. They earn for us as a nation not only large amounts of currency, both overseas and domestic, but also enormous international prestige and goodwill, to which the noble Lord has already referred—by-products which cannot be calculated, such is their value.

The Government's Green Paper on recording and rental of audio and video copyright material, published the day before yesterday, is to be welcomed. It is long overdue. Many people have reservations about its content, myself included, but it is at last a step in the right direction. My main reservation is the proposed upper limit on the amount of royalty payment allowed. In both the audio and video cases, they are far too low and will not do much good to anybody by the time they are collected, administered and distributed.

Perhaps it would be appropriate at this time to remind your Lordships that without the film industry there would be no video industry and there would be no television industry. Both owe their existence to the film industry, and therefore it is only right and proper that both be required to support it more than they do at present. However, I am very glad that the Green Paper is at last with us and I note that 30th April has been set as the deadline for when suggestions will be acceptable for consideration.

In conclusion, with the impending advent of cable and DBS broadcasting, there will be an ever increasing demand for filmed material of all types to fill all those hours of programme planners' schedules. If there is not a ready, healthy, well financed and flourishing British film industry, turning out low, medium and even the occasional high cost feature film, as well as shorts and documentaries of every description, then inevitably we shall be the recipients of a vast flood of the most dreadful American rubbish imaginable. I for one find that prospect horrendous—a horror which I am sure is shared by all noble Lords present as well as those who are not here tonight.

9.11 p.m.

Lord Lloyd of Hampstead

My Lords, I regret that I must begin by offering your Lordships an apology, as I am afraid that it is impossible for me to remain until the end of this debate. The noble Lord the Minister began by pointing out that I was responsible for initiating an earlier debate, as recently as last December, on the White Paper on film policy, which is of course implemented in this Bill. Therefore I am anxious to avoid any unnecessary repetition of the various points which I endeavoured to emphasise at that time.

However, I think that there are certain points which need some amount of re-emphasis, and there are of course a number of fresh points which have subsequently arisen. One of the extraordinary features of the situation is that the Government, on their side, apparently view with a considerable measure of euphoria—though I notice that on this occasion the Minister presented perhaps a slightly more muted version of it than one finds in the White Paper—what they see, as the outcome of the Bill, whereas on the other side, the industry is universally condemning it and indicating its inadequacies.

We have the very recent example of Sir David Lean, one of our greatest film directors, fresh from his triumph of directing "A Passage to India" and the many Oscar nominations which it has already received, coming back to this country after many years and being reported as saying: Now the Government is making it even worse over here. The powers that be have never really been interested in films in England". I am afraid that that kind of verdict is only too representative of the general approach taken by the industry.

I should like to concentrate my remarks on two areas; one is the area of production, and the other is training. So far as production is concerned, the prelude to this Bill, as we all know, was the abolition of capital allowances, which in itself was a crippling blow to the industry. Subsequently, the Bill is proposing to abolish the Eady fund and also the NFFC. So far as the Eady money is concerned, we are all agreed that its abolition was necessary because Eady had outlived its usefulness. The real question is this: what has been put in its place?

We know of the sad events which occurred in the other place regarding the proposal for a television levy. There was all-party support for it in Committee in another place and it was passed—but then it was rejected at Report stage. It seems that those few Members of Parliament on the Committee who really understood the problems of the industry were extinguished by the majority who neither knew, nor perhaps even cared, about the future of this great industry. Yet the arguments in favour of a television levy are extraordinarily simple.

There is on the one hand a great flourishing industry—the television industry—which has for years lived off the cinema at minimum cost. We know that there are more viewers of a cinema film shown on television in one day than there are admissions for a whole year to the cinema itself. Still the Government apparently cannot see that there ought to be some recognition of that fact, and some transfer of resources to that part of the film industry which provides so much material for television itself. The Government have preferred to heed the siren voices of the television lobby and at the same time to ignore the real needs of the film industry.

This is a great pity because I believe that the present Government genuinely wish to help the film industry. They appreciate to some degree the importance of that industry in the national culture. But it seems they are bemused by the vision of a free market which really does not exist. What exists is a cartel for the purchase of feature films for television, of which the film industry has been the victim.

It is a great failure on the part of television that it has neglected to realise the immense commercial sense in allowing money to be resiphoned into the film industry—which has played, plays now, and (one hopes) will continue to play, so vital a role in television's own existence and future. Both the television and the film industry need a steady supply of indigenous, medium-budget films. One has to take on board the point that by a "medium-budget film" one means these days a film which costs upwards of £1 million. One is not talking about blockbusters which cost from £15 million to £20 million but a production costing something in the order of £1 million to £2 million. Nevertheless, one is dealing with a pretty expensive product.

One knows—and this fact is frequently cited—that Channel 4, under the excellent aegis of Mr. Jeremy Isaacs, is doing a very good job in encouraging film making. I understand that Channel 4 are spending in the region of £8 million a year on films. But what must be borne in mind always is that those films are primarily for the television screen and not for the cinema.

If all this money is not to come from a television levy, then where is it to come from? The view generally accepted in the industry is that it needs a sum in the region of £10 million to £20 million a year to support the medium-budget film market. If there is not to be a levy on television, there remains at least the alternative of a levy on video tapes—both blank and prerecorded. I was most interested to read the Green Paper published yesterday, and was somewhat encouraged by the fact that it seems to be a good deal less negative than its predecessor.

I remember being responsible for opening a debate in your Lordships' House on the subject of that earlier Green Paper which was published in 1981; our debate was in 1982. I remarked, as indeed did many other speakers, on its negative approach towards the idea of a levy on tapes. Since then the Government have undoubtedly been doing some more thinking on the subject. What I found encouraging-and I hope that it will not be proved that I am reading too much into this—was what seemed to me a rather significant passage in the Green Paper which is to be found on page 9: It is far less clear for video than for audio what basis could be used to subdivide the levy proceeds among the main groups of beneficiaries and within each group. One possibility"— and these are the words that I emphasise— might be for the film proceeds to be diverted to a central fund to be used in the film industry to support production". I certainly welcome that sentiment. Study of this matter has shown that, if one is to attempt to distribute the proceeds of a tape levy among all the possible individual copyright owners, it will prove to be a totally impracticable exercise.

The noble Lord the Minister is probably aware that the interim action committee, which is shortly to reemerge under the guise of the Screen Advisory Council, has been hard at work on this subject and is in the process of producing a working paper which endeavours to show how this problem can be dealt with in a thoroughly practical way—something for which the Government plead in this Green Paper. I should like to express the hope in that context that the Government will, having adumbrated that notion, pay serious heed to the constructive suggestions which I think will emerge both from that council, of which I have the honour to be a member, and, I think, from other sources which will show how this may afford an avenue for support for the film industry.

Then a word must be said about the so-called son of NFFC, now redesignated as the British Screen Finance Consortium. Many questions arise about that new structure. The main criticism is inevitably that it appears to be too commercially orientated. The Minister in the other place referred to the excellent prospect of carrying on the traditions of the NFFC, and that is apparently desired. But one cannot avoid some doubt as to whether the very special way in which the present NFFC has been able to perform its task by reason of its very independence can possibly be achieved in a body which is so commercially orientated.

I am delighted to hear that these draft heads of agreements are in the Library. I was not aware of that and I have not had an opportunity to study them. But I have been told by someone closely concerned in this matter that great care is being taken to ensure, for instance, the independence of the chief executive in the choice of projects. I certainly hope that that is so. But as the noble Lord, Lord McIntosh, pointed out just now, the real difficulty is to know quite what validity heads of agreement will have in a body of that sort. So much seems to be taken on trust.

We have the new notion of a limited partnership under the 1907 Act, which is a most unusual form of organisation. This Act has hardly ever been used. One wonders whether it may not create awkward problems. However, these are matters of detail on which I need not spend more time.

However, I should like to say a few words on the training aspect. From this point of view our attention is centred on the National Film and Television School. Naturally, I welcome the tributes that have been paid to that school. For instance, Mr. Lamont, in the other place, referred to the excellence of that school and its reputation for producing highly skilled film and television programme makers. Those of us connected with the school recognise that the Government's intentions here are perfectly sincere and that they are anxious to help the school and give it some measure of security—that is the phrase used by the Minister in another place. We certainly applaud their support of the financial policy, which has been the policy of the school from its beginning, that it should be a partner- ship between Government and industry, so that we should not have to look solely to public funds but that there should be support from the industry.

Nevertheless, a number of points arise as to whether the Government are adequately meeting these problems. I will only mention them very briefly because this is not the occasion to go into detail. The sum of £600,000 mentioned by the Minister, as he will know, has been explained by the school to be inadequate, to say the least, to cover the current costs of the school. I think this is a matter which is under consideration.

Moreover, the whole future of the school, so far as the industry's support is concerned, is being left to an extremely vague agreement to which the school itself is not a party. One has no way of knowing how this agreement may be enforced if there is any failure to comply with it or any change in personnel. Therefore, one is left with an uneasy feeling that one has a much less secure position than under the previous Eady position. Moreover, by the abolition of the Eady levy, the school has been deprived of the statutory backing that it was given in the Films Act of 1970, whereby the school was designated as a beneficiary of the British Film Fund—and that, of course, has put the school in quite a strong position in dealing with the industry because it has given it a legislative mechanism which gave the school access to the industry itself. The finances of the school have always been precarious. However, whereas one might have thought that this Bill would have been taken as an opportunity to render the school's financial future secure, I am afraid that it has in some ways added to that degree of insecurity.

I come to my conclusion. I say this with regret. It seems to me that this Government have failed—and it is a charge which could be levied against previous governments, too, but this evening I am only concerned with the Bill itself—to take proper account of the cultural significance of the film as a form of popular art of unique force and creative vitality and the immense contribution that film makes to the national culture. Secondly, the Government have failed to realise that that industry needs continuing support, as the whole history of European film has shown. However important the market forces may be—because we are dealing with a commercial product—those market forces alone do not suffice for the special position in which film necessarily develops.

Our apprehensions for the future overshadow to some considerable degree the more hopeful signs from which we can take comfort—the immense abundance of talent and the remarkable successes of recent British films. What we need to secure is that that abundance of talent remains within our own frontiers. There is a great danger that if we do not enable our film industry to develop fully, that talent will be weaned away to other lands and will not fructify our own resources which all of us, I think, agree, would be a very sad outcome.

9.30 p.m.

Viscount Mersey

My Lords, last December, I also took part in the debate initiated by the noble Lord, Lord Lloyd. I argued that the Government should not have any film policy, no controls, and that the film industry should be left to its own devices. However, in this Bill, we are principally concerned with the British feature film—quite a small part of the total amount of film exposed each year, yet the most important part. I agree that there should not be interference in feature film and certainly no restrictive control. I do, however, believe that the British feature film needs help and that such help should take the form of the new levy, or Gorst levy, that has already been mentioned.

Speaking from these Benches, I am of course heartily in favour of a free market economy. But, as stated already, such a thing does not exist where the British feature film is concerned. It faces not one duopoly but two: on the big screen, the duopoly of Rank and Thorn-EMI; and on the TV screen, the duopoly of the BBC and ITV. This means roughly that the British independent product cannot be shown anywhere. In the cinema the Rank, Thorn-EMI duopoly is American orientated. It is linked with Columbia, Warner, Fox, Universal, Paramount, MGM and Walt Disney. In that connection, I would pay a passing tribute to Mr. Clarence Nash, who did the official voice of Donald Duck for 50 years in seven languages and who died today.

You could perhaps say that the big screen is of minor importance because people are leaving the cinemas and going to the small screen. There is a catastrophic fall in audiences. On the television screens, with the BBC-ITV duopoly, I cannot see that DBS and cable have yet done anything to break the duopoly. The problem is one of in-house production. The television people say, "We don't want your product; we make our own". Jolly good they are, too. They include "Jewel in the Crown", "Brideshead Revisited", and so forth. "And" the television people might continue "if we need outside material, we can get it at only £5,000 an episode for 'Kojak', 'Quincy', 'Cagney and Lacey' from the United States of America." Therefore, they say, as stated by many noble Lords, "We will only take British feature films at the same sort of rate. Too bad if it costs £1 million to make".

I do not deny that this sorry state of affairs is to an extent the fault of the British film industry itself. In the mid-1950s, it rather turned up its nose at the infant television and developed separately. In America, quite the opposite happened. Film joined forces with TV. In America, they became allies; here, they became enemies. That is unfortunate, but it is history now.

Still worse, hostilities continue today. Mr. Brian Tesler who was chairman of the Independent Television Companies Association, gave evidence to the Committee on the Funding of the Arts in 1982 as follows: It is an arid and destructive attitude of the British film industry that the television industry owes it a living. If it were not for television, the British film industry would not exist at all". But then, the noble Lord, Lord Lloyd of Hampstead, said to me, at tea only the other day, completely the opposite: If it was not for the film industry, the television industry would be dead". The noble Earl, Lord Winchilsea, has just agreed with that. The noble Lord, Lord Lloyd of Hampstead, cited, quite rightly, the huge numbers of feature films that were shown on all television channels over the Christmas period. Certainly it is feature films that people most want to see on television. Video cassettes are mainly features, and the most successful and most expensive cable channels in the USA run features. The best that television can do "in house" may be brilliant, but it just is not as brilliant as the British feature. In the final analysis, the "Jewel in the Crown" is not as brilliant as "A Passage to India".

So the British feature does need help, but, I would suggest, not by way of capital allowance, as some noble Lords have suggested. Investment in films by people less interested in the medium than in tax relief can lead all too easily to a bad, expensive product. The Australian experience of 150 per cent. tax relief was not a happy one, and I wonder whether capital allowances in this country were even effective, because I cannot detect any rise in cinema attendances between 1979 and 1984.

Now we have the business expension scheme. But what I regard as better than either is voluntary sponsorship of feature by interested companies. I was heartened to read what my noble friend Lord Gowrie said in last Sunday's Observer, about business sponsorship of the arts. He wrote Over the past decade, corporate sponsorship of the arts has risen from a few hundred thousand pounds to £15 million. It is still rising". Businesses sponsor arts more esoteric than film. Barclays Bank sponsored the art of mountaineering when it backed the British ascent of the south face of Everest. The Midland Bank sponsored an entire "Ring" cycle at Covent Garden. What would be wrong with a "Morgan Grenfell Film" instead of a "Warner Brothers Film"? Would it not be really rather suitable for Prudential Life Assurance to sponsor an Agatha Christie murder mystery?

Yet experience has shown that this does not work unless, to begin with, there is adequate money provided from a central fund. For business sponsorship to succeed it is essential that the proposed successor to the NFFC—the British Screen Finance Consortium, or BSFC—should back British film in a meaningful way, not with £3 million but with something much closer to £20 million, as the noble Lord, Lord McIntosh of Haringey, has said already. The source of the revenue must be a levy on all feature films shown on television screens, whether broadcast or on cassette.

The point about an increase in the BBC licence fee of only 30 pence has already been made. It is a little less than the cost of two first-class stamps; it really is peanuts. That would yield £10 million. The essential springboard for the British feature industry must be an adequately-funded central body. It is true that some people can extract realistic sums from television for their products—I think of Mr. "Cubby" Broccoli and his James Bond films; but the British film-maker, in particular the young, unknown film-maker, cannot. He is the chap who is forced to sell for £10,000 what it cost £1 million to make. But he could be the "Cubby" Broccoli, the David Puttman, or the John Schlesinger of the future. Obviously all famous film-makers started as promising youngsters; and in the past many of them were helped by the old NFFC, with meaningful sums. It is fair to say that without such funding there would not have been, for instance, "Tom Jones", "Gregory's Girl", "The Duellists", or "Bugsy Malone". Carol Reed might never have started his film career: no "Our Man in Havana", no "Fallen Idol", and, last but not least, no "Third Man". My noble friend Lord Lucas himself agreed with me on that point.

I wonder whether I may appeal to the Government on the grounds of patriotism. Can my noble friend Lord Lucas put his hand on his heart and say, "The culture of our country would have been just as great without 'The Third Man', 'Kind Hearts and Coronets', 'Bridge over the River Kwai' and 'Lawrence of Arabia'"? I believe that he cannot. None of those films would have been made had the directors not been launched on their careers by a film fund when they were young unknowns full of promise, but bad box office.

Since the good old days of the "Lavender Hill Mob" and "Passport to Pimlico" the British feature film has lost much of its identity. Only occasionally does it now resurface—as "Chariots of Fire" or "A Private Function". Surely those films are as important to our visual culture as John Piper's stained glass windows or even Turner's paintings. The Government have a patriotic duty to ensure the continued excellence of the British feature film, and they should do that by television levy.

9.41 p.m.

Lord Willis

My Lords, I am not a believer in astrology and I very seldom read my chart in the stars. However, this morning I did happen to glance at mine and it said something like this: "This is the perfect time to prove that you have a remarkable sense of the ridiculous about certain setbacks or losses. Also you are aware that a new and more advantageous agreement can be made". It is in that spirit that I approach this particular debate: I hope that a new and more advantageous Bill will arise out of your Lordships' discussions tonight and in Committee.

Much of the general ground has already been covered by the debate that the noble Lord, Lord Lloyd of Hampstead, initiated a few weeks ago. Therefore, like other noble Lords, I do not want to go over the ground again but simply to underline one or two basic points. The Bill as it stands is rather like the debates in your Lordships' House: good in parts. The Bill is particularly notable for its recognition of the importance of the British film industry. But in my view—and I support the other noble Lords who have said this—it falls lamentably short of translating the recognition of that importance into practical and realistic terms.

There seems to me to be two basic flaws in the Bill as it stands. First, it really does take insufficient account of the precarious position of British films—they live, as it were, on a knife-edge. As I said in the ealier debate, I have been a screen writer for almost 40 years and during that period I have seen our industry stagger from one crisis to another. I posed this question, and I pose it again because it is fundamental, Why, over the years, has it been possible for us to develop what is recognised as some of the finest talent in the world—directors, technicians, writers, and actors—yet we have been quite unable to build a stable film industry?

I do not want to repeat at length the answer which I gave to that question. But the truth is that the British film industry for the last 40 or 50 years has been, in the main, a virtual prisoner of Hollywood. I want to stress, as I did then, that I am not in any way anti-American and that I admire very much what products the great Hollywood dream factory gives us from time to time. However, the truth is that, in their own self-interest, the American film moguls have no wish to see a truly independent film industry in Britain. They know that that would represent unwelcome competition as regards the making of English language films. So for the past 60 years or more they have followed a policy of keeping British films out of their cinemas while flooding the British market with their own product. We have become a virtual colony.

Do not let the Government kid themselves about an odd "Ghandi" or "The Killing Fields" or the odd Oscar that might come to a British film. Most of the Oscar winners have not had full distribution in the States and will not get it; and those that have had it, rarely return a significant profit. There are too many middle men in the middle nibbling at the cake. There is no getting away from these facts. We have not been able to penetrate the American market and over the years we have failed in one attempt after another.

Over the years, in an attempt to give the British film industry a fighting chance, a number of measures have been introduced. We have had the Eady Fund, the British quota system, the National Film Finance Corporation, the British Film Institute and—until the last Budget—certain capital allowances. However, now, at a stroke, the Government are proposing to abolish these or to place some of them in private hands. Most of the measures and organisations which have helped British films to survive—if only precariously—are to go and not enough is being offered in their place. It is as if the Government were to tear down Westminster Bridge and replace it by chucking a couple of ropes over the river. That is what we are replacing these measures with.

I do not mourn the passing of the so-called Eady levy. A small fraction of it found its way to British producers and some was used to support organisations such as the Film School and the Film Development Fund. But the bulk of the money was paid to American film companies. Bond films, financed by American money, but made in our studios, sometimes took £¾. million out of the Eady Fund in a year. The Americans seized the opportunity to make films in our studios with our talent, and then described the films as British made for purposes of the Eady Fund; over the year millions of pounds was exported from the fund to America. It did some good, but it was an imperfect instrument and therefore I do not mourn its passing.

Apart from the abolition of the Eady Fund, I can see little logic and less sense in some of the other proposals. We shall of course go into greater detail in Committee. However, as some other noble Lords have said, it seems to me that the Government have signally failed to recognise the true nature of the film industry and its problems. You simply cannot apply ordinary commercial standards and criteria to film-making; much as we would like to, it is impossible. It is a high-risk investment and almost every film-making country, except Britain, recognises this fact. Many of them have devised special schemes of tax relief in order to attract private investment in films.

Here I must take issue with the noble Viscount, Lord Mersey, about Australia. It was the tax relief that gave the much needed boost to Australian film production. I was present at various meetings of investors called by film producers and I saw these investors actually produce their cheques to make the films possible. At that time they were given 150 per cent. relief; it has now gone down to 125 per cent., or 130 per cent. But those special tax relief systems really did give Australia the boost it needed. And that is a nation of only 14 million people, but it has developed an industry which, as all your Lordships will know, has won the respect and admiration of the world.

It is in this direction that I hope the Government may change course. Investment is the key. We need a a certain amount of money in the middle through the son of NFFC, as it is called, to promote training and so forth. We need much more than the Government are prepared to offer at the moment. But even that will not get the film industry on its feet. What we really need is some attractive form of investment for the City and other financiers which will give them the return. That is the only way we shall do it. If it costs £15 million or £20 million to make a "Gandhi"—and it took Sir Richard Attenborough 20 years to go round the world peddling "Gandhi" in order raise the money—I would not expect any Government to put up £20 million to make a movie; I would expect the Government to put up £20 million for training, film development and script development—in other words, the risk money at the very beginning. After that, if films are to be made, we must give business the incentives. Those incentives have been taken away and in so doing we have dealt the British film industry a mortal blow. Not all the measures in this Bill will save it.

The noble Earl, Lord Winchilsea and Nottingham, together with the noble Viscount, Lord Mersey, have argued that we should have a small levy each time the BBC and the ITV show a feature film. I am sorry to have to part company with them and perhaps with some of my noble friends on this issue, but I find little attraction in the idea of taking from Peter in order to pay Paul.

The ITV companies and the BBC already make substantial investments in British films. Indeed, it has been said tonight that without those investments very little would be done in the way of British film-making. Channel 4 alone will make almost 100 feature films by 1987 at a cost of about £100 million, and that will provide work for actors, writers, technicians, and so on. Whether those films are shown in the cinema or on television is quite immaterial, because the borderline between the two is closing all the time. The fact is that they are subsidising the making of films, and this is in addition to the other grants that they make to such organisations as the British Film Institute and the National Film School.

It has been argued that the BBC and ITV companies combine together unfairly in the purchase of films; that they keep the price artificially low. The films that are quoted when there is talk in those terms are the small films which have run their course; films which have had a fair lease of life or are not of the top quality. But they have had to pay, and they still have to pay, enormous sums for blockbusters. The BBC had to pay out millions to get the rights of "Gone with the Wind". You may say that they should not have done so, but they did; and to get the rights of any up-to-date film today you are in a sellers' market and you have to pay a very good price.

In any case, it can be argued: who sell the films to the BBC and the ITV companies? It is the producers. They sell them because they want to make money. I do not know whether the BBC and ITV companies combine in this way, but I hope they do. I certainly would not blame them if they did, if only because by doing so they help to curb the voracious appetites of the American producers. If the BBC and the ITV go to Hollywood to buy movies to show on our screens and compete against each other on the prices, it would be absolute madness. Therefore, I do not see any great sin in what they are doing.

No, my Lords, my strong feeling is that the answer lies not in some special fund, not by a new tax on television, but by tax concessions which will encourage the private investor to put up the large sums which are needed. I would certainly favour, and agree with the noble Earl. Lord Winchilsea and Nottingham, that there should be some kind of levy on recorded and pre-recorded cassettes, and even on blank cassettes, with the money being used to compensate film producers and to put money into a film production fund, but not only in that way. We have to remember that there is a queue of copyright owners, such as authors and others, musicians and so forth, all of whom would be entitled to some part of the money. I think that that would be a reasonable proposition, that one should have a levy on the tapes.

In addition, the Government must give greater support, rather like the French Government support their film industry, as has been said, to the tune of about £75 million each year. I would not expect that kind of sum: but if we could keep to the 1979 level of support which came from Eady and other sources, that would give us the start money, the risk money, which the industry needs. In comparision with that, what the Government offer in this Bill is really piffling.

The British film industry is not asking for the moon. We do not want any special favours. We want merely to be recognised as an important cultural and commercial arm of Britain. We want to be given a small part of the support which other Governments extend to their film producers. We need this to survive. We need this so that we shall not be swamped by overseas products, and so that the unique cultural nature of our best indigenous films may be maintained.

There are many good things in this Bill, but they do not go far enough; and, above all, the amount of central government funding is inadequate. Tax incentives for the main, big investors, and more money from central government, and you will have a film industry which will surprise the world.

9.54 p.m.

Lord Birkett

My Lords, so much has been said tonight, and so many good arguments put forward, and so much of it has been said in unison, that I shall try not to keep your Lordships long. I cannot let the debate go by without remarking on what a really desolate prospect this Bill raises. I am irresistibly reminded of somebody who, piece by piece, has taken apart a delicate and complex mechanism, and who finds himself without the skill or energy to put it back together again. From this Bill the film industry seems to me really to be in pieces.

Of course, we all recognise that a degree of bureaucracy will vanish with it, and we shall all be happy for that reason. We shall all be glad to see that the British Film Institute has been remembered and not forgotten, and that its good work will in some way continue. We are equally happy for that reason about the film school; but when it comes to the major central issue of the film industry as such, one can see little comfort at all. Indeed there is only one thing left to it. The CFC is to go, the Eady levy is to be abolished, the NFFC is to be abolished, a great rack of things are to disappear and in their place one looks for some kind of central system of support. Dozens of countries all over the world can provide examples. Unfortunately, all the examples are different. Every nation has invented its own complicated system of prizes, subsidies, returns of tax concessions and levies. There are 101 ways to do it. But every country that has a flourishing and a civilised film industry has done it.

We are faced with this new son of NFFC. I have been practising saying "BSFC" to see whether it came trippingly off the tongue—cannot say it does, more work yet and it might, but at the moment I cannot say that it flows easily. It certainly does not flow easily in the way of money because as everybody has pointed out (I will not weary your Lordships by repeating it yet again) £3 million per year spread over anything up to 10 films is not enough, particularly if one considers the suggestion that that funding represents between 25 and 30 per cent. of the fund of each film which automatically restricts each film to under £1 million. There is no reason why we cannot make, even in this day and age, a good film for under £1 million. But an awful lot of good films need more than £1 million. I think it is unduly restrictive to expect the industry to go forward on a £3 million per year 10-film programme. I simply do not believe it. Everybody has pointed out that more money is needed and most people in your Lordships' House tonight have pointed out that the best way—I know that there are exceptions as the noble Lord, Lord Willis, has just dissented from that—would seem to be a levy on televisions films.

I will not weary your Lordships by going on at length about the reasons for it because they have been advanced. However, perhaps I may be allowed to add something to what the noble Earl, Lord Winchilsea and Nottingham, said about the economics of films on television. He rightly said that at the lower end of the market a feature film will be bought for television for between £6,000 and £7,000, which is a very low figure. What is interesting is that the average price of an hour of drama made by and for television is about £100,000 on ITV, and slightly less on BBC. That is the average figure for an hour of entertainment. So one can see that the purchase of a feature film lasting an hour and a half for between £6,000 and £7,000 gives an extremely good deal. After all, you are getting drama. It is not a documentary, education or quiz show. Therefore what you are paying for your hour and what you ought to be paying for your hour are so far apart that I cannot believe that a levy, albeit a modest one, on films shown on TV would not be the ideal way of funding this new corporation to the tune which it surely needs.

As the noble Lord, Lord McIntosh said, there may be a dozen different ways of working out how one calculates that levy and on what basis. I am not an expert and will put forward absolutely no suggestion about it except that that seems to me to be the way to do it. At the moment what the Bill presents is not so much a support for a flourishing film industry as a requiem for it.

10 p.m.

Lord Briginshaw

My Lords, I must immediately join with my noble friend Lord Willis in saying that investment is the key to the whole problem. This Bill before your Lordships and this discussion on the Second Reading, taken together with positive representations from all sides of the film industry with unprecedented unanimity, are impressive beyond measure. The issues are closely argued in the most positive fashion; support is emphasised for the continuation of financial partnership between Government and the industry. It has been a cornerstone of the training policy of successive Governments via the National Film and Television School; but concern is expressed that the Government may not get the relationship properly worked out in order to maintain the educational independence of the school, to secure for it the proper level of funding, and to guarantee its future funding against the changes of ownership in the private sector.

We are aware that the school not only is responsible for training students in its full-time programme but also has the responsibility for the national short course training programme which, among other things, is helping to retrain a generation of free-lance film technicians to work with new generations of electronic technology. Without this retraining, the industry's efficiency and productivity will be seriously impaired. Since the film production workforce is largely self-employed, it is only through a national initiative that the required retraining can be provided. Any of the proposals for a redistribution levy which are being put forward or might be introduced must therefore reserve an adequate allocation for training and retraining.

As an industry there is concern that in the absence of such a levy the training provision will be seriously diminished and the industry will consequently be severely weakened. There is a lack of a cultural element, previously mentioned by noble Lords. It is believed that a fundamental omission from the Bill is an acknowledgement of film culture as a record of the changing face of society. This would be achieved through the proper funding of the British Film Institute Production Board, the workshops and the regional art associations. These three elements are now essential to innovation and development in British film. Film, just like theatre and music, must retain an arena for experiment close to but not part of the commercial cinema and separate from training in the narrow sense.

The Films Bill contains no provision, as I see it, for any of the foregoing. Unity in diversity, if I may say so, my Lords, is expressed with a reflection that we ought to get that culture. We should not underrate it in any circumstances because it is everywhere in our country. I am sure that the utilisation of this will be to our general advantage.

10.4 p.m.

Lord Auckland

My Lords, I hope that my noble friend the Minister and the House will forbear with me if, due to public transport being what it is and my not living in London, I have to leave before the debate concludes. I hope that that will not be necessary. Any Government which is faced in the mid-1980s with promoting a Films Bill is probably on a hiding to nothing because, whatever legislation is brought forward, somebody is going to be displeased.

Of course, in regard to this particular Bill the television lobby has been criticised, I think rightly. Mention has been made of the number of films shown on television over the Christmas period. I made a count and I think the figure was 85 films in four days. One has the ludicrous situation of two television channels, and sometimes three, showing films at the same time. I shudder to think what the outcome would be if we had cable television.

A number of noble Lords who have taken part in this debate work in the film industry in various capacities; I am not one of them. I speak as a consumer, though I must say, as I said in the recent debate on the White Paper which was initiated by the noble Lord, Lord Lloyd of Hampstead, that nowadays, since in my part of Surrey there are no cinemas in Epsom, Leatherhead, nor Dorking, I have to rely very much either on our local Thorndike Theatre, which occasionally shows films, or on seeing them on the television screen. I do not object to films being shown on the television screen, but I believe that this is an industry which needs more recognition than it sometimes gets.

Looking at this question from a financial point of view, one can quite see the dilemma which faces any Government at the present time. All Government departments are begging for more public finance—for the arts, social services, roads, overseas development and so on—and whichever Government happen to be in power they are faced with criticisms from some quarter if they disburse too much or too little public money. But our cinema industry has had a distinguished record and it is a sad commentary that there is, as I understand it, only one full-time film studio operating in this country at present. This is the Pinewood Studios, which has, I think, an entirely British team of technicians. It is a feature films studio, perhaps I should say—

Lord Willis

My Lords, will the noble Lord give way? Films are made at Elstree and Shepperton, and I think there is a studio still operating at Twickenham.

Lord Auckland

My Lords, I am grateful to the noble Lord, Lord Willis, for that information. I was of course talking about main feature films; but the noble Lord has much more experience of the film industry than I or indeed many other people in your Lordships' House. I in fact visited Pinewood Studios with two of my noble friends the other day, and I have been there on previous occasions, too. I think a tribute should be paid to the people who work in those studios, particularly the technicians, and those in the carpenters' shop and elsewhere. They are the people who are really the hub of the industry, and it would be a crying shame if the cinema industry were to deteriorate still further. What then would be the future of these people? To some extent, this Bill makes the best of a rather poor job. It does not completely decimate the industry but it seems to the layman like myself to pick about.

Mention has been made of private funding of the industry. This happens in the visual arts, particularly music. Symphony orchestras are funded partly by the Arts Council and partly by commercial concerns. If commercial concerns did not fund them, many would not survive, despite the fact that under the present Government, even though the funding of the arts may not be adequate, it is higher than at any other time. But of course one has to make allowances for inflation. So any government are faced with a dilemma as to how the film industry should be funded publicly as opposed to being funded by private consortia. What we have to avoid is any further drain of British talent leaving the cinema industry and going elsewhere. We shall have a Committee stage on this Bill when we can go into the more technical details. Inevitably, this debate has ranged far and wide over the film industry; but the Bill itself poses more questions than it tends to answer.

10.11 p.m.

Lord Graham of Edmonton

My Lords, for the purpose of this Bill, as I have done on previous film debates, I declare an interest in an association with the Association of Cinematograph, Television and Allied Technicians. The House could not be other than impressed by the breadth of experience that has been brought to this Second Reading of a very important Bill. The Minister must be aware that, regardless of the friendship that we might show towards him personally, the Bill itself is virtually friendless all around the House. That does not mean to say that we are unanimous in our feelings towards the different parts of the Bill. Members have said that there are parts of it that are good and parts of it that they do not like, while various noble Lords have indicated some changes which they would support and some which they would not. So noble Lords are certainly not unanimous about what they want. But I think the Minister can take it that it would not be an overstatement to say that there is a hostile reception to the Bill.

The Minister must understand that one of the achievements of the Government has been to bring together disparate interests in the film industry to a remarkable degree. The National Film and Television School, the Directors' Guild of Great Britain, the British Film and Television Producers' Association, the British Film Institute, the Association of Independent Producers and the Association of Cinematograph, Television and Allied Technicians have combined their common interest and concern for the future of the film industry. They do not have a fancy title. They have not decided to call themselves something that might be dramatic or provocative. They have simply got together, because they recognise that if this Bill proceeds as the Government intend it to proceed there will be grave consequences for the future of the film industry.

I do not talk about disaster or catastrophe, because many of the people I have met and learned to know and respect are resourceful and will be survivors. However, I hope that the Minister will recognise that we are giving him tonight, with his ministerial colleagues, the opportunity to reflect seriously before going much further. The Minister must know that in a Committee in the other place the three senior officers of the Conservative media group combined with Members of more than one party on the Opposition Benches to demonstrate that they were prepared to say to the Government: Think again. Reference has been made, sadly, to the history of a useful amendment—it may not have been the answer—which Members of the Conservative Party, who I would certainly respect as knowing more than many others, felt should be made.

The Minister needs to take on board the fact that there is no party animus in what those who have spoken want—I see that he nods his head; I am grateful, and I acknowledge that—but the Minister either has advice which is contrary to the advice which those like myself are given by people whose views on the future of the industry we respect, or, alternatively, there is an imperative which Members here will certainly not accept. It has been categorised as walking away from the problem or allowing people to do one or two things that we do not like.

I think the Minister should listen carefully to the words of his political friend Mr. Roger Gale, who in Committee in another place said, in effect, that what he was after in the amendment that was successfully carried in Committee but rejected by the Government on Report was, founded on two fundamental Conservative principles". That is what he believed. The first principle he talked about was that people should be prepared to pay a fair price for what they get. In this instance, it was the television companies. The other principle was that it was a move towards the ending of restrictive practices. That is how he saw the amendment that was so important.

The Minister has opportunities to see whether it is not possible to accept one of the amendments that will be moved in Committee or perhaps come forward with something that may well satisfy a wide range of opinion. The Minister smiles and asks me to understand his difficulties and problems, which I do, but if we are to be in the business of improving the Bill by dividing the House, quite clearly that may be the only alternative. But that is not the only way in which we can make progress.

Noble Lords have very effectively demonstrated their deep knowledge and understanding of the history of the film industry in this country, and, of course, I cannot possibly improve on what I have heard. I am always deeply impressed. I certainly want the Minister to take on board the powerful case made from experience by the noble Lord, Lord Willis. The noble Lord asked the Minister to look seriously at whether he could not say helpful things and deliver them by way of fiscal incentives; at whether the industry will be improved by the levy; and at whether it will be improved by persuading British investors that it is worth investing their money in British films, which at the moment it is not.

The ACTT and others have demonstrated by their contacts in the City the amount of money that needs to be funded centrally before they are prepared to put in their own money. It is all sensible and logical, and, as my noble friend Lord McIntosh said, even from the point of view of business acumen the question is whether we have a Government of businessmen who understand business when they put together a package which so patently is out of accord with the times.

Reference has been made by the noble Earl, Lord Winchilsea and Nottingham, to another means whereby some central funding could be provided—by a levy on video and audio tapes. A reference was also made by the noble Lord, Lord Lloyd. In his absence—and we understand his need to leave—may I say that I think he made a very impressive case for better funding for the National Film and Television School. As to how that is to be done, and whether we have to think in terms of amendments—that may or may not be the right way—we shall have to wait until Committee stage to see.

What in fact we need at this time from the Government are perception and courage. I do not doubt their courage if we can get the perception right. We believe that they have the wrong perception. Outside of any party animus, I genuinely believe that there are the means of getting the British people to realise that the film industry, by comparison with a great many others, including the television industry, has not had a fair crack of the whip.

We heard statistics on the cost of producing films and producing drama for television. The noble Lord, Lord Birkett, gave the cost of producing drama as £100,000 per hour, whereas a film might be purchased for the equivalent of only £6,000 or £7,000 per hour. That contrast is quite ridiculous. At the end of the day we want to give our British film industry something that it does not have now—a feeling that the Government do care. It is not that the film industry feels unwanted—just that the Government do not care enough about its problems.

Indeed, the film industry believes that it has evidence to prove that in the past few years the Government have actually taken steps which have damaged its ability to survive in the future. I hope very much that the Minister will be able to say—and I and other noble Lords will be pressing him on this—that as from tonight there must be a will to lift the film industry out of the doldrums in which, for a variety of reasons, it now finds itself. We want to see the British film industry elevated to what we consider to be its proper place. Its proper place is as a trail blazer for British craft, for British art, for national flair, for British genius—and in helping British culture. We want to maintain our British film industry for British workers. At Committee stage we shall try to help the Minister do just that.

10.21 p.m.

The Viscount of Falkland

My Lords, I thank the noble Lord, Lord Graham of Edmonton, for coming up with the word I have been seeking; that word is "perception". Ever since our debate last December I have tried to find a word that is charitable and understanding in describing how it was that the Government's line on the British film industry came about. I believe the noble Lord was absolutely right when he said that it was due to a lack of perception. Even taking into account the White Paper and the distinguished persons who were consulted and who were acknowledged in that White Paper, the lack of perception there is very clear. That lack of perception is not something that has suddenly come forth from this Government; it has perhaps endured for a great length of time.

What has now happened is that which the noble Lord, Lord Birkett, described so brilliantly as a dismantling of a delicate instrument. In fact, it has not been possible to put it together again. The situation as it obtains in Britian at the moment is far from bright. As to the changing fortunes to which the noble Lord the Minister referred, I understand his thinking on this. He mentioned British films which have received some acclaim; the old stand-bys are "Gandhi" and "Chariots of Fire". But they are fairly exceptional examples. The truth of the matter is that our cinema audiences have been declining; they have been in a downward spiral since the 1950s. This has resulted in a situation that is not common. Indeed, we are unique in the way that our film industry is suffering.

One thinks of America. The noble Lord, Lord Willis, mentioned that we are often associated with the American film industry. Possibly one of the misconceptions which lies behind the thinking on our own film industry dates from the 1930s, when the film "The Private Life of Henry VIII", which was an enormous success, gave rise to the conventional wisdom that we could produce films which would be profitable from their American returns. That has never, ever been repeated.

In the United States, the situation as regards the film industry—and when I talk about the film industry, I mean the exhibition of films in traditional film theatres—has been maintained at a very steady level for about 20 years. On the figures available last year, the number of cinema theatres in the United States was something under 20,000 screens, which is an enormous number, when one considers also the extent of television in the United States. In the United Kingdom, the number is now just over 700. It may even have decreased since the last figures were available. That is a reduction from about 4,500 to 5,000 in the 1950s.

One of the central causes for the failure of our industry has been the dilapidation at the exhibition end; the inability of the exhibitors to provide the kind of environment in which the public can comfortably see films. A healthy film industry requires a healthy exhibition end; and that is not a healthy exhibition end on the small screen. It is a healthy exhibition end in the cinema theatres.

That is something which has been realised in other countries very close to us in Europe. The nettle has been grasped in France, Belgium, Switzerland and Germany. It is important to maintain the exhibition end. It would be invidious to make comparisons, and we do not have the time. However, France is probably a good example to give. It is a misconception that the French are more temperamentally suited to the medium of cinema than we are. I think that the figures which have come out for audiences watching films on television show that we are as enthusiastic about feature films as anybody in Europe or the United States; yet we, for reasons of lack of innovation and of imagination, which have resulted in—as, I am afraid, is common in our country—lack of investment, have experienced a steady deterioration and lack of willingness on the part of the British film-going public to go into cinemas.

There are cinemas in London, Manchester and Glasgow which are comparatively comfortable. That is where most of the cinema-going public goes, but I do not know whether any of your Lordships have attempted to take members of your families to cinemas in the provinces. I still have young members in my family, and I tend occasionally to take them to cinemas in the provinces. I must say that one gets a better standard of comfort in a bus shelter! Certainly nobody can be blamed for wanting to stay at home and watch a film in the comfort of his own home. Of course, the remarks that have been made by noble Lords about the cheap rate at which the television companies get films is absolutely right. But this is not central to the problem. We must improve the whole environment of our film industry.

Apart from the misconception about our ability to earn in the United States, there is another very central and important factor which has to be understood. It has been mentioned by several noble Lords here. It is the curious and very British lack of trust of anything which has the words "culture" or "art" attached to it. The great Frenchman, André Malraux, gave his definition of cinema as the perfect example of art and industry. In other countries of the world, including the United States, there has been a successful balancing of these two factors—art and industry.

The noble Lord the Minister mentioned, with some emphasis, commercial cinema. This is something which worries me. I do not like this dichotomy; this idea that we have on one side commercial cinema and on the other side we have something slightly airy-fairy, something slightly pseudo, which is the cultural end. This is probably another reason which has caused the lack of interest in the cinema. Probably the only organisations which have been able to do anything about this balancing of the commercial and the artistic have been the following. One is the very organisation which is now being dismantled, the National Film Finance Corporation. It did this through its revenue from the Eady levy, and so on. Nobody would criticise the Government for getting rid of the Eady levy because there is not enough exhibition to have that. However, the replacement of the National Film Finance Corporation by another body seems to me to be totally irrelevant.

The other body in this country which has attempted it is the British Film Institute. It has attempted it very successfully. This has probably been appreciated only by film buffs and people in the film industry. The British Film Institute, on a very slender budget which it receives from funding resources here and from voluntary sources, has managed to produce in this country a network, mainly centred on London, with its National Film Theatre, and so on. It has managed to spill out into the provinces and has, as an adjunct to that, a network of film workshop activity. Such activity, if we look to the future, is an important function, an important contribution to the film industry because it is at this cultural level where our seed corn (to use a popular expression) of talent, technical and creative, will come.

I have not yet quite understood what these "shorts" are which have been included in the Bill. The noble Lord the Minister may explain this or it may become clear at Committee stage. I do not understand why it should be found necessary that new talent should cut its teeth on these 35 minute shorts. Having had a fairly mis-spent youth, I have probably been to cinemas in more countries than most. But I have never been tempted to see a 35 minute film unless it has been a special subject such as an educational film. Perhaps the Minister will enlighten us. I am curious to know what a 35 minute short is. However, I wonder what the up-and-coming film directors, the up-and-coming film technicians, and so on, will think about cutting their teeth on a 35 minute short. I am curious about that. I should say that the whole lack of perception on this Bill, which we have discussed, has probably actually benefited us. That is because one of the benefits of this is that we have all got together, since December, with interests.

I have not talked to anybody in the film or in the television industry who has thought that this Bill is good or relevant. I think that we have been able to concentrate our minds on this lack of perception, and that something good will come of it. I am of an optimistic nature. I am quite sure that even if this Bill should go through in the form in which it is and result in the complete collapse of the film industry as we know it—which I think is likely if we do not amend the Bill—we will then be forced to look, as other countries have done, particularly other countries in Europe, at ways of resuscitating our film industry. Time is now getting on. I think the useful work will be done at Committee stage.

Before I wind up, I should like to say that if we are at some stage going to look at other parts of Europe, we ought to look at France. France had had similar problems to our own. In the 'sixties they had falling audiences and dilapidated exhibition centres. They found that the television was drawing people away. They took active steps, with Government support, using, through its agency, a redistributive mechanism—which is the accepted way of doing it—to create a rejuvenated film industry. There were problems, but a levy similar to our Eady levy, although its application was somewhat different, was operated. A tax of 14 per cent. before VAT was collected from exhibitors. In 1983, this was placed in a rolling cinema support fund, known as the fonds de soutien, which in that year totalled well over £50 million. Seventy-seven per cent. of that fund came from contributions and a further 8 per cent. from television, with a 15 per cent. top-up from the state. The money was collected and administered by a Government-sponsored agency. Another important factor—to be considered, I suggest, in any future reform of our film industry—is that the money went back into production, distribution and exhibition. It went right across the board. There was no concentration simply on production, leaving exhibition to fend for itself.

This process rejuvenated the French film industry to the extent that there has been an eightfold increase in the number of people buying cinema tickets. There were some problems. As always happens, unless you have a regulatory body in films the big boys tend to get the biggest piece of the cake. It was the original thought of Monsieur Jacques Gajos to create the agency for regional cinema development in France. This body, with very little Government subsidy, enabled small cinemas to obtain big films quickly. That has never happened in this country. It has enabled small cinemas in regional areas in France to buy prints from the agency, which had them printed at its expense. This has revitalised interest in films in areas of France that had not been well served. Over the last 18 months there has been a remarkable renewal of interest, with cinema audiences increasing by four to five million.

I agree with the noble Lord, Lord Willis. I liked his illustration of tearing down Westminster Bridge and throwing ropes across. I hope that the united front shown by the film industry at all levels, and indeed displayed by your Lordships' House, means that the noble Lord the Minister will heed the remarks that have been made. I am sure that he will be sympathetic to the new vision that we have been able to create, and will see that a wider understanding is perhaps necessary in order to put this business really on its feet. We should not be fooled by one or two successes, one or two Oscar nominations and so on. Unless we are careful, as the noble Lord, Lord Willis, has said—he said it more forcibly in our debate in December—any money that we put into the new operation will somehow get back to the Americans, who are very jealous of their English language film industry, and it will not benefit our industry at all.

It is a balance of culture and commerce: a matter of taking a completely new look at serving an interest that is not dead. People want to go to the cinema. It is a pleasant place to visit, and they can see good films quickly and in comfort. We shall have a flourishing film industry.

10.40 p.m.

Lord Lucas of Chilworth

My Lords, I do not take quite the same view as the noble Lord, Lord Graham, took in his opening remarks, because I have not regarded this evening as at all hostile; I have found it extremely interesting. But I have to say that some five hours ago I heard a number of noble Lords talking about another industry precariously balanced between survival and extinction. That is what I have heard again tonight. The one common theme between the earlier debate and this one was that noble Lords asked, in a variety of different ways, for more money—more taxpayers' money.

Frankly, that rather saddened me, because I do not think that is the right way of going about things. Money does not grow on trees; it has to come from the taxpayer. It is the Government's general view that we have to provide the right kind of environment in which people have a free choice as to how they spend their net disposable income. We have, through taxation, reduced quite markedly over the last two years the imposition on the corporate sector, and there is another year of that plan to go; so there are more monies available for various industries without its all going in tax, and it would be quite wrong to reverse that trend by taking more money away from the taxpayer by increasing taxes to meet the demands not only of this industry but of other industries.

I shall enter very much into the spirit of this evening's debate because I have found it interesting. I want to assure noble Lords that I will take away and think about many of the ideas that have been put up, and discuss them with my colleagues. I am grateful to the noble Lord, Lord McIntosh of Haringey, for identifying some of the areas in which he suggested he might be seeking to amend the Bill. He agreed that the innovation, the commercial risk, inherent in this industry was not something which was necessarily a role for the public sector but was better undertaken in the private sector, with safeguards. I believe that we have introduced in this Bill the safeguards for which he calls.

The noble Lord, Lord Birkett, said that we were quite wrong on the dismantling of the existing framework of the industry and had been clumsy in restructuring it. I do not agree, because we have provided a good restructuring and we have provided continuity in the form of the new consortium. It has among its members highly reputable people. I am sure that no noble Lord would suggest that the existing members were going to do anything other than that which they have agreed to do, and do it in an honourable and wholehearted fashion. They are putting up some very good money. In fact, the continuity is such that, certainly for five years, there will be more money available to the industry. Of course, it cannot be anywhere near the £18 million which the noble Lord, Lord McIntosh, spoke of as the 1958–66 Eady levy contribution. It would be ridiculous if I ever suggested that we were going to match that kind of figure in an industry which has changed so remarkably since that time, as I tried to make clear in my opening remarks.

We think that the private sector successor to the NFFC is a good arrangement. We believe that, as it gets under way—and a lot of progress has been made in the last few weeks other members of the industry will join that consortium; and, in turn, that will generate more money. I take very much to heart what the noble Lord, Lord Briginshaw, and others, have said.

The noble Lord, Lord Willis, in particular spoke about reviewing the general tax system; perhaps the term "tax regime" would be a better way to put it. He was really suggesting—as I think was the noble Lord, Lord Briginshaw—that the real answer was investment. Investment in an industry such as this, which is so highly speculative and is a big risk business, must come from the private sector. It is not the Government's function to risk taxpayers' money in this kind of area.

My noble friend Lord Mersey made a number of interesting remarks. However, with respect, I think that my noble friend was wrong in his suggestion that people are especially keen to see feature films when they watch television. Investigation has indicated that the percentage of television screen time taken up by feature films is only about 10 per cent., and that percentage is steadily falling; that is, apart, of course from the festival periods. In fact, in most weeks of the year very many more people watch the serials, the soap operas and sport than watch any feature films that are shown on television.

My noble friend Lord Auckland spoke about videos. I have a number of figures, but perhaps it would be better if we left that analysis for another day. However, the situation is not quite as my noble friend suggests.

I should like to refer to one point that was made by the noble Lord, Lord McIntosh of Haringey. The noble Lord spoke about the European Directive concerned with what made up a film. I have some sympathy with the noble Lord's view that the Commission really has to take steps to ensure that other member states—not just the United Kingdom—comply with the Directives on the freedom of establishment and labour. I can assure your Lordships that the Government will continue to press the Commission on this matter. Of course, to decide now to put the clock back some 15 years and to re-erect the barrier against other member states would be a pointless and futile exercise. Sooner or later—probably sooner—we would be taken to the European Court of Justice and charged with being inconsistent with the fundamental rights of the establishment and the freedom to provide services. I am sure that the noble Lord would not like us to fall into that trap.

I should like to say a few words about the very interesting contribution made by the noble Lord, Lord Lloyd of Hampstead. During the course of his remarks he spoke about the security of funding of the National Film and Television School. Of course I recognise—as do your Lordships—that he has a particular interest, and it is a very valuable interest. We do not believe that there is any reason to doubt the bona fides of the film and television interests which have agreed to fund the school for the next five years. Moreover, their contributions to the school will be in addition to their existing payments. Therefore, I think that there is a good deal of goodwill in that direction.

Perhaps I may quickly reiterate the main objectives of the Bill. The overriding concern is with the commercial film industry. I do not think that this evening is perhaps the right time to debate what the noble Viscount, Lord Falkland, described as the airy-fairy end of the film-making business. However, as I speak in commercial terms as distinct from cultural terms, it may be that the noble Viscount was suggesting that it was I who thought that the cultural end was airy-fairy. I do not. I am talking about the bread and butter end of the market, rather than the educational and specialist market which, in my vocabulary style, more neatly falls into culture. However, contrary to what the Lord, Lord McIntosh, suggested, let no one be under any misunderstanding that the Government have no care for the culture of our society. Of course, we have. Indeed, the grants which my noble friend Lord Gowrie makes from the budget of the Office of Arts and Libraries to that part of the film industry, although perhaps not as large as many people would like, ought to demonstrate the Government's feelings in that area.

I reiterate that the main policy as set out in the Bill attacks the main problem area. We sweep away this raft of regulatory controls; we pave the way to do away with the Eady levy, which has not helped in recent years. I take the point that the noble Viscount, Lord Falkland, made in his remarks about the dilapidation of the cinema and the run-down at the exhibition end of the film industry in recent years. They say that the abolition of that levy might possibly make the difference between survival and extinction.

While I am on that point, I would agree with the noble Viscount that the exhibition industry has a very much more important role to play in the future. It must find new products; it must find a new way of marketing and selling those products. I do not suggest that, for all that they might do, they will encourage all those people who have left them to return to the cinemas, but I was interested to note that an experiment in Darlington of all places, which has a very high unemployment rate, of reducing film prices is having some encouraging results, and is of course adding to the social life of what is a deprived area.

There has been much talk about the cost of television time and the cost of making short films, long films, major films, and so on. When I was looking into the background of this Bill I was surprised to find that there is less of a problem today in securing finances and ensuring backing for a high-budget, really big film than for a low-budget, modest film. For a £10, £12, £15 or £20 million budget film with television rights and international rights involved, there is no great difficulty in raising money. It is in the other area where there is greater difficulty and this is where the proposals in the Bill set out to give assistance; I refer to the low-budget £1 or £2 million film, which does not attract risk finance quite as regularly.

Again I noticed and was encouraged that Investors in Industry had recently subscribed to or taken a financial interest in the Barkworth television film series "The Price", which has just finished. So industry outside the film industry is taking some interest.

As it has been mentioned on a number of occasions during our debate, I think I should say something about the levy principle. I hope that no one will take it amiss if I say that arguments that have been advanced tonight for a new levy are not entirely novel. We received similar representations during the course of the review of film policy and they were summarised in the While Paper in paragraph 5. We summarised the Government's response to those representations. It may not go amiss if I reiterate them.

First, the White Paper makes the point that we do not believe that statutory recycling mechanisms are an efficient way of encouraging an economic activity that should essentially be orientated towards the market—a market which, as we have heard, is expanding in a number of areas through a number of outlets. Secondly, the argument that the original Eady system was efficient by virtue of the fact that it rewarded success cannot be used to promote arrangements for siphoning off returns from commercially successful productions in order that films can be made which would otherwise not attract market finance.

We also stated in the White Paper that we did not believe that the Government should intervene by introducing a television film levy which would increase the costs of the BBC, with consequent implications for the television licence fee; nor did we think that it would be right to increase the costs of the ITV companies, either. It is claimed that a levy on films shown on television would be an important corrective mechanism, for underlying that proposition is a belief that the BBC and ITV pay too little for the films they show. I do not know on what basis that statement is made. I believe that the film makers are big enough boys to negotiate and deal with the so-called duopoly.

I am rather intrigued that one does not hear the football industry complaining about the price they receive. A deal is struck between the football interests and the television interests. Nobody has actually said, "Let us have a levy per viewer of football". Therefore, I think that the industry could well look after itself there. I am not persuaded, and the Government are not persuaded, that we need an artificial recycling mechanism in statute in a market which, despite all the limitations, is nonetheless pretty capable of operating without that distortion.

I do not want to keep the House any later. We have had an interesting debate. I shall look forward to the Committee stage. I have no doubt that many of the points raised this evening will be discussed, and I know that those amendments which we may see in a week or two will be constructive. In conclusion, I believe that the Bill as it stands sets a rather better framework within which the commercial film industry can tackle and overcome the problems confronting it. I believe that the Government have provided an amount of money which will secure continuity, and which will give the industry that element of faith that it so rightly deserves. I hope that in the course of our further consideration we shall not be confronted with demands for further taxpayers' money to support an industry rich in inventive genius, in skills, in talent, and indeed in culture. I hope that your Lordships will give this Bill a Second Reading tonight.

On Question, Bill read a second time, and committed to a Committee of the Whole House.