Lords Sitting of 7 March 1985

Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Derby): The LORD CHANCELLOR on the Woolsack.

Trident: Independent Deterrence
Lord Beswick: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will give an indication of the circumstances, referred to by Lord Trefgarne in answer to Lord Beswick (Official Report, 17th December 1984, col. 429), in which the United Kingdom would be prepared to use the Trident nuclear missiles independently of her NATO allies.
The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne): My Lords, to discuss in advance when Trident might or might not be used would be tantamount to suggesting to our adversaries the circumstances in which they could attack us with impunity. I hope the noble Lord will forgive me if I decline to do that: Neither our nuclear, nor any other, weapons will of course ever be used save in response to an attack.
Lord Beswick: My Lords, in thanking the noble Lord for that Answer, and more for its courtesy than for its content, may I say that I sympathise with him in being in the difficult position of having to put forward a credible scenario in what is a quite impossible situation? However, may I ask the noble Lord, since he contradicted me so firmly on the 17th December, whether, if it ever came to an exclusive bilateral exchange of nuclear weapons, there would be a sufficient pause to enable our American allies to withdraw from their United Kingdom bases to escape destruction? Also may we take it that we already have an agreement with the German Government which will enable our forces in Germany to operate from that territory in the event of this independent war which the noble Lord is suggesting?
Lord Trefgarne: My Lords, the whole thrust of our policy is designed to avoid the kind of scenario which the noble Lord describes. The question is therefore hypothetical.
Lord Mayhew: My Lords, may I ask the noble Lord whether it is the Government's intention to assign the Trident fleet to NATO, as is done with the Polaris fleet?
Lord Trefgarne: Yes, my Lords; on the same basis as the Polaris fleet is assigned.
Lord Beswick: My Lords, the more we consider the possibility of the independent use of this weapon, does it not become apparent that the thing is absolute nonsense?
Lord Trefgarne: My Lords, the whole purpose of our independent nuclear deterrent is to add to the deterrent posture of the Western Alliance, and that it has succeeded in doing for more than 40 years.
Viscount Trenchard: My Lords, would my noble friend agree that perhaps the problem of the noble Lord, Lord Beswick, is in not viewing this matter from the perception of a potential aggressor in 1995 or later—perhaps because he is not an aggressive man and is a good democrat? But would my noble friend agree that if one does look at it from the viewpoint of a potential aggressor, it must be obvious to such an aggressor that his only hope of taking over another part of the world—which might be his intention—would be if nuclear weapons were not used? Finally, does my noble friend agree that if it is clear that on that long-far-off day preferably more than one democratic defender is prepared to defend freedom with whatever weapons are necessary, the tragic situation will never arise?
Lord Trefgarne: My Lords, I can assure my noble friend and, indeed, the noble Lord, Lord Beswick, that we have the political will to respond in whatever way appears appropriate at the time. The Argentinians made a mistake about that in 1982.
Lord Boston of Faversham: My Lords, the Minister has been careful to say that there are circumstances in which he could envisage our nuclear weapons being used independently. Can he say whether he envisages circumstances in which they would be used independently?
Lord Trefgarne: My Lords, as I made clear in my original Answer, I decline to speculate upon circumstances of which I cannot yet be aware.
Lord Beswick: But, my Lords, if the noble Lord is now shifting his ground and saying that the purpose of Trident is to add to the total NATO deterrent, does he not accept that the two main contestants in this equation—the Soviet Union and the United States—already have enough nuclear weapons to wipe out all of us and that there really is no necessity to add this extravagant item, Trident?
Lord Trefgarne: My Lords, the noble Lord and I may understand that the NATO deterrent is indivisible, but what is important is to ensure that the Soviet Union understands that; and that is the principal purpose of our independent deterrent.
Lord Boston of Faversham: My Lords, will the Minister accept that in my question I was not asking him to specify circumstances in which these weapons might be used, and that I recognise the point he made in that connection? I was simply asking him to say whether there were circumstances in which they would be used independently.
Lord Trefgarne: My Lords, I am certain there are.
Lord Kennet: My Lords, are the Government aware that while on these Benches we believe that Trident is absolutely the wrong nuclear weapons system for

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Britain to have, we nevertheless consider that the noble Lord's description of Britain's purpose in having one and the present policy of the Government in keeping it assigned to NATO—the same as the last three Labour Governments—is correct?
Lord Trefgarne: My Lords, I am partially reassured by the question which the noble Lord puts to me; but if he thinks that there is some alternative to replacing the Polaris force, I have to say that I think he is mistaken in that view.

Animals in Schools: RSPCA Guidance
3.6 p.m.
Lord Sandys: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are aware of the recent guidance of the RSPCA on the care of animals in schools, and whether they are satisfied that sufficient care is being taken to protect animals from pupils and pupils from animals.
The Earl of Swinton: My Lords, the Government are aware of the recently-published RSPCA booklet entitled Animals in Schools, which was drawn up in consultation with advisers from local education authorities in England and Wales and contains helpful guidance for schools. Advice on the care and maintenance of living animals in schools and on the health and safety aspects involved has also been published by the Department of Education and Science. It is for local education authorities and individual schools to ensure that suitable procedures for the protection of both animals and pupils are followed.
Lord Sandys: My Lords, I thank my noble friend for that very helpful reply. Can he give some indication of the numbers of schools involved in looking after animals? In addition, will his department commend generally the use of this document to the schools concerned?
The Earl of Swinton: My Lords, so far as the numbers are concerned, I think I can best quote from News from the RSPCA, which is a brief that they published in conjuction with this booklet, in which they said that most schools in England and Wales keep animals. This fact was revealed by the RSPCA's education department from a two-year survey, the result of which led to the new publication.
Animals have been kept in schools for many years, and the advice published by the Department of Education and Science and other bodies has been made available to schools for some considerable time. The RSPCA's recent publication is helpful, and it should be read in conjuction with the other advice which has been published.
Baroness Masham of Ilton: My Lords, may I ask my noble kinsman whether the Government are aware that in schools in America, Germany, Switzerland and
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Scandinavia the ethical needs of animals, their treatment and care, are taught as part of the curriculum? Would this not help in giving us a more caring and less violent society in the long run?
The Earl of Swinton: My Lords, I must honestly admit that I have no idea whether the Government are aware of what is taught in other schools around the world. I would not know. For instance, I would not know whether they teach Baluchistani in Bulgaria. This seems to be somewhat wide of the Question on the Order Paper.
Baroness David: My Lords, may I ask the Minister whether the Government are giving consideration to doing something about the large number of Acts which have to be respected by teachers who keep animals in their schools? There are six, according to this admirable publication Animals in Schools, one of them going back to 1876. It is quite a business for teachers to know exactly what they can do and what they cannot. It would perhaps be helpful if the law were to be brought up to date in this respect.
The Earl of Swinton: My Lords, I am very grateful to the noble Baroness for pointing out what I think was going to be my reply; that the Acts are all referred to in this admirable document, and I hope that teachers will use it to see what the requirements are.

South Africa: Arms Embargo
3.10 p.m.
Lord Hatch of Lusby: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how they are interpreting the 1977 United Nations embargo on arms to South Africa in their trade with that country.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Lucas of Chilworth): My Lords, the Security Council Resolution 418 of 4th November 1977 forbids the provision of arms and related material to South Africa and also the provision of equipment and technical knowledge for their manufacture. The resolution is mandatory, and the Government's policy is to comply fully.
Lord Hatch of Lusby: My Lords, while thanking the noble Lord the Minister for that Answer, may I ask him to elucidate a rather obscure situation that appears to have arisen? If the Government are holding to this United Nations mandatory resolution as he said, how is it that the South Africans are able to keep in the air aircraft which are dependent solely on spare parts provided in this country? I should like to refer to the Buccaneer, but I believe that that might be considered to be sub judice. Certainly there are other aircraft, such as the Impala, which use Rolls-Royce engines. How is it that the South Africans can keep their aircraft in working order when the only place from which they can get their spare parts is this country?
Lord Lucas of Chilworth: My Lords, I must confess to the noble Lord, Lord Hatch, that I do not know the precise answer, since there is no precise question. If he likes to furnish me with more precise details, I shall look into it. There could be a number of sources. Aero-engines, for example, might be bought from countries which dispose of aircraft and there is a certain amount of cannibalisation of parts. However, in this country we take due regard of the end-use, and indeed of the end-user, of any material contained in the resolution. We control this through the Export of Goods Control Order 1981. We believe that this works well.
Lord Kennet: My Lords, are the Government aware that there is a widespread impression, which is doubtless false, not only in South Africa but also in Namibia, which is illegally occupied by South Africa, that the British Government are helping South Africa in a military manner in general? Will they consider taking a suitable opportunity—perhaps in a speech to be made in the United Nations—to spell out in some detail all the measures which are no doubt in operation to ensure that this country and those who fall under the law of this country are abiding by the 1977 resolution?
Lord Lucas of Chilworth: My Lords, I am sorry that the noble Lord feels that there is a widespread understanding that Her Majesty's Government are helping South Africa in this way. I had hoped in my original Answer to dispel that feeling. So far as making speeches in the United Nations is concerned, I can only say to the noble Lord that I take note of what he has said in that regard.
Lord Paget of Northampton: My Lords, is it not time that we began to reconsider our policy towards South Africa in the light of the new circumstances? We perceive an Africa which is starving and a union in which the people of all races are well fed. Does that perhaps lead us to the thought that the South Africans may be better acquainted with the needs of their country than we or indeed the United Nations are—
Noble Lords: Speech!
Lord Paget of Northampton: There is another factor. Is the noble Lord aware that the Soviet Union and her allies are poaching the fish off Namibia on a huge scale? Are we really going to refuse South Africa assistance in providing weapons to protect those fisheries which are so urgently needed by the African populations?
Lord Lucas of Chilworth: My Lords, I shall confine my response to the first supplementary question that the noble Lord, Lord Paget, asked: would we reconsider our position with regard to this embargo? Since the embargo is by virtue of a resolution of the United Nations to which we are a signatory, it would be necessary to get everybody else to agree. To turn to the noble Lord's other string of supplementary questions, I suggest that they are sufficiently wide of the original Question for me to avoid answering them.
Lord Paget of Northampton: My Lords, it will at least teach us not to sign such silly resolutions.
Lord Orr-Ewing: My Lords, is my noble friend aware that the original Question dealt with initial arms, and the supplementary question dealt with spares? Is it not true that the French are supplying spares for the submarines which they provided to South Africa, and that the Germans are providing spares for the radar which they have supplied to South Africa? Is it not reasonable when armaments have been supplied that at least one should honour the contract and provide spares so that they can be utilised in an emergency?
Lord Lucas of Chilworth: My Lords, I understand what lies behind the question of my noble friend Lord Orr-Ewing. I think that I have answered this in sufficiently wide terms in an earlier response.
Lord Hatch of Lusby: My Lords, will the noble Lord the Minister make it quite clear that the original resolution of 1977 included spares, and also included trade in any kind of military items? May I ask him to go one stage further? Is he aware that there is widespread support for the Government's action in December last year in giving their support to Security Council Resolution 558, which refers to the purchase of military equipment from South Africa? Can he say how the Government are intending or have begun to implement this resolution which is supplementary to that of 1977?
Lord Lucas of Chilworth: My Lords, the noble Lord, Lord Hatch of Lusby, will know that Security Council Resolution 558 of December 1984 is not mandatory. We take regard of it within the general context of the United Nations Security Council resolution.
Lord Hatch of Lusby: My Lords, it is true, is it not, that Her Majesty's Government have supported that resolution and supported it at the United Nations?
Lord Lucas of Chilworth: My Lords, I think that in my Answer I said exactly that.
The Earl of Onslow: My Lords, is my noble friend aware that several of us here have the impression that the noble Lord, Lord Hatch of Lusby, thinks that the "Belgrano" was on a pleasure cruise? How can he possibly withdraw the tanks from South Africa, which are probably used as taxis for poor farmers around the Kruger National Park?
Lord Lucas of Chilworth: My Lords, the impressions which noble Lords may have of the noble Lord, Lord Hatch of Lusby, are not within my competence. I would prefer that noble Lords receive the right impression from the answers which I gave to the noble Lord.

Honda: UK Production Discussions
3.18 p.m.
Lord Bruce-Gardyne: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what discussions they have had with the Honda Motor

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Corporation regarding that company's plans for the establishment of manufacturing and/or assembly facilities at Swindon; and what consultations they have had with other established United Kingdom automobile manufacturers about this project.
Lord Lucas of Chilworth: My Lords, the Department of Trade and Industry holds discussions with Honda from time to time, as with any other potential inward investor in the United Kingdom. Such discussions are commercially confidential.
Lord Bruce-Gardyne: My Lords, I am grateful to my noble friend for that reply. Can he assure your Lordships, when my right honourable friend the Minister for Industry told the Commons the other day that Honda have not asked for any grant in respect of this operation, that we can draw the conclusion that if they were to ask for any grant they would not get it, and above all that there would be no question in future Finance Bills of a Honda clause to replicate the Nissan clause in last year's Finance Bill?
Lord Lucas of Chilworth: My Lords, I confirm that Honda have not asked Her Majesty's Government for any grant, in so far as that is confirmation of what my right honourable friend said in another place. Regarding the other two points that my noble friend made, as these are hypothetical I regret that I cannot give him an answer.
Lord Grimond: My Lords, may I ask the Minister whether it is not the case that at present there are adequate production facilities for motor vehicles in this country to meet the present demand? If that is the case, is it the Government's view that there will be a very great increase in the demand for motor vehicles, both in this country and in Europe?
Lord Lucas of Chilworth: My Lords, that really is rather wide of the Question. If I could keep my answer more in line with the original Question, there is no suggestion at this moment of time that increased and/or additional car manufacturing plants are to be erected in this country.
Lord Bruce of Donington: My Lords, is it not the case that the negotiations that have been taking place in this particular instance concerning the possible future development of some 367 acres in Swindon with a possible development of a joint manufacturing capacity in terms of engines, and also possibly the future assembly of cars, have been between Honda and BL direct? Will the noble Lord confirm that in those circumstances, it is not incumbent upon the Department of Trade and Industry as such to hold conversations with other automobile manufacturers as stated in the Question put down by the noble Lord?
Lord Lucas of Chilworth: My Lords, I am grateful to the noble Lord, Lord Bruce of Donington, for his question because it enables me to say that, so far as we are aware, the land at Swindon is to be used for buildings which will enable the pre-delivery inspection of the Cowley-produced Honda version of the XX car; pre-delivery inspections for their motor cars currently
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carried out at Sheerness; and possibly the sub-assembly of certain components for the Honda version of the XX car. The collaborative arrangements between Honda and British Leyland are matters confidential to those two companies. In so far as they affect the Government's interest in British Leyland, we welcome such collaboration.
Lord Jacques: My Lords, will the Minister bear in mind that many Members of this House from all parties are interested in a high and stable level of employment? If Honda are prepared to take the risk then we welcome them.
Lord Lucas of Chilworth: My Lords, indeed we are immensely concerned with the employment of people in this country. If Honda's activities in Swindon which I have just outlined encourage some employment, however small, then they would be welcome to us.
Lord Bruce-Gardyne: My Lords, notwithstanding the welcome that one would certainly offer to incoming businesses of this kind, is not the real issue the question of taxpayers' support for such an operation? Since Swindon is not in a development area, will my noble friend confirm that, if there were any question of selective assistance being given to this investment from the taxpayer over and above £5 million, the Government would first seek approval from both Houses of Parliament?
Lord Lucas of Chilworth: My Lords, again I have to say to my noble friend that that is quite hypothetical. It would be wrong for the Government to dictate to any company, whether it be a foreign-based company or a domestic-based comany, where they shall expand. Honda have chose at this moment in time an operation based in Swindon. There has been no question of grant or assistance. If that question arises, Her Majesty's Government will take into account all matters that would concern that issue.
Lord Bruce of Donington: My Lords, will the noble Lord confirm that, in just the same way as Her Majesty's Government give a vast and selective subsidy to the agricultural industry of this country, they would not be averse in certain circumstances to giving some support to industry?
Lord Lucas of Chilworth; My Lords, there is no question here of a subsidy arising. Assistance is given in development areas for the encouragement of labour related projects. If in this instance such a circumstance arose—which I find difficult to envisage—the rules by which the Government give such assistance would thereby apply.

Business
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Caithness will, with the leave of the House, repeat a Statement that is to be made in another place on revaluation and rate support grant in Scotland. This will be followed by my noble friend Lord Glenarthur, who, again with the leave of the House, will repeat a Statement on commercial surrogacy.

Prosecution of Offences Bill [H.L.]
3.25 p.m.
The Minister of State, Home Office (Lord Elton): My Lords, I beg to move the Motion standing in my name on the Order Paper.
On 28th February, when this Bill received its Third Reading and was passed, the usual privilege amendment was omitted. Such an amendment is necessary because of the financial implications of the Bill. The purpose of this Motion is to enable the error to be corrected by including the privilege amendment. I beg to move.
Moved, That the proceedings relating to the passing of the Bill on 28th February last be vacated.—(Lord Elton.)
Lord Elwyn-Jones: My Lords, this is an interesting example of the way in which our rules of procedure enable us to correct our errors, in however obscure a fashion.
Lord Simon of Glaisdale: My Lords, one cannot avoid noticing the item following on the Order Paper. If we agree to this Motion, I take it that we shall not have to go through all the matters that were dealt with on the Motion, That the Bill do now pass. So far as I was concerned there were only two matters; one related to private prosecution (or, rather, to restrictions on private prosecutions) which I would not desire to go into again because the noble Lord the Minister wrote to me a letter which was entirely satisfactory.
However, also on that Motion I desired to pay a tribute to the noble Lord and to my noble and learned friend on the Woolsack for the way the Bill had been conducted. I would very willingly repeat, as I am sure other noble Lords would, the tributes that were paid, but I hope that they can stand on the Hansard record of our previous proceedings.
Lord Elton: My Lords, I can reassure both noble and learned Lords that this is a relatively painless way of recovering mistakes, which we do not often make. While thanking the second noble and learned Lord for his kind remarks, may I assure him that they will remain in Hansard and not be vacated therefrom.
On Question, Motion agreed to.
An amendment (privilege) made.
Lord Elton: My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Lord Elton.)
On Question, Bill passed, and sent to the Commons.

Films Bill
3.29 p.m.
Lord Lucas of Chilworth: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Lucas of Chilworth.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clause 1 agreed to.
Clause 2 [Provisions relating to termination of levy on film exhibitors]:
Viscount Mersey Viscount Mersey moved Amendment No. 1:
Page 2, line 41, at end insert ("provided that he has first established arrangements to ensure that independent television contractors and the BBC recompense makers of cinematograph feature films for the exhibition of those films on television on a basis that is related to the size of the television audiences that view them and distributed on a basis that will favour indigenous film production.")
The noble Viscount said: This afternoon is peculiar in that it is "Viscounts' maiden amendment day". Neither I nor the noble Viscount, Lord Falkland, has ever moved an amendment before. So while I feel it would he going too far to crave your Lordships' indulgence, I would be obliged if either of us was quickly called to order should we break or bend the rules of the Committee stage in any way.
The thinking behind this amendment is simply this. Thirty years ago people saw films in their local Gaumonts and Odeons, and they paid for their seats. Today, they see films on television and do not pay for their seats, barring the BBC licence fee. Even if that is increased to £65, the cost per day will still be only 18 pence per family, not per person. The consequence of so much free or near-free viewing of feature films is, inevitably, that the British feature film industry is in dire financial straits.
When people patronised the Odeons and Gaumonts part of the seat price went back into British film production. This was called the Eady levy, and it was introduced by the noble Lord, Lord Wilson of Rievaulx, in 1959 and supported by my right honourable friend Mr. Edward Heath 10 years later. It had all-party support. But now the average person goes to the cinema only once a year. We must scrap Eady; I believe that all agree on that. But I submit in moving this amendment that we must have a "Son of Eady" at the new point of sale: the television screen in the home. If we could achieve even a token levy of one farthing per viewer per film, that would, surprisingly, generate a central film fund of around £10 million. The effect on the economics of television would be minimal. For example, if the BBC chose to pass on their share of the extra cost to the licence fee, and therefore to the consumer, the very most that would be added to the licence fee would be 30 pence. We have not put figures into the amendment at this stage, as it is meant to establish only the principal of a levy at the point of sale; and some £10 million raised by levy could finance at least five low-budget British features a year.
Anticipating the reply of my noble friend Lord Lucas, I believe he will say that there is to be a new organisation called the British Screen Finance Consortium, which will have an income of £3 million a year, and with which they can back 10 feature films. I would say, with respect, that they are wildly optimistic. That works out at only £300,000 per film, and even the cheapest feature costs over £1 million nowadays. The central problem is that the British film

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industry cannot exist with a central funding agency. It has had one since 1950. Without it no young but promising directors could have got off the ground. Without it there would have been no launch pad for David Puttnam, Bill Forsyth or Carol Reed: and therefore no "Chariots of Fire", "Lawrence of Arabia", "Third Man" or "The Blue Lamp", as I said on Second Reading. I submit that such a central fund would be meaningless nowadays if it amounted to anything under £10 million a year, and I believe that the best way to raise it is by television levy.
Speaking from these Benches, I believe of course in the free market economy. The irony is that there is no free market economy between British feature films and the television companies. Independent film producers are up against a cartel or duopoly. Actually I rather dislike the word "duopoly" and prefer to substitute "duality", as in Noah's Ark. Sadly, the BBC-ITV duality lacks the consequent fertility achieved by Mr. and Mrs. Noah and their animals. Neither partner in the modern duality fertilises independent British feature films to any meaningful extent, for in the ITV companies' own submission the average price paid for a feature is in the lower tens of thousands of pounds—and that, for a product that cost more than £l million to make. No wonder people now have the luxury of watching features for next to nothing.
I will give one example of a low payment, though I cannot break confidence and name the film in question. It was a first-run film, sold to television for £50,000. It is a two-hour film and therefore its transmission costs per hour were £25,000. It was, however, repeated at prime time and so transmission costs per hour were only £12,500. Compare that to the cost of in-house drama; that is, plays produced by the television companies themselves. They cost at least £100,000 per hour; "Dr. Who" costs, I believe, an amazing £200,000 per episode. The television companies are on to a good thing so far as independent British feature films are concerned. Some call it TV Rachmanism. Others say, more mildly, that it is simple opportunism. It is, anyhow, a rigged market and my solution to the funding of this central film fund is to do so by levy, which seeks to ensure that the market mechanism overcomes the obstacle that has recently arisen on television. It creates in effect a freer market. Thus, this amendment is founded on the best Tory principles, though I welcome the fact that it has support from other Benches.
The amendment has a means and an end. The means is the levy. The end is the fund in excess of £10 million. If my noble friend Lord Lucas says to us, "I agree that the fund should exceed £10 million but I've found a way of achieving that even better than the levy", then I at least would be a happy man. I hope he does say that, but I doubt that he can better the levy, as it seems to me so equitable.
I should like to draw the Committee's attention to what was said about the levy by my honourable friend Mr. Tim Brinton in another place. He said:
"We are not talking of a tax or indeed public spending. We are simply asking the cinema fan to contribute something to his own enjoyment".
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I recommend as a good read the proceedings of Standing Committee B on this Bill in another place, from 29th November to 20th December last year. There one will find the other place operating at its best; there one will find that the other place also can forget party politics for a while and argue a case on its merits; and there one can find, too, the vote at the end of the debate, for this amendment was passed in Committee in another place. It was supported by my honourable friends Messrs. Gorst, Brinton, Gale and Hanley.
I found, too, at Report stage in another place on 5th February (col. 789) this forecast from my honourable friend John Gorst:
"At the end of the debate the Government will undoubtedly use their unspoken weapon—a Whipped vote—to get their way. For the time being we must accept any such verdict … but I hope that the other place will note our arguments and exercise its independent judgment on those arguments, without fear of the consequences of which we who must obey a different system must take cognisance".
Sure enough, the amendment now before your Lordships' Committee was thrown out by a Whipped vote in the other place at Report stage. Surely it is now our duty to exercise our independent judgment. I beg to move.
Lord McIntosh of Haringey: I am happy to support the amendment moved by the noble Viscount, Lord Mersey, and to which I and others have added our names. He has set out far better than I could, from his own specialised knowledge, the nature of the film industry's needs for financial support. It is worth reminding the Committee that the need for financial support from government is not unique to this country. Indeed, virtually every country in the civilised world, and some countries in the less civilised world, provide support of one kind or another for their indigenous film industries because they appreciate the necessity for a film industry as an essential strand in their national culture. That, I believe, is behind what appears to be the financial plea made in this amendment by the noble Viscount and others.
I disagree with the noble Viscount on one or two points of detail, but they do not affect the wording or the strength of the amendment. I do not believe that there is necessarily implicit in the amendment the assumption that television companies pay too little for films. On this matter I am content to accept the market mechanism. I should like it to be less rigged than it is, but the important point is, as the noble Viscount said, that there is, quite apart from what is paid by the television companies to the film production companies, a need for some replacement of subsidy from the viewers who are now sitting in their living rooms rather than in cinema seats.
The really difficult issue raised by this amendment is, who should the money go to? The noble Viscount has added to the amendment, as it was passed in Committee in another place, the phrase,
"distributed on a basis that will favour indigenous film production".
I am conscious of the point that the Government will make play with the use of the word "indigenous". I am conscious that there is in the Schedule to the Bill a definition of British films which, in fact, is no such thing. It is a definition of Common Market films, in order to conform to European Community regulations. It may be thought that the word

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"indigenous" is a way to get round that. Clearly this definition will need further investigation if it is to have full effect in statute. But the principle is sound. The principle is that money raised by a levy in this way with so little effect, as the noble Viscount made clear, on the economics of the television industry, or on its viewers, should go to the British film industry and for the purposes associated with it.
The amendment uses the phrase, "favour indigenous film production". I confess that I should like to see it go wider than that. It does not exclude going wider than that, but to my mind it would be desirable to use this opportunity, if it finds favour with the Committee, to provide finance for, for example, as they do in France, refurbishing cinemas and increasing the number of people who actually see films in cinemas as they were intended to, and as I am sure the noble Viscount and I would prefer to do if we had the choice, because that is the only way in which to get the full effect of cinematographic art. I am pleased that the amendment does not exclude other kinds of subsidy but leaves it open for that subsidy to be extended, if it were thought fit, when the matter comes back.
The really important point is that we should not have the kind of distortions that arose from the detailed working of the Eady levy even at the time when the Eady levy was at its height. The number of people visiting cinemas and, therefore, paying the levy was at a level, as I said at Second Reading, in the late 1950s and early 1960s which would give an equivalent figure now not of £10 million, which the noble Viscount quoted, but more like £20 million at 1985 prices. The real trick, of course, in a levy of this kind is to keep it out of the hands of the Americans. You can be sure that if such a levy is introduced, the highly paid American lawyers will descend on this country, and their drafting abilities are far greater than those of Mr. John Gorst, the noble Viscount, or myself. It will certainly need the most intense scrutiny by parliamentary draftsmen to make sure that the money protects and supports the film industry in this country rather than goes across the Atlantic. We certainly want to avoid the kind of abuses that took place, for example, when film companies could sell off their right to the levy to the highest bidder, thus effectively frustrating the purpose of the levy.
3.45 p.m.
We are all agreed in this Committee, and we were agreed at Second Reading, that there is no future for the Eady levy. That was a common point among us all. Nevertheless, it would be unjust not to pay tribute to the work which the Eady levy did at its best, and with all the defects to which I have referred. I want to make a proposition to the noble Lord, Lord Lucas. The Eady levy was brilliantly named after the civil servant who first introduced it and was to administer it. I should like to propose that, if the noble Lord agrees to the new levy, it should be called the "Lucas-Lamont" levy or the "Lamont-Lucas" levy; I would leave it to the noble Lord to decide which would be the more appropriate. If the noble Lord shows the same sympathy for the British film industry which was exhibited in all parts of the House at Second Reading, and if he reflects what I believe was the feeling of the House then and will be the feeling of the Committee
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now, his name ought to be enshrined in this very necessary amendment to the Bill.
Lord Lloyd of Hampstead: As one of the signatories to this amendment I am, of course, happy to support it, though I am bound to say that I do not feel totally satisfied with the manner in which it is framed. It bears a somewhat uneasy relationship to the next amendment on the Order Paper. There are some aspects of it which, personally, I would not think represent the best ways in which to introduce a levy.
The inadequacies of the amendments flow from the very difficult situation in which Back-Benchers find themselves during the very short period which is allowed to them between Second Reading and the Committee stage. There is insufficient time, with the total absence of resources that such unaided Back-Benchers possess, for them to put forward adequate amendments on a very complicated issue of this kind. I hope that when the noble Lord the Minister deals with this matter he will not concentrate his fire on some of the inadequacies of the actual phrasing of the amendment but will address himself to the main thrust of this (and the succeeding amendment) which is, after all, propounding the view that the film industry should look to, and is justified in looking to, a levy on television, having regard to the extent to which televison uses feature films.
Of course, there is a market in relation to the purchase of films and I do not for one moment suggest that there is a kind of conspiracy between the two television parties concerned—ITV and BBC—to defeat the film industry. But it is a totally distorted market. Here again there is no blame to be attributed to any particular Government, because the Government have more or less created a monopoly, or duopoly—pardon the term, and with all respect to the noble Viscount, Lord Mersey—in favour of two television interests and placed them in that unique bargaining position.
I venture to submit to your Lordships' Committee that the Government, having created these distortions in no improper way, as I said, should now regard it as incumbent upon themselves to see that the film industry is not irreparably damaged by reason of this anomalous situation. The thrust of these first two amendments and the argument for them is really very simple. We have television, which is a flourishing industry, and it has for years and years been living on the film industry by reason of its (if I may use the phrase) parasitic use of feature films on a grand scale. As a consequence of that, attendance at cinemas has shrunk and diminished to a tremendous degree. There is no need to quote figures on this; everybody knows the position. That having happened, and still continuing to happen, at the moment no adequate return is made to the film industry.
There are three sectors to which one might refer in regard to the production of films in this country—and I am talking about feature films, of course. There are, first of all, the blockbusters—those gigantic film undertakings costing innumerable millions of dollars which are on so lavish a scale that we can say comfortably that they can look after themselves. If they are successful, they make colossal fortunes: if they are unsuccessful, they can cause tremendous losses.

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But that is not the area with which we are really concerned.
It is the second area, mainly, with which we are concerned, and that is the area of low or medium budget films, which in present extravagant terms means a film costing something approaching, or indeed probably more than, £1 million. They are the cinema films, and they are the centre of this debate. There is also something to be said—and I shall deal with it only briefly—for what might be called the arts sector; but I reserve that for a moment and I concentrate on the second category, which, as I say, is the heart of the industry and is generally described (and, although the term is vague, I think it is generally well understood) as indigenous commercial films of quality, of which, happily, numerous examples can be cited from recent times: "Chariots of Fire", "Local Hero", "The Dresser", "Another Country", and so on. All of us could give many examples.
It is that area which needs, not just minor but substantial support. All the people who understand the workings of the industry are agreed that that means something in the region of £10 million to £20 million. That is a view which is widely held, not only in the film industry but in the City. Unless there is substantial backing to get films of that category launched, we shall not be able to attract the commercial money which is necessary to bring about the production of the films.
I have said that we have to look to television primarily to create this situation. Here, again, I think that everybody is agreed about this, with of course the noteworthy exception of the television lobby. It is a matter of sadness, I think, that the Government have always shown a tendency to accept the rather specious arguments of that lobby rather than to address themselves seriously to the problems of the film industry. Of course it will have repercussions on television if a levy is laid upon it, but surely, so far as independent television is concerned, any sums which it may cost could fairly easily he recouped from advertisers or, alternatively, might produce some very slight reduction in its profits, which most people agree are pretty ample already.
As for the BBC, here, again, we have had put before us harrowing tales of the decimation of other sectors—dramatists and others—which will lose their activities if a little more is given to the film world. I venture to submit that that is a very unrealistic view. The vast number of viewers who see feature films in the comfort of their homes, which they are perfectly entitled to do, and thereby are weaned away from the cinema, means surely that television must be brought into the equation of film earnings.
The background of this matter is of course that tax concessions have been removed and Eady has been withdrawn. So far as Eady is concerned, nobody disputes the fact that, whatever the merits of Eady in the past—and the highest praise is, I think, owed to those like Sir John Terry and, more recently, Mamoun Hassan, who operated that system within its narrow restrictions with great success—it was absurd in this latter day because it imposed a heavy demand on the one sector of the film industry which was totally incapable of supporting it; that is, the cinemas. So it
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was in its latter day an absurdity. Apart from that, the actual amount had shrunk to a very modest sum.
So when the Government say in answer to those of us who deploy these arguments, "What are you complaining about? After all, we are taking Eady away but we are giving you twice as much in return", surely the answer to that is quite simple: That it is geared to this latter-day, totally inadequate figure which the Eady money was ultimately producing. Of course, on the footing of that figure it is twice as much, but what we are all saying, as I understand it, is that we are starting from a totally inadequate base and we have to begin again with an adequate base.
Then the Government try to deploy other arguments which seem to me equally ineffectual. They say, for example, on the one hand, that television is losing its taste for films and that it we put further levies on it then it will cease to use films. If I may say so, the most effective answer to that was given by Mr. Lamont himself in the other place on the third day of the Committee stage of the Bill on 6th December, when at column 101 of Hansard (Standing Committee B) he said:
"There can be no doubt that demand for film is voracious and increasing, and supply is falling a long way short of demand".
That does not seem to provide much support for the idea that television is backing out of film or is likely to do so.
Then the Government refer to the fourth channel. They say that, after all, the fourth channel is spending a lot of money on film, and that is really a boost that it is getting from television. Surely the answer to that is that, despite the admirable job that Jeremy Isaacs and his team are doing on the fourth channel and the deployment of money for the making of film, the films with which he is primarily concerned are films for television. They are not films for the cinema, and it is films for the cinema that are the esential target for the whole of this debate.
Then it is said that we do not want a recycling mechanism; there is something inherently bad about a recycling mechanism. Of course, Eady did have some defects as a recycling mechanism, as I would heartily agree. It helped individual producers, but it did not help the industry as such, and, unfortunately, most of those individual producers turned out to be United States distributors of film—enormous corporations of vast wealth—and that was not, of course, the aim of Eady. I am not saying that it all went to them, but quite a lot did, and that was a great weakness of the Eady system.
What those of us who support this amendment want to do, as I understand it, is to see this money paid into a fund on the footing that it is appropriated to new production and is not just passed off to people who have already made a lot of money on films in England and therefore it is thought that they ought to have a bit more, which is hardly the object of the exercise.
4 p.m.
Then we have the other arguments that the Government have put forward, as I understand it. However, those arguments seem to me to consist very largely of mere assertion. They say, "We are not persuaded of this" or, "We are not convinced of that". They really

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do not tell us any reasons as to why they are rejecting the points made. For instance, Mr. Lamont in the other place, said, that we cannot say that the price paid for films is unfair. Television, after all, does not negotiate with pygmies. The people selling films can fight their own corner, and it is major distributors, after all, mainly from the United States who are selling old films to television.
Surely this totally falsifies the argument. The argument is really this. Of course the United States film distributors are very happy to sell their old films at knock-down prices to British television. They do not care and they cannot be blamed if the result is to destroy the British film industry. That is not their concern. I recall the brilliant speech that the noble Lord, Lord Willis, made some little time ago in this House when he demonstrated so clearly, with his tremendous knowledge of these matters, the attitude of the American film industry and the devastating damage that it has caused to our own. So I really do not think this kind of argument can be allowed to wash.
I agree that it is a criticism of Amendment No. 1 in its present form that it is to provide for payment to makers of films and that quite a lot of this might eventually find its way into the hands of United States distributors. I think this is one of those points that I was making at the beginning,. That is that I think this amendment is unfortunately framed in so far as it is directed to producing money for individual producers rather than a fund which supports the film industry itself. However, that is a matter of drafting. If we could only persuade the Government—as I still have a faint hope that we might—that creating such a fund is what we are really about, then this matter should be put right quite easily at the next stage.
I do not propose to take up much of the Committee's time in talking about the third sector to which I have referred, which is what I have called the arts sector, though I hasten to say, as a one-time chairman of the British Film Institute, that I do not think and never have thought that the arts sector can in any way be separated by a clear line of demarcation from the commercial film. However, what I am referring to basically is the rather small-scale production of small, cheap films involving new talent and experimental ideas, the kind of things that the British Film Production Board have supported most valuably for many years.
In this area the Government have virtually done nothing except to provide for a final hand-out from Eady for the production board and then to say, "Go your way with our blessing and just get on with it".
I suggest that that is not good enough. This is a very important section of the industry. There is need for more to be done in that direction. Certainly some small part of a levy, if it were to produce a substantial sum, as most of us think it could do, could be diverted in that direction. My conclusion is that here you have no recycling mechanism, very little public money and the film industry is offered, as one may say, all aids short of help. The position compares most unfavourably with other eminent film-producing countries. If the Government fail to heed the warnings which have been sounded with a remarkable degree of
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unanimity from every quarter of the industry, I am afraid—and many far more knowledgeable than I have expressed this view—that films and cinema in this country will gradually fade out and will leave all our high hopes for a flourishing art and industry of the film totally disappointed. I am sure that it cannot be that sad day over which the present Minister would wish to preside.
The Viscount of Falkland: First of all I should like to thank, the noble Viscount, Lord Mersey. I am encouraged by having an ally on the other side of the House, an ally in our fairly new approach to a very difficult task, which is to introduce amendments of this kind.
I support the amendment of the noble Viscount but with certain reservations. I think one can be quite brief about this. There has grown up, and there is implied in these amendments, a certain criticism of the BBC and the television companies. The first unjust criticism, which is often heard, is that the decline in the British film industry has been entirely due to the growth of television, which has somehow seduced the filmgoer away from the cinema and theatre to the comfort of his drawing-room or television room, so that there in some way a responsibility upon the BBC and the television companies to expiate their guilt. I should say that this is an unfortunate construction of an adversarial position between film and television.
I suggest that we have a good deal to be grateful for in the service of television over the years, in encouraging, or at least maintaining, an interest in the cinema. I do not mean an interest in what have been called in another place in discussions on this subject "easy" films or "commercial" films. I mean on all types of cinema. We have to thank particularly Channel 4, recently, and BBC 2 for introducing people who, without this kind of exposure, would have been quite unaware of the developments of film throughout not only the English-speaking world but also in other parts of the world the quality of whose films with subtitles and so on has sometimes been difficult to grasp. We have films from Poland, Czechoslovakia—particularly films from behind the Iron Curtain—and from India, Japan and so on. So I should say that television has, particularly recently, performed a very valuable service and we should hear that in mind.
Among people working in the film industry and in the television world there is not a deeply felt conflict of interest. There may be a conflict which is implied by the structures in which they work. But many of the technicians and creative artists who work in television also work in cinema. So this kind of feeling should be encouraged to grow. We should not dwell too much on who was responsible for the decline in cinema attendance. I know where the decline in cinema attendance has come from. I suggested that to the Chamber when we covered this matter at Second Reading. I persevere with that. That is one of my main criticisms of the whole inspiration of this Bill.
If blame is to be laid for the decline of cinema audiences, it must be laid fairly and squarely on the shoulders of the exhibitors in this country. The cinemas are in a disgraceful state and they have become more disgraceful over the years. These have been increasingly in the hands of one or two large

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companies. The ironic aspect is that these two large companies that have presided over the decline in cinema attendance are the proposed mainsprings of this new company. However, we shall come to that matter later on.
If we are to create a company which replaces the very excellent function performed by the National Film Finance Corporation, I would say this. Here one has to say—and I agree with other noble Lords—that it was time for something to be done. The Eady levy was totally irrelevant and produced a very small amount of income due to the decline in cinema audiences. I am optimistic about this. I hope that after we have churned this over, we can persuade the Minister to bring his influence to bear so that we can have a sensible body with sensible aims and a sensible realisation of its responsibilities—its responsibilities not only to the structure but also to the future of the film business in this country.
I hope that your Lordships will be persuaded to agree with me that the film industry, curiously, is on the doorstep of a new era. I do not say that merely in the light of recent awards for very excellent productions, many of them inspired by Mr. Puttnam, a supporter—I do not know whether your Lordships are aware of this—of those of us who sit on these Benches. With all thanks to him—because he is one of the driving forces—we are on the springboard of a new era. Young people coming out of schools and universities are well versed in film appreciation which is becoming a serious study. Many young people now study for A-level in that subject.
The whole business of film and its place in culture is much more readily appreciated now than it was 10 years ago. Certainly, when I started to go to the cinema it was perhaps relevant to talk about easy and commercial films and art house films. Now it is invidious to make this comparison. We have cinema. And cinema, although we have been slow to realise it in this country, is the art of the twentieth century. We are the only country in the world where those going about their normal social activities do not talk about films in exactly the same way that they talk about books, going to the theatre or anything else. It is a conventional wisdom here that the cinema is somewhere you go to laugh easily or perhaps to eat a bar of chocolate and disturb the enjoyment of everyone else. We have to thank television for encouraging a more serious approach to cinema even though it exists in the comparative freedom of the home with all the interruptions that this implies.
To stick strictly to these two amendments, the television companies have a duty to contribute to the funding of the new company, but this has to take place in a spirit of collaboration and co-operation with all those who put their endeavour into this industry in order to make it grow. One should be sympathetic to their problems. Those problems certainly exist. There are many noble Lords who are more expert about television than I am. They will interrupt me if I am wrong in saying that when the television companies negotiate to buy feature films they tend to buy them in packages. This means that there may be a good one in the bunch but possibly also some rough ones. Generally speaking, the negotiations take place—this
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will appeal to the noble Lord the Minister—in the atmosphere of a free market. No one complains about that. All the film people and television people with whom I have discussed this matter do not disagree that this is, the way things are done. I have not heard anyone in the business talk of rigged markets or anything of that kind.
We should encourage this sense of collaboration and go forward to the new era of cinema which is upon us looking sympathetically upon the ability of the television companies to pay and their responsibilities in this area, but at the same time bearing in mind the requirements of the new company. Basically, the new company, in every way that it has been described, is under-funded. This has been mentioned by other noble Lords.
The noble Viscount mentioned a figure. I would go even higher. If money is to be attracted from the private sector into film finance, there will first have to be some likelihood of success. No one in business will invest in films unless it is thought that there is a likelihood of success. As all noble Lords, even those with only a minimal knowledge of this business, will know, success is quite difficult to come by even when all the signs look favourable. It is a matter of encouraging people to invest in a very speculative business. We are not dealing with a commodity that comes off the end of a production line. We are dealing with a combination of art and industry. It is a fine, sensitively balanced product all the way through its manufacture. I would argue that any funding under £20 million to £25 million for the new company is unreasonable. The kind of money that we suggest the television companies should contribute will only represent a very small part of the amount that is required. It would be unfair to expect them to put into the pot an unreasonable amount on the basis that they have monopolised the potential audience. In the new era I hope that people will go back to the cinema theatres because that is where cinema really makes its mark.
4.15 p.m.
There is a difference—it has been mentioned already in our discussions this afternoon—between a film made for television and a film made for the cinema theatre which goes beyond the budget. The aims of a television film and how it tells its story in visual terms, without getting too technical, are limited. The film story is told in a different way. On the larger screen, in the cinema theatre, where a wider panorama, if you like, is the norm, you need money. Anything beyond four weeks' shooting on funding of around £1 million to £1·5 million for the small to medium budget pictures, so admirably done and financed at the moment by Channel 4, is unreasonable. And that does not include any shooting at night. For feature films, with a likelihood of success abroad, you need to think in terms of a budget in excess of £3 million. I support the amendment. I believe that the television companies will willingly make a fair contribution in relation to the part that cinema plays on the television screen but we do not want to make them feel that this is a position into which they have been kicked and booted.
Lord Willis: I indicated at Second Reading that the idea behind the amendment has my sympathy. I am, however, sorry to have to depart from my noble friends in saying that the amendment cannot have my support. I would add, in parenthesis, that I noticed that the noble Viscount, Lord Mersey, and the noble Lord, Lord Lloyd of Hampstead, quoted from Hansard in this place. I understand that this is against the rules of the House. It should perhaps be noted that I do not intend to quote from Hansard in what I wish to say.
As already stated, films in this country need two sources of finance. First, they need what is called the start money or the risk money. I should like briefly to explain to your Lordships—I have been in the business now as a writer for something like 40 years—the process that takes place. A producer reads a book, sees a play or sees a writer and an idea emerges for the production of a film. That producer then needs some start money. He needs to pay the writer to write a screenplay. He needs to pay an accountant to draw up a budget once the screenplay is written so that the cost will be known. He needs all kinds of other relatively small amounts of money to get the process started. That is needed before he goes to investors. Once he has that property, that product, then he can go to investors to start raising the rather large sums of money that are necessary to make a film.
In the past that start money has been provided by individual investors and by money from the Eady fund, though most of that found its way into the pockets of the Americans, as the noble Lord, Lord McIntosh, said, and as I said on Second Reading. It came also from the British Film Institute, sometimes from television companies, and so forth. What is worrying the film industry is the fact that over the next few years that start money is going to be drastically reduced from all its various sources. It is that start money which is absolutely essential to the health of the British film industry.
I see behind this amendment a very worthy attempt on the part of my colleagues in the industry to scurry around to try to replace the money that is going to be lost. They look around and think, "Well, who can we best clobber? Who can we get it from?" May I say to the noble Lord, Lord Lloyd of Hampstead, that I am not speaking here on behalf of the television lobby. It is my submission, looking at it quite coolly from our side—because it would in fact be in my interest if a fund such as this were set up—that the television companies are doing a very good job in regard to films.
Let me give one or two examples. They substantially underpin the British film industry at the moment, and have been responsible in the last few years for taking up the slack that arose because of the continuing decrease in the Eady levy. I should like to mention one or two figures. Channel 4 has already allocated £96 million to film and video. It will fund about 100 films by 1987. Although these are low-budget and modest-budget films, at least 50 per cent. of them are destined to be shown in cinemas. Of course as we know, if you can launch about 100 low-budget films, any one of these may become what we in the business call a "sleeper". The meaning of that is the very reverse of what it actually sounds like. A "sleeper" is a film of
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low budget which suddenly takes off and makes a great deal of money.
The television companies also provide a great body of useful work. I like very much the point the noble Viscount, Lord Falkland, made about the interchange between film and television technicians, writers, and so forth. In fact, there is very little difference nowadays. I am a member of the Writers' Guild of Great Britain. We represent television writers, screen writers and dramatists. But in fact you could count on the fingers of both hands the number of people in this country who actually earn their living simply by screen writing. I cross the frontiers every year of my life. Last year I wrote a television series, two film plays and also a play for the theatre. Nowadays there is very little distinction. If you are a craftsman in our area, you have to be skilled enough to cross those frontiers at a particular time.
In addition to the contribution that Channel 4 is making, ITV makes a large grant to the school, to the British Film Institute and to film and video workshops. It will amount to about £3½ million over the next five years. These are not insubstantial amounts. ITV has also pledged support for the new film consortium. Finally, many of the ITV companies have set up their own film production arms and are actively producing either mini-series, which are really another form of cinema, or feature films; so their contribution is pretty substantial. My feeling is that to clobber them again and to go back and ask them to contribute to a levy would be totally wrong.
Lord McIntosh of Haringey: I wonder whether my noble friend will permit me to intervene. The amendment does not actually refer to Channel 4, which he has been citing with such approval. It refers to the contractors and the BBC, and therefore it is not a question of clobbering those who, as he says, have been so effective in their support of the cinema.
Lord Willis: With respect, my noble friend is wrong, because Channel 4 is supported totally by subscriptions from the ITV companies and so the money comes indirectly through the ITV companies. I believe this is wrong. One of the arguments that has been advanced is that the payments made for films shown on television are unfair—that they are too low and sometimes they are too rigged. I do not believe that for a moment. I believe that, as has been said, there is a pretty free market in films. I cannot really believe that the Americans are so stupid as to sell films at low prices when they could get better prices for them.
What is more, we have to remember that satellite and cable are now beginning to take off and there will be increasing competition for the existing stock of films. At the same time this will also provide more money in one way or another for the production of films; so it is a two-edged sword. Certainly I do not think that the ITV companies will for long be able to say that they can fill an hour or an hour-and-a-half of television with a feature film which they bought for £8,000 or £10,000. The price is going up all the time.
There are other things I could say, but I shall not take up the time of your Lordships' Committee about the nature of the levy that is suggested in this

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amendment. It would be very unwieldy and very difficult. You would have to deal with a great mess of copyright owners, quite apart from the people who actually own the films. For example, I happen to own certain rights in one or two movies that I have made in the last 20 to 25 years. What happened was that I leased the rights—I did not sell them; I am too careful for that—to the film companies to make films from my stories. If those films are shown again or sold again, I have to have some money; and so if there was a levy, I and other people would say, quite rightly, "We want a piece of this, too". It would be unfair not to do that. There are all kinds of other people who have subsidiary rights which would complicate this kind of recycling mechanism. I come back to the point that I think this is a wrong-headed but well-intentioned amendment, and I am opposed to it.
Lord Lucas of Chilworth: I am greatly obliged to all noble Lords who have taken part in this debate. May I start by congratulating my noble friend Lord Mersey on the first occasion on which he has moved an amendment. He moved it with a good deal of eloquence. I suspect that he has perhaps rehearsed his explanation of the amendment on a number of occasions. I should not want to quarrel very much with him about some of the figures in his speech; nor do I want, as the noble Lord, Lord Lloyd of Hampstead, suggested I might, to argue about the inadequacies, omissions or technical deficiencies of the two amendments before us. I say "two amendments" because it was agreed that we were to speak to Amendments Nos. 1 and 2 together, since essentially they fall into the same subject area.
Amendment No. 2: Page 2, line 32, at end insert—
("(7) The Secretary of State shall, by order made by statutory instrument, establish within one year from the passing of this Act arrangements for the levy from independent television contractors and the BBC of an appropriate sum of money to be determined by him for the showing of feature films on television.
(8) The Secretary of State shall, by the same order, determine the amounts of and the regulations under which the proceeds of the levy are distributed to makers of British films whose products have been exhibited on television during a qualifying period to be determined by the Secretary of State.
(9) The Secretary of State may appoint a person, or persons, or he may request the tribunal appointed under subsection (11) below to make recommendations to him and to provide other services in connection with the discharge by him of his functions under subsections (7) and (8).
(10) Any sums required by the Secretary of State for making payments under subsection (8), or for meeting any expenses under subsection (9), shall be paid out of money levied under subsection (7).
(11) The Secretary of State shall establish within one year of the passing of this Act a films tribunal to which any British film maker may appeal against an unfair price paid by an independent television contractor or the BBC for a feature film intended for exhibition on television.
(12) If, in the opinion of the tribunal, a below market or unfair price has been offered by the television operator the tribunal shall have the power to order that a proper price be paid, or any contract be nullified.
(13) The tribunal shall have the power to listen to a complaint from any British film maker whose product has been exhibited in a British cinema within the previous five years, regardless of whether he has been the maker of the feature film about which the complaint has been made.")
At the heart of these amendments, as the noble Lord, Lord McIntosh acknowledged, is the view that although the Eady levy itself, as a levy on cinema admissions, had outlived its usefulness, a levy
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principle of some kind should be preserved. The modern medium of mass exhibition of films is no longer the cinema, but televison. Therefore, what is more natural and sensible—at least, so the argument runs, and has run in the Committee this afternoon—than to transfer the Eady levy with some support, some greater sophistication, to the television screen? Such a levy might then perform all the functions that Eady performed to support the National Film Finance Corporation and part-finance the National Film and Television School and the British Film Institute Production Board, and thus, in some manner recycle money to British film makers. It is a familiar argument and I suggest that it is only just superficially attractive.
The argument ignores the real and substantial difference between the cinema sector of the past, when the levy was introduced, and the modern and future television industry. Although I accept that my noble friend Lord Mersey spoke of a few pence per day as being representative of the television licence fee, I point out that essentially the argument sweeps aside the consideration that the television viewer has already paid money towards independent television either by way of a licence fee or through the shopping basket. The argument also ignores that films are simply one small, and slightly decreasing, proportion of the programming that is available to the viewer. My understanding is that, as between ITV and BBC, feature films amount to something between only 8 and 11 per cent. of total programming available. So there is a tremendous difference between the film fan making an effort to go out for an evening to see a film and the television viewer who has perhaps taken no more trouble than to leave the set on at the conclusion of the last programme that he wanted to view.
4.30 p.m.
I spent some little time on Second Reading outlining the Government's view on the principle of the levy. Therefore, perhaps the Committee will forgive me if I repeat some of the remarks that I made at that time. The Committee will be aware that the White Paper which was published last July marked the culmination of a very long review of film policy, during which we received representations somewhat similar to those advanced today about the case for a levy. Those representations are summarised in paragraph 5 of the White Paper and the Government's response also appears in that paragraph. That response makes the point that we do not believe that statutory recycling mechanisms are an efficient way in which to encourage an economic activity that is essentially oriented towards the market—a market that is expanding through new outlets, as we have heard from a number of noble Lords this afternoon.
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 commerically successful productions in order that films can be made which perhaps would not otherwise attract market finance. We 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 both of the BBC, with consequent implications for the

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television licence fee, and of the ITV companies. Therefore, in keeping with our general approach away from the statutory intervention of the last 30 years and towards the creation of the right business environment, the White Paper rejected the idea of a statutory levy. That, in a nutshell, remains the Government's position.
We have heard many times, both here this afternoon and during the proceedings in another place, arguments advanced by the proponents of a redistributive levy. But I have to say that we remain unconvinced that such a levy is, in principle, a sound prescription for the health of the film industry.
I should say something about what has been called the duopoly of the BBC and ITV which was mentioned both by my noble friend Lord Mersey and the noble Lord, Lord Lloyd of Hampstead. Strictly speaking, of course, the BBC and ITV have represented what has become known as a duopoly in the sense that until recently they were the only television channels available. There is no obligation on a film maker to accept a particular price for his film. Since we first discussed this matter I have been at pains to make some investigations. I remain unconvinced that those negotiating with the BBC and ITV companies cannot fight their own case effectively. The rights to the films are generally owned either by the major distributors, who are well able to argue their own corner, or by independent producers who are usually sufficiently big to have retained the rights and are therefore unlikely to be easily overpowered by the BBC or ITV.
Naturally one has to accept that the market for films may not be perfect. On the supply side, some films will be more attractive to one channel than to the other. In such cases there may be only one buyer. Some films will be of a type that is regarded as unsuitable for showing on open television at all. The majority of films are probably those that either channel would regard as acceptable for broadcasting, and the decision to buy will then depend on the price and the quality, and, as the noble Viscount, Lord Falkland, suggested, it will also depend very much on how much mediocre screen filler is in the total package.
There is little doubt that the supply of good quality films that will attract television audiences today falls a good way short of demand. The noble Lord, Lord Willis, stole a good many of my speech notes in his remarks. Perhaps noble Lords will accept that I agreed with very much of what he said. I am glad he said it because noble Lords may perhaps accept it more readily from him than from me, in view of the noble Lord's great experience. The noble Lord mentioned that, in view of the developments that are taking place as regards cable and satellite, they, too, would be looking for a share of good quality films. The pressure is on supply; it is significant; it will become greater and the powers of the owners of the film rights will increase accordingly. I do not believe that the duopoly argument is a very serious worry today; I believe that in future it will become even less of a worry.
In connection with what the television industry has been doing for films, it is interesting to note that the noble Lord, Lord Willis, mentioned Channel 4's expenditure on films. I would merely add that, of 60 films that have been financed by Channel 4 in recent
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times, 34 have actually had exhibition cinema releases and 25 of those films have received awards or have been selected for film festivals. Therefore, that is purely an endorsement of what the television industry can do for the film industry.
I was sorry that the noble Lord, Lord Lloyd of Hampstead, criticised the Government's statement that television companies are dealing with people who can look after themselves. Certainly, in his argument he did not demonstrate why film sellers cannot get a decent price for their product from television. What he really said was that because television as a whole is so widely part of the leisure industry—I cannot remember the number of households without a television set—it would be a good lemon to squeeze. He was saying, in effect, "Television can afford a levy, so let's have a levy anyway". We do not think that that is at all the right way in which to go about it.
The proposition raises a number of practical matters. For example, the amendment suggests that the matter might be related to the audience viewing the film. However, what will be the view of those who produce specialist material for television? Will the sportsmen and those running the cookery classes and the dancing classes say, "If films can have a 50p levy or a 25p levy, we want a pence levy on ours"? How, indeed, can it be distributed? How much cost would be involved? However superficially attractive a few pence might be, as my noble friend suggested, these matters must be borne in mind. Suppose there was £9 million, £10 million, £20 million or £30 million: how would it get to the right people? I do not believe that it would.
Essentially, I have argued against the principle of extracting money to revert to the film industry, which is the idea contained in these two amendments. The noble Lord, Lord Lloyd, said that the Government pay too much attention to the specious arguments of the broadcaster. I noted that Mr. Alan Howden, who is the BBC's general manager for programme acquisition, said in an article in the journal Broadcast that he fully accepted that many films were purchased cheaply, but he pointed out that they are old material. He said:
"They are there because they are cheap; if they were subject to a levy we would have to replace them with other cheap imported material".
Mr. Howden may paint a rather gloomy picture, but I think it is perhaps realistic of what might happen if a levy were introduced. He said that decent films might very well be swept away in favour of old American television material and other cheap imports; purchases of new films would be cut back; prices would be pushed down to offset the levy wherever possible and whenever possible; and the net return to the film industry would almost certainly be reduced. I do not believe that that is what noble Lords really want.
The noble Viscount, Lord Falkland, repeated some of the remarks that he made during the Second Reading debate in which he criticised the product which the exhibitor was offering to the public. As I said on Second Reading, I can only endorse that. There is no question of the TV viewer being weaned away from the cinema. If the product is right, he will go. I repeat: feature films—long or short—account for a declining 8 to 11 per cent. of total programming time.
I have spoken about these issues of principle, and I hope that I have also touched upon some of the more

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important points which other noble Lords have raised in support or otherwise of these amendments. We have considered a levy, and we have rejected the idea of a levy. We have not changed our view that it would be wrong to impose statutory redistributive levies. We do not believe that that is the right way forward for the film industry. Today's edition of the Daily Mail contains an article headed, "Where Britain Leads", and it comments on the success of Mr. Puttnam's film, "The Killing Fields". The article says:
"Some credit for this great new creative phase of British film-making must go to the way that Mrs. Thatcher's Government has removed the grosser financial penalties on the top talents in this very risky business".
With that endorsement of a splendidly growing and virile film industry, I would ask noble Lords to reject these two amendments.
4.45 p.m.
Lord McIntosh of Haringey: It must be for the noble Viscount, Lord Mersey, to decide what he wants to do about the amendment which he has moved, but I, for my part, would say that the Government have been totally uncompromising in their reply and have failed to make out an effective case against the levy which is put forward in the amendment which the noble Viscount so eloquently moved. Unfortunately, I also have to address that remark to my noble friend Lord Willis, who avoided some of the inconsistencies of the noble Lord the Minister in his reply. The noble Lord, Lord Lucas, seemed to be making two separate conflicting remarks at the same time. On the one hand, he said that films were a declining part of television, that the audiences for them are not sufficent, and therefore any levy would put those audiences even further at risk.
Lord Lucas of Chilworth: I am obliged to the noble Lord for giving way. I did not say that. I said that across all the channels feature films accounted for between 8 and 11 per cent. of programming time, and that that share of programming time was decreasing. It follows because the viewer does not particularly want that kind of programme across his television screen.
Lord McIntosh of Haringey: I am content with the noble Lord's repetition of his remarks; but very shortly after that he was arguing that we were reaching the stage where there would be a seller's market for feature films; that, for example, there were increasing markets in cable and satellite broadcasting, and that the longer-term rewards for film producers would be increasing. There seems to be some conflict between those two statements. To put it at its lowest, there seems to be no solid basis for the confidence which the noble Lord has in the commercial field as well as for the artistic future of the British film.
My noble friend Lord Willis made as effective a speech now as he did when he spoke in the debate on the White Paper in December. The difference is that in December, and during his Second Reading speech, he argued very strongly not only against a levy but for tax changes. The difficulty with the argument for tax changes is that such changes could not be introduced in the context of this Bill; nor could they be introduced
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from your Lordships' House. If we are to treat the matter within the confines of our own powers and our own responsibilities, we must look for sources of public finance for the film industry which are capable of being introduced by amendment within the Bill.
Therefore, with all respect, my noble friend put only half his case and left his argument hanging in the air, because he now has no alternative to the case for the levy which has been put forward from all sides of the Committee. I hope and believe that the Committee will think that the case has not been destroyed or even significantly dented by the arguments put forward.
Viscount Mersey: We have had a long and, I think, very good debate. I could go into a number of very detailed points now; there were minor matters with which I agree and disagree which were put forward by other noble Lords whose names are on the Marshalled List of amendments. However, I think that that could better be done outside this Chamber. But I must apologise for quoting from Hansard. In fact, I was not absolutely certain whether I was quoting from Hansard, because I was quoting from what took place in a Committee room; but perhaps that is still Hansard. Doubtless that is my fault, and I apologise for it.
My noble friend Lord Lucas raised practical difficulties concerning this amendment. The amendment is not perfectly drafted, and other noble Lords have said the same. At one stage in my opening remarks I left the door wide open for my noble friend. I said that we have this idea of a levy which we think is pretty good, but that if he could guarantee another even better way of getting over £10 million into a central film fund, that would be great. I honestly do not think that my noble friend has done that. I see that he remains silent. Therefore, I must divide the Committee.
4.50 p.m.
On Question. Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 80; Not-Contents, 85.

DIVISION NO. 1

CONTENTS

Airedale, L.

Ezra, L.

Ampthill, L.

Falkland, V.

Ardwick, L.

Fitt, L.

Attlee, E.

Foot, L.

Auckland, L.

Gallacher, L.

Banks, L.

Graham of Edmonton, L. [Teller.]

Beaumont of Whitley, L.

Bernstein, L.

Grey, E.

Beswick, L.

Grimond, L.

Birk, B.

Hampton, L.

Bottomley, L.

Hatch of Lusby, L.

Broadbridge, L.

Hayter, L.

Bruce of Donington, L.

Hunt, L.

Carmichael of Kelvingrove, L.

Hylton-Foster, B.

Chitnis, L.

Ilchester, E.

Cledwyn of Penrhos, L.

Jacobson, L.

Coleraine, L.

Jacques, L.

David, B.

Jeger, B.

Donaldson of Kingsbridge, L.

Jenkins of Putney, L.

Ellenborough, L.

John-Mackie, L.

Elwyn-Jones, L.

Kilbracken, L.

Ennals, L.

Killearn, L.

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Kilmarnock, L.

Prys-Davies, L.

Kinloss, Ly.

Rea, L.

Lawrence, L.

Ritchie of Dundee, L.

Llewelyn-Davies of Hastoe, B.

Rugby, L.

Lloyd of Hampstead, L.

Seear, B.

Longford, E.

Shepherd, L.

Lovell-Davies, L.

Shinwell, L.

McIntosh of Haringey, L.

Stamp, L.

McNair, L.

Stewart of Fulham, L.

Marley, L.

Stoddart of Swindon, L.

Mayhew, L.

Strabolgi, L.

Mersey, V. [Teller.]

Taylor of Blackburn, L.

Mishcon, L.

Tordoff, L.

Molloy, L.

Wallace of Coslany, L.

Mulley, L.

Wells-Pestell, L.

Nicol, B.

Wilson of Langside, L.

Oram, L.

Winterbottom, L.

Parry, L.

Wootton of Abinger, B.

Ponsonby of Shulbrede, L.

NOT-CONTENTS

Airey of Abingdon, B.

Mancroft, L.

Alexander of Tunis, E.

Marsh, L.

Alport, L.

Massereene and Ferrard, V.

Avon, E.

Middleton, L.

Bauer, L.

Mottistone, L.

Belhaven and Stenton, L.

Mountgarret, V.

Belstead, L.

Norfolk, D.

Boyd-Carpenter, L.

Nugent of Guildford, L.

Brabazon of Tara, L.

Orkney, E.

Caithness, E.

Orr-Ewing, L.

Cameron of Lochbroom, L.

Plummer of St. Marylebone, L.

Campbell of Alloway, L.

Cathcart, E.

Polwarth, L.

Clitheroe, L.

Porritt, L.

Constantine of Stanmore, L.

Portland, D.

Cranbrook, E.

Rankeillour, L.

Croft, L.

Reay, L.

Cullen of Ashbourne, L.

Reigate, L.

Davidson, V.

Renton, L.

Denham, L. [Teller.]

Rochdale, V.

Ebbisham, L.

Rodney, L.

Elliot of Harwood, B.

St. Davids, V.

Elton, L.

Saltoun, Ly.

Faithfull, B.

Sandford, L.

Ferrier, L.

Sandys, L.

Fortescue, E.

Savile, L.

Fraser of Kilmorack, L.

Sempill, Ly.

Gainford, L.

Skelmersdale, L.

Glenarthur, L.

Stodart of Leaston, L.

Gray, L.

Strathcarron, L.

Gridley, L.

Strathclyde, L.

Hardinge of Penshurst, L.

Strathspey, L.

Hemphill, L.

Swansea, L.

Henley, L.

Swinton, E. [Teller.]

Hives, L.

Terrington, L.

Home of the Hirsel, L.

Thomas of Swynnerton, L.

Hornsby-Smith, B.

Thorneycroft, L.

Hunter of Newington, L.

Trefgarne, L.

Kinnaird, L.

Trumpington, B.

Kintore, E.

Vivian, L.

Lane-Fox, B.

Ward of Witley, V.

Long, V.

Whitelaw, V.

Lucas of Chilworth, L.

Willis, L.

Resolved in the negative, and amendment disagreed to accordingly.
House resumed.

Rating and Revaluation-Scotland
4.58 p.m.
The Earl of Caithness: My Lords, with the leave of the House, I shall now repeat a Statement a Statement that has recently been made in another place by my right
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Honourable friend the Secretary of State for Scotland. The Statement is as follows:—
"With permission, Mr. Speaker, I wish to make an announcement about revaluation and rate support grant in Scotland. As honourable Members know there has been a revaluation of property in Scotland which will come on 1st April this year. I believe that such regular revaluations are essential to maintain a fair distribution of burdens within the rating system. In considering the rate support grant settlement for 1985–86, I have had very much in mind the special issues which revaluation raises.
"It is however now becoming very clear that authorities are not heeding my repeated warnings to contain their expenditure. Spending in both 1984–85 and 1985–86 will continue to be above the Government's plans. I will, of course, be closely examining the budgets of all authorities to see if any are planning expenditure of a level which would make in necessary for me to take selective action to reduce their rates. I would also remind all authorities that the penalties for overspending in 1985–86 will be much more severe than in 1984–85.
"I consider that the increases in rate bills now emerging are in general so steep that I must take further action to protect domestic ratepayers. I have therefore decided to increase the total of aggregate Exchequer grant and, within it, the domestic element of rate support grant by £38·5 million making it possible to increase domestic rate relief to 8p per pound of rateable value. This is an eight-fold increase over 1984–85 from £12 million to £102 million. Domestic rate relief is a direct relief on each £1 of rateable value and accordingly the benefit from it increases with rateable value. The necessary order will be laid shortly.
"The increase in domestic rates will in total now be reduced from 24 per cent. to about 17 per cent. The increases for individual domestic ratepayers will in many cases be higher, and in many cases lower, than this figure, depending on the level of spending in their local authorities and changes in the pattern of valuation. It is pf course open to ratepayers to appeal against their valuation and we have made improvements in appeal procedures in the Rating and Valuation (Amendment) (Scotland) Act 1984. The cost of increasing domestic rate relief in this way will be financed by adjustments within my existing policies and expenditure programmes.
"As I have said, the object of revaluation is to apportion the rate burden fairly. This means that some pay a larger share and some a smaller share. That is justifiable, but it is necessary to have regard to the effects on domestic ratepayers in current circumstances. This I have done with a substantial increase in domestic rate relief".
My Lords, that concludes the Statement.
Lord Carmichael of kelvingrove: My Lords, may I first thank the noble Earl for repeating the Statement made by his right honourable friend in another place? Is he aware that this Statement is primarily necessary only because of the dreadful mess the Scottish Office

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has made of the whole revaluation exercise? The Statement suggests that regular revaluations are important, and that is something with which we on this side would completely agree, because continual adjustments are needed. But does the noble Earl accept that the delay in revaluation has made the medicine a great deal more bitter than it would otherwise have been—and this is where it becomes slightly ironic for the Secretary of State to say that he believes in regular revaluation—and that the Secretary of State delayed revaluation at the appropriate time because it would have arrived in the middle of the 1983 election, and that would have been extremely embarrassing for the party opposite?
The Statement makes it clear that the rate increases now emerging are very steep indeed. Would the Minister accept that, contrary to what is suggested in the Statement about Certain local authorities not heeding the repeated warnings to contain their expenditure that the Secretary of State has issued from time to time, the implication being that the effect of the revaluation is only going to hit what the Secretary of State would call the recalcitrant authorities, the higher rates are in fact hitting even the traditional true blue Tory areas, such as, for instance, Eastwood and the Border region, where the rate increases are respectively estimated to be about 38 per cent. and about 22 per cent.? So the implication in the second paragraph of the Statement is somewhat bordering on the misleading, and perhaps even on the dishonest.
Is the noble Earl aware that this belated concession that he has made of 8p in the pound as against 5p in the pound is quite inadequate and that at least 10p would have been needed in order to make it reasonable for the thousands of families who are going to have a particularly difficult time because of the revaluation? Is he aware that this concession is unlikely to reduce the anger of prominent Scottish Tories, who have publicly attacked the Secretary of State for forcing revaluation as he has done—not least the chairman of the Conservatives in Scotland, who made a futile trip to London to try to persuade the Secretary of State that the whole revaluation exercise should be postponed?
Can the Minister tell us what results we can expect in the other areas of Scottish Office financing when the adjustment (as it appears in the Statement) of £38·5 million is made within the Secretary of State's existing policies and expenditure programmes? Where will this money come from? Finally, does this Statement really mean that we can forget about the promises made repeatedly by the Secretary of State for Scotland from 1979 right through almost to the eve of the election in 1983, that the Scottish Conservatives would abolish the whole rating system?
Lord Wilson of Langside: My Lords, from these Benches I should like to echo our thanks to the Minister for repeating the Statement. It will of course do little or nothing at all to allay the acute anxieties among so many people in Scotland—if not indeed all ratepayers in Scotland—over the increasing burden of rates which they face.
May I ask the Minister, first, about the question of revaluation? I share much of the feeling behind the
1472
concern and shock expressed by the noble Lord, Lord Carmichael of Kelvingrove, about the delay in the revaluation. It is, of course, part of the conventional wisdom of the Scottish Office, and I think we all accept, or have done up to date, that regular revaluations are essential to maintain a fair distribution of the burdens. Why delay the revaluation?
Could the Minister tell us, perhaps—some people better informed than I will already know, but could the Minister tell us for the benefit of the people of Scotland—why we have so much concern for regular revaluations in Scotland when, of course, there has not been any revaluation in England, as I understand it, since 1973, if the press is right?
May I comment, secondly, on the third paragraph of the Statement, which reads:
"I consider that the increases in rate bills now emerging are in general so steep that I must take further action to protect domestic ratepayers".
That statement takes my breath away, coming from a Minister in a Government which we thought was committed to radical reform of the rating system in Scotland, after six years in power. The only thing to be said in favour of that statement is that it is extraordinarily frank, and that at least is something, coming from this Government.
But what follows—and I wonder what comment the Minister would care to make on this—is in effect too little and too late. It is too late because, of course, everyone has been telling the Scottish Office about the grievous increased burdens that people would have to bear so far as rating is concerned. To that extent, therefore, the Secretary of State's conversion would seem to come too late. I agree with, and would just acknowledge, what the noble Lord, Lord Carmichael of Kelvingrove, said: that it is far too little.
May I ask the Minister to comment on a point raised in the fourth paragraph, where it says:
"The increase in domestic rates will in total now be reduced from 24 per cent. to about 17 per cent."?
I understand that COSLA said that the increase in domestic rates before this Statement would be in the region of 27 per cent. I wonder whether the Minister has any comment to make on that, as against the figure in the Statement of 24 per cent.?
Finally, may I ask the Minister whether he can tell the House and the people of Scotland when this Government, who have paid so much lip service to the need for radical reform of the financing of local government—with which I and my noble colleagues on these Benches entirely agree—intend to give us that radical reform and to introduce a little sanity? I am sorry; I get a little excited about this, but we really ought to have a little sanity in the relationship between central and local government—instead of which, does the Minister not agree, it gets madder and madder? I know that in 1966 the Labour Government, and maybe other governments before, adopted this approach to local government finance, but enough is enough. When are the Government going to do something about it?
5.10 p.m.
The Earl of Caithness: My Lords, I am grateful to the noble Lord, Lord Carmichael of Kelvingrove, and

1473
to the noble and learned Lord, Lord Wilson of Langside, for their welcome to this Statement. It was a rather muted welcome to good news, but there we are. It was welcome to some extent. If I may try to reply to some of the points that they raised, both noble Lords said that this was, in effect, a dreadful mess by the Scottish Office and that there were anxieties over the change. I suggest to them that perhaps they should go and ask some of the industrialists in Scotland, whose rate bills have gone down as a result of this revaluation, and ask them whether they consider that it was a mistake.
The noble Lord, Lord Carmichael, said that we ought to put the domestic rate relief at 10p in the pound and not 8p. All I can tell him is that COSLA asked the Secretary of State for £31 million, but the Secretary of State said, "No, it will be £38.5 million", so that was rather beneficial to the domestic ratepayers. He asked me also about savings. About £26 million of the savings will come from reductions in my right honourable friend's cash limited programmes in 1985–86. The programmes mainly affected are likely to be industry—and that is largely the SDA—roads and transport, the urban programme and health and housing. My right honourable friend has also taken some account of the grant penalties which are likely to arise from authorities through overspending. There is also some underspending in the current year that can be brought forward but, as the noble Lord will appreciate, without coming to the end of the financial year these figures cannot be finalised.
The noble and learned Lord, Lord Wilson of Langside, asked: What about England? As I am sure the noble and learned Lord of all people does not need reminding, there are totally different systems in Scotland and in England. In England, the revaluation is made at the request of the Secretary of State for the Environment and it is done by the Inland Revenue. In Scotland, it has to be carried out every five years unless Parliament agrees to a deferment and it is carried out by independent assessors. I cannot stress that too strongly. It is not a Government revaluation; it is an independent assessor's revaluation.
The noble and learned Lord also said that COSLA had suggested that the increase in domestic rates was 27 per cent., whereas the figure that I quoted earlier was 24 per cent. I think that the figure of 27 per cent. comes from the article in The Scotsman today, which I believe was put out partly by COSLA. I understand that the figures contained in that article include water rates and that probably accounts for the difference. If it does not, I will write to the noble and learned Lord. So that clarifies the situation. With regard to the reform of the rating system, we have discussed this fairly lengthily in the past and perhaps this would be an inappropriate time to take the matter a stage further.
Lady Saltoun: My Lords, would the noble Earl care to comment on the fact that the new valuations in Grampian region are, on average, two-and-a-half times what they have been in the past five years, and that the proposed domestic rates increases in Banff and Buchan district are, in many cases, in the region of 21 per cent. up on last year, which will hit householders very hard indeed and is far in excess of inflation?
The Earl of Caithness: My Lords, I am grateful to the noble Lady for what she has said. The figures that I have before me relating to Banff and Buchan—and this is confirmed by COSLA—are that the domestic rate increase, on average, is about 15.3 per cent. That will be reduced by 6 to 7 per cent., following the Statement that I have repeated on behalf of my right honourable friend. So that will bring the figure down to under 10 per cent. As she will appreciate, when there is a revaluation some values will go up and some will come down. But the advantage that we have had in Scotland of a regular revaluation is that when there are these discrepancies they are sorted out at an early stage. As the noble Lady will be aware, there has been enormous pressure for the revaluation to be delayed. But if it were delayed, it would only compound the problems.

Surrogate Motherhood: Legislation
5.16 p.m.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Glenarthur): My Lords, with the leave of the House, I will now repeat a Statement that is being made in another place by my right honourable friend the Secretary of State for Social Services. The Statement is as follows:
"With permission, Mr. Speaker, I will make a Statement on commercial surrogacy.
"Over the last few months there has been increasing concern about the practice of surrogacy—that is, the practice whereby a woman agrees to become pregnant with the intention that the resulting child should be handed over to another couple. This concern has related particularly to the activities of agencies which operate to promote surrogacy arrangements on a commercial basis. We also now have the results of the consultation which we initiated on the Warnock Report on Human Fertilisation and Embryology. Although there was some difference of view about the general principle of surrogacy, there was almost total agreement on the unacceptability of surrogacy undertaken on a commercial basis.
"When the Warnock Report was debated in this House last November, I said that the Government would consider urgently whether clarification of the law on surrogacy was necessary. This we have now done. It is quite clear that the question of surrogacy raises wide issues not just of general principle, but also about, for example, the legal status of children and the involvement of professional people in facilitating surrogacy arrangements. We have concluded that it would be right to deal with these questions in the comprehensive legislation which is needed to deal with the whole range of issues raised by the Warnock Report.
"Nevertheless, it is clear that the existing position is unsatisfactory. The case of baby Cotton demonstrated the difficulties which commercial surrogacy arrangements can cause and the widespread public concern about them. There are almost certainly other similar cases in prospect and

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there is an incentive for commercial agencies to increase their activities before any general legislation can be brought forward.
"Mr. Speaker, the Government believe that commercial surrogacy is in principle undesirable and that commercial agencies should be prevented from operating in this country. I shall therefore shortly be bringing forward a Bill to achieve this purpose. It will prohibit such agencies from recruiting women as surrogate mothers and from making surrogacy arrangements; and it will prohibit advertising of their services.
"Mr. Speaker, the objectives of this Bill will not be to resolve all the issues in the field of surrogacy. It will, however, give rapid effect to the widespread view that this is not an area where commercial agencies should operate and will avoid an escalation in the number of surrogacy arrangements procured by them. I hope that the House will agree that action of this kind is justified and urgent."
My Lords, that concludes the Statement.
Lord Ennals: My Lords, may I thank the noble Lord for repeating the Statement made by his right honourable friend in another place. He will be aware that in the debate on the Warnock Report in this House on 31st October, when we all spoke as individuals, though there were differing views on many of the recommendations in the Warnock Report, there was near unity in the strength of feeling against the practice of surrogate motherhood and the need for early legislation, especially to make illegal the agencies making money out of these negotiations. Thus, in my personal view, most Members of your Lordships' House will welcome the Government's intentions as set out in the Statement.
Does the noble Lord the Minister accept that there is something deeply wrong when a womb is used for financial gain? Does it not reflect on the values we place on human life, as if a child was an article for sale? Does he not also agree that there are major social and legal as well as ethical problems involved which could affect the surrogate mother, the couple and the child? May I put to him two questions? First, can the noble Lord give any indication of the target date for this proposed legislation to take effect? Secondly, can the noble Lord give any additional information on the proposed timetable of further long-term legislation not only dealing with surrogacy but with other aspects of the Warnock report?
Lord Kilmarnock: My Lords, we on these Benches would also like to thank the noble Lord, Lord Glenarthur, for repeating the Statement made by his right honourable friend in another place. This is not a party political matter but I think that there will be widespread agreement that it was right to take action against commercial surrogacy. My personal view—I repeat that it is a personal view—is that this ban should not extend to non-commercial arrangements made between friends or within the bosom of a family. From the Statement it would appear that such arrangements will not be covered by the Bill. Perhaps the noble Lord would confirm this.
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While generally welcoming the Statement, may I express a hope that this is not a prelude to a helter-skelter piecemeal legislative approach to this extremely complex scientific and ethical issue? I hope personally that the Government feel they have taken care of the pressing need to curb a practice which many people find repugnant and that having done this they will bring forward comprehensive legislation after full and detailed consultation. It does not seem correct to me that whatever its merits or demerits the full discussion of the Warnock proposals for a regulatory agency should be pre-empted by the hasty passing of a Private Member's Bill on one aspect of the problem. I hope that the Government will be able to give us some assurances on this.
Lord Glenarthur: My Lords, I am grateful to both noble Lords for their reception of the Statement, and for the fact that they find the measures which we propose to take generally acceptable. I certainly agree with the noble Lord, Lord Ennals, that there is something very wrong with those who wish to exploit people for financial gain in this particular way. I would also agree with him that there are some very real social, legal and ethical problems to be undertaken; but we felt that it was right to tackle this immediate problem now and that is why we are doing it.
On the question of timing about which the noble Lord asked, we hope to introduce the surrogacy Bill as soon as possible. We hope that it will be by Easter. On the question of wider legislation, we must think about this carefully because it is very complicated, as the noble Lord will be aware. What I can say is that my honourable friend the Minister for Health said in the debate on the Second Reading of the Bill, to which I think the noble Lord, Lord Kilmarnock, referred, which is in passage through another place at the present time, that it was our aim to introduce a full Warnock Bill within the lifetime of this Parliament. I cannot be more precise than that but I hope that that will at least help the noble Lords with the questions they ask.
With regard to the more general question of surrogacy and the bosom of the family, the point that the noble Lord, Lord Kilmarnock, first raised, this is one of the areas that we really must consider and no doubt views will be made known on this when we come to discuss the Bill in your Lordships' House.

Water (Fluoridation) Bill
Brought from the Commons: read a first time, and to be printed.

Films Bill
5.26 p.m.
House again in Committee on Clause 2.
[Amendment No. 2 not moved.
Clause 2 agreed to.
Lord Auckland Lord Auckland moved Amendment No. 3:
After Clause 2, insert the following new clause:
Levy on pre-recorded video cassettes.
(" . The Secretary of State shall by order establish a scheme to impose a levy on all pre-recorded video cassettes sold in the

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United Kingdom, the proceeds of which shall be redistributed under the scheme to the makers of British films released on video cassettes, pro rata to their sales in the year in question, in the form of investment credits to be used for the production of British films.")
The noble Lord said: I should like first of all to say to the Committee that I have no personal financial interest in either the film industry or the video industry, so I do not speak on this matter with any business authority. I speak purely in a personal capacity. We have just been discussing a very important amendment about the financing of the film industry. I think it is fairly generally accepted that the industry is facing a number of problems which are beyond its control. On the other hand, it is equally true to say that the Treasury is being called on to finance a number of important matters, such as the health service, hospitals, roads, overseas aid and the arts, which was discussed at great length yesterday. The film industry must obviously for purely social needs come right down in the queue.
But we are discussing here something very new. The video industry is very new and I would be the last person to condemn it. It gives pleasure to a number of people including handicapped people who cannot get to the cinema and who cannot get to the theatre. I have no quarrel there. But there seems to me to be something very wrong. If the cinema industry cannot have sufficient central funds, why should the video industry not pay some kind of levy? I quite accept, having read the Green Paper which was published recently, that it is not an easy matter to adumbrate the amount of the levy. The problem here is very largely a matter of how one is going to equate the levy with the films concerned.
This amendment as I see it is, in a sense, a probing amendment to hear what the Government's feeling is. The live part of the cinema industry, so to speak, badly needs finance. It deserves finance. It employs a large number of people. The "undercutting" of the industry—I do not think that that is a unfair word—by video needs looking into. This amendment, whose other signatories—it is an all-party amendment—have much more professional experience in the industry than I, gives an opportunity for the Government to give their views on what is an important social matter.
It is of course accepted that the video and cassette industry is here to stay. There is no quarrel about that. But it should in my submission have to compete on fair terms. It is in that spirit that I beg to move the amendment.
Lord Somers: I should like to support this amendment. The Committee will be aware of the fact that normally composers and authors get performing rights from their works when shown on films or broadcasts; but when it comes to cassette recordings they are at a loss because it is absolutely impossible to trace them. This seems to be the best way of closing that gap and of enforcing a levy, and I am sure all noble Lords will welcome it. It is an excellent idea.
5.30p.m.
Lord Willis: Having briefly wandered into Indian country, I am delighted to be back in the fold and to support this amendment, on the basis that it is a
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probing amendment. My own view is that it does not go wide enough. The difference between this and the proposal that there should be a levy on films shown on television—discussed in the previous amendment—is this. A video recorder, which is the instrument by which these films are shown, is in fact an instrument of piracy. It can be used, and it is constantly used, to steal copyright from authors, composers, film makers, etc. I therefore welcome the Government's Green Paper which proposes that there should be discussion at least on the question of a levy not only on pre-recorded tapes but also on blank tapes.
I would go further and say that there should be a levy on copiers and on video recorders. A small levy imposed at the point of purchase would provide a sum of money that would have to be distributed to copyright owners. There would be, probably, some money left over to reinforce British film production. On the basis that this is a probing amendment, and that I should like to hear what the Government have to say, I support it.
Lord Graham of Edmonton: I rise to support the sense as well as the principle of this amendment. The Minister should take note that this Chamber, clearly, is genuinely trying to probe the Government, even at this late stage, to establish whether they are prepared to devise some mechanism that will provide the British film industry with a source of essential income. The Government appear to have made their arrangements, which are not unfair and which might not even be ungenerous, and have then said, "That's it. At the end of the day, you stand on your own two feet". As the many experts and people of experience both in this Chamber and outside it have said, that approach is not enough. The British film industry cannot even begin to operate because it cannot attract the investment it needs. It was in respect of its need to attract investment that my noble friend Lord Willis made a most telling point.
We want to see tax incentives that will induce people to invest in British films. The industry does not want handouts or levies. But faced with the action taken by the Government in last year's Budget and with their clear intentions for this year's Budget, the industry is asking. "What can we do?". Given the very close vote on Amendment No. 1—and 80 votes to 85 votes is close in any book—we now find ourselves presented with another opportunity. Like the first amendment, the amendment now before us is open to criticism. It is not the ideal, but the Government must understand that unless they are able and willing to listen at this stage, or at the next stage, or at the stage after that, there will be people who will continue in their attempts to find ways of improving this Bill.
With great respect to the Minister, and to his advisers, there are people outside this Chamber who have far more experience of the industry and a better feel of what the industry needs. They may be forced to say that Parliament has neglected the British film industry at its peril. One can compare our situation with what other nations have been doing for their indigenous film industries. We are entitled to be ashamed if we do not take the opportunities now before us. I certainly support this amendment.
Lord Lloyd of Hampstead: As one of the signatories, I should like to add my support to this amendment. I should point out once again that I do not altogether go along with the language of the amendment. In particular, I believe that it ought to cover blank tapes as well as pre-recorded tapes; and it is a little unfortunate that the amendment directs its aim at supporting individuals rather than creating a fund to support the film industry generally.
Having said that, and wishing to make clear that I have no desire to rehearse the arguments about levies which were put in respect of the previous amendment, in the light of the Government's persistent attitude I should emphasise the point that the aim of this exercise is not to find the most efficient way of giving further support to the film industry; the aim is to find some means of saving that industry.
If one rejects, as they have been rejected, tax concessions on the one hand—favoured by the noble Lord, Lord Willis, and many others—and a television levy on the other, then what is left? Unless the Minister can come up with some other notion, it would seem that this proposal is a last resort. On the whole, it is a sensible resort.
I am bound to point out, as I did on Second Reading, that the Government have, happily, devoted some further thinking to this matter since the 1981 Green Paper, when they scalped in a very dismissive way the notion of a levy on tapes. They have done some valuable rethinking, as I venture to believe. On a previous occasion I referred your Lordships to what seemed to me to be—and I hope I am right—a significant passage on page 9 of the new Green Paper. It is very short and perhaps the Committee will permit me to quote it once again. Paragraph 7.21 includes this statement:
"Similarly it is far less clear for video than for audio what basis could be used to sub-divide the levy proceeds among the main groups of beneficiaries, and within each group. One possibility might be for the film proceeds to be diverted to a central fund to be used in the film industry to support production".
That is a fruitful concept and I hope that the Government will give it serious consideration, particularly, as I mentioned on a previous occasion, in the light of a report which I hope will shortly be in the hands of the department. It comes from the Interim Action Committee for the Film Industry, as it has hitherto been named, though it is likely to re-emerge under a slightly different guise in the very near future. I hope that the thinking which has gone into that report with considerable care will indicate lines to the department whereby such a notion can be rendered practicable. It is that which the department itself emphasises in the Green Paper. The department, quite rightly, says that it wants from those who are familiar with these matters suggestions which demonstrate how such a concept can provide a practicable solution to achieve the desired objective.
I conclude by expressing the hope that the Minister will indicate that it is the Government's intention, after taking due soundings by the date designated in the Green Paper, at the end of April, that they will not wait, as they have hitherto done, until they can produce total overall reform of the copyright laws. I remind your Lordships' Committee that the Whitford report was published in 1977 and nothing has yet
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emerged from that. If we have to wait until such a mammoth exercise has been performed, I am afraid that it will be postponed to the Greek calends. I urge the Government to deal with this matter separately, as is indicated by the fact that they have chose to issue at this juncture a separate Green Paper on this single issue. The need of the film industry, as many of us have emphasised, is a dire one and cannot wait on too prolonged and lengthy deliberations. Therefore, what is needed is a speedy decision that I hope will achieve the objective which I am sure is dear to all our hearts; that is, the survival and, ultimately, the flourishing of this immensely important British film industry.
The Viscount of Falkland: I, too, support this amendment, but somewhat more enthusiastically than I supported the last amendment because, although I hate to use emotive words such as "parasitic", one could justifiably, if in a rather liverish mood, say that the use of video tape, in the way that it potentially can be used, is parasitic. I have just acquired a video recorder. I have not yet used it because I am long-sighted and have not yet found a way to operate the controls. If there are any entrepreneurial noble Lords, there is obviously an opportunity to market a light, or something else, perhaps, that magnifies the controls so that one can learn to use the machine quicker.
My original intention in using the machine was to record programmes, principally films. If one thinks that through, I can record a film while I am in your Lordships' House late, as we seem to be sitting, and when I see fit to play it back on, perhaps, a Sunday evening I can show it to a group of friends and lend it to my son, so that before long 100 people could have seen the film. It therefore seems only reasonable on that basis, and, referring back to my remarks on the previous amendment, should we be on the threshold of a new era of films, that the video business is going to do even better. I foresee the time when everyone will have a television set and video recorder in the same case—the same ensemble, as it were.
It is obviously a huge business. Recently I went to a shop in London to investigate the possibility (when I learn to operate my machine) of hiring films. I actually purchased my first blank tape there, but I looked at the list of recorded films and, with all the work I have to do in your Lordships' House, I have not yet finished going through the list of titles which I obtained from that small shop in Fulham. There is clearly an area here where we could get a contribution and that contribution would obviously grow with the success of the film industry, which I hope we shall see when we have perhaps persuaded the noble Lord the Minister to make certain adjustments in the Government's thinking; and we shall be coming to that later.
I echo everything that has been said. Anything we can get into the new consortium, however it is composed, by way of finance will help, though I reiterate that we are still thinking way too low, even with video contributions and contributions from television. If we aim modestly, and we encourage one or two people to see the new film era as being possible, we are way too low. Certainly it is a good idea if we can get a contribution from video.
I add one point, to which we shall obviously come later. I am surprised to see the British Videogram

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Association involved as a prospective participant in this new company. I wonder whether it will be as pleased to participate if there is to be a levy. I do not see what function the video side of the business has in partaking in a company which is to be, as it were, the architect of the new film industry, but I daresay we shall come on to that 'ere long. However, I support the amendment.
5.45 p.m.
Viscount Massereene and Ferrard: I shall speak briefly in support of the amendment. It is an excellent idea that blank video cassettes should have a levy on them to help the film industry. I understand that under the Government's proposals the subsidy is to be £3 million. Is that right? However, to make a feature film now costs at least £1·5 million. If, as I understand it, the Government want to back about 12 feature films, that works out at only £300,000 per film, and that is not much. Of course, it depends on what you sell the blank cassettes for. If you sell them with a 50 pence levy, that will amount to about £10 million. If you sell them with a £1 levy, that will give about £20 million. That is an extremely good way of helping the film industry.
I have had a very slight connection with the film industry. I cannot remember whether it is £2 million or £3 million that the Government are proposing under the new arrangement, but it will be of very little use and so I support this amendment regarding these tapes. Having a levy on a blank cassette will certainly help the film industry.
Lord Lucas of Chilworth. I am most grateful to my noble friend Lord Auckland for his explanation of the amendment, but I must say at the outset that the principle behind the amendment is practically the same as that which we have spent most of the afternoon discussing in Amendments Nos. 1 and 2. It proposes, again, a redistributive levy, the proceeds of which would be directed towards British film production. The target of the levy in this case is different—pre-recorded video cassettes rather than television. Therefore, this amendment raises a number of different, though in some respects similar aspects, which are equally important, I suspect, to my noble friend and his supporters.
With the leave of the Committee it might be sensible if I concentrate on these new issues rather than reiterate the points of principle set out in the White Paper which we have discussed. The Committee will know that the market for the rental and the sale of pre-recorded cassettes has been quite buoyant in recent years. However, I suggest to your Lordships that there is a risk that a levy on pre-recorded video cassettes introduced with the same reasoning as that which lay behind the introduction of the Eady levy would suffer exactly the same fate. I take the point made by the noble Lord, Lord Willis, when he referred to the Green Paper on the recording and rental of audio and video copyright material. I digress for a moment, since this subject matter has been introduced. The proposal here is that there should be a levy on blank tapes and the proceeds distributed to the copyright holders to compensate them for the unauthorised copying of their work. I think the noble
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Lord used the word "piracy", and I do not disagree with him in that description. It would be wrong if this afternoon we were to anticipate or prejudge the outcome of those consultations. The Government will be prepared to consider, in the light of the responses to the Green Paper, whether a levy should simply be paid to copyright holders or whether, perhaps, a central fund might be established the distribution of which may possibly go towards supporting the film industry.
Whatever we do in respect of a levy in that context of copyright, we will have to remember that the decision cannot be arrived at as a result of discussions we may have on the implications that this Bill, which is a films Bill, may have on copyright issues. They are separate at this time, and if there is an overlap which is beneficial, so be it. Therefore, I hope that noble Lords will not press me on that issue.
The noble Lord, Lord Graham, argues that the principle of a levy is the same. I would agree with him in that merely adding a levy onto pre-recorded video tapes or television screening time, which would then be distributed to a rather undefinable area such as the film industry, is not a practical proposition. He suggests that a subsidy is fair, but at the same time he argues that the industry does not want one. He suggested, as I believe did the noble Lord, Lord Briginshaw, and others at Second Reading, that what the industry was looking for were opportunities for investment and certain tax reliefs. Again, he will appreciate that I cannot go down that avenue this afternoon, whatever my feeling might be.
Lord Graham of Edmonton: Does the noble Lord not recall what my noble friend Lord McIntosh said earlier? Of course we appreciate that certain avenues of support are exempt from our powers in this place under this Bill. But if we acknowledge that we cannot go down that road, and if we accept the view of the Minister and his colleagues in another place that there are no other roads down which to go, quite frankly, it is a dead end. Many of us are not prepared to accept that.
Lord Lucas of Chilworth: It really is not a dead end.
Lord Graham of Edmonton: Good.
Lord Lucas of Chilworth: My noble friend Lord Massereene and Ferrard asked what the Government were doing. I would hardly call the Government's contribution of £1.5 million, plus £600,000 from the portfolio, plus additional support to the school, guaranteed over the next five years, a dead end. That is a considerable amount of money. It is in excess of what the Eady levy has produced in recent years. The noble Lord, Lord Graham, shakes his head.
Lord Graham of Edmonton: No, I am not shaking my head.
Lord Lucas of Chilworth: He must agree that the facts which I have laid before the Committee are correct. If he and my noble friend want to argue that £1.5 million is not very much, even when multiplied five times, that is totally different, but it is an argument which I do not believe holds too much water.
Lord Willis: I think that the noble Lord is using selective facts, with respect. I would draw attention again to the point which the noble Viscount, Lord Falkland, made. One can hire a pre-recorded video for one night for £1.50 or over a weekend for £2. One may ask a dozen people round to see it, as many young people do over the weekend. Many young married couples with children hire video cassettes rather than go to the cinema. If one goes to the cinema, however, it costs £2 or £2.50 a seat, or in the West End it is £6 or £7. There is a tremendous discrepancy there. The market is booming now. I believe that the penetration of video recorders into homes in this country now is between 40 and 45 per cent. It seems to me that this is an area which would get the Government off the hook. I wonder why they do not grasp the opportunity.
Lord Lucas of Chilworth: The noble Lord suggests that I pull out selective figures. The example that he gave is even more selective. There is no comparison whatsoever between cinema and television. The noble Viscount, Lord Falkland, made the point: the two cannot be compared. One involves an entire outing. A seat in the cinema may cost £2 or whatever, but it is a total experience. One may be watching a film on the screen in both cases, but going to the cinema is a totally different experience from watching a film on television at home.
Lord Lloyd of Hampstead: Does the noble Lord not agree that his recognition of that makes all the more important the fact that the cinema industry should be saved? If we simply say that we have films on television and that is good enough, that will result in letting the cinema industry fade out of existence. If I may add further to that, does he not recognise, in the light of all the arguments presented from so many informed quarters, that the great sum of £1.5 million a year over five years is trifling in relation to the problem that faces the film industry? I ask him to take seriously the points being urged by people who fear a dramatic and disastrous collapse of the industry if no further money is fed into it beyond those relatively modest sums.
Lord Lucas of Chilworth: I believe I answered most of the noble Lord's comments earlier. I find it extraordinary that the immediate call of any industry, whether films, shipbuilding, motor cars or whatever, is for more taxpayers' money. We have put up some money. As I sought to explain at Second Reading, we have set an environment in which the industry can help itself. The film industry is buoyant, as those in it have admitted. A quote that I gave earlier this afternoon illustrates that, and noble Lords have quoted the success of particular films.
If I came before the Committee and said that we would provide £1·5 million plus x, somebody would say to me that that was not enough because of so on and so forth. I do not doubt that the market for pre-recorded videos is at present a strong one. But I believe that we should bear in mind that it is a relatively new and highly competitive industry. Margins are fine. Although the range of outlets is still expanding, very many of them fail to achieve anything approaching their hoped for success.
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I think that it was the noble Viscount, Lord Falkland, who spoke of the growth of video. I understand that although it has reached a peak of about 45 per cent. penetration in homes in this country there is already a tail-off. I understand that there is a change in the way in which those films are being made and produced. There are coming along all sorts of technical advances which I believe make that industry extremely vulnerable. It is a market which is very sensitive to price, and a drop in sales caused by having a levy attached to it would, I believe, be counter-productive.
Again, I say that I do not believe that a levy is the right way forward. There is an alternative, and it is from the pre-recorded video industry. That industry relies on good quality films, and it recognises that. Increasingly the industry is showing its readiness to invest in film production, and there have been some very good British films to show for that.
I want at this stage to refer particularly to the British Videogram Association. I believe that it should be praised for its general attitude to its responsibility, if I may call it that, to the videogram industry. They are now taking major steps towards an involvement in film production. Not only are the British Videogram Association one of the founder members of the new consortium but also through their members they continue to make contribution to the film industry. One of the larger members of the association is the Virgin Group. They have had successes with their film, "A Shocking Accident", which was part financed with the NFFC. They made "1984" and that is doing very well. Palace Video were responsible for making the "Company of Wolves", and that has been successful. Video Arts Limited have also been successful. Also other companies in membership have begun to support film production. There is no doubt in my mind that that industry is helping. They are of course at one and the same time in being founder members of the organisation supporting it financially, at least for three years, to the tune of a quarter of a million pounds. That is not insignificant and I do not think it would be fair if the Committee were to ignore that fact.
6 p.m.
I believe that this recognition of the link between video and film offers a far, far more dynamic way forward than the imposition—it is almost like a dead hand—of a levy. It seems to me that at the moment that industry is doing very well. It is stimulating precisely the kind of development in the industry for which noble Lords are looking. This is a way forward for the industry. It is helped by Government in pump-priming for the new consortium. It is costing the taxpayer a considerable amount of money, more than the support hitherto.
A levy of the type which is proposed in this amendment stands a very good chance of falling extremely short of expectation. I believe it would damage the trend in the video industry's investment in the industry. I do not believe it is needed and it could be positively harmful. I understand that my noble friend Lord Auckland said that this was a probing amendment; he wanted to find out what the government felt about it and why. I believe that I have

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answered him. I therefore hope that he will withdraw his amendment.
Lord McIntosh of Haringey: Before the noble Lord, Lord Auckland, returns to the issue, I must say that if ever there was a justification for a short debate on a probing amendment I feel that this was it. That is because every time the Minister opened his mouth his case weakened. He revealed more and more inconsistencies. He made exactly the same mistakes in respect of the video industry as he made on the last amendment in respect of the television industry. On the one hand he was saying that the video industry is enormously strong and that, for that reason, the British Videogram Association can afford to make this substantial contribution of £150,000 for at least three years to film production. In almost the same breath he is saying that the video industry is extremely competitive, that it is vulnerable to new technical developments and that therefore a levy of the sort proposed would be extremely damaging to its health—"a dead hand" was the phrase he used. He really cannot have it both ways. Certainly he cannot claim that £150,000 a year for three years, with no guarantee of success—or was it £300,000? from the British Videogram Association. Am I quoting the figures wrongly?
Lord Lucas of Chilworth: I do not wish to be unkind to the noble Lord, Lord McIntosh. He advances these arguments to destroy mine. At least he might have the courtesy to destroy them with accurate figures which have been well published through Second Reading and elsewhere. It is a quarter of a million pounds.
Lord McIntosh of Haringey: I beg the noble Lord's pardon. I was incorrect to the extent of £100,000 or £50,000. Nevertheless, the total amount has been universally agreed by everybody associated with the film industry to be totally inadequate for the purpose. If the noble Lord did not learn that lesson from the unanimous opinion expressed in all speeches at Second Reading, then, if I may say so, I do not think he was paying adequate attention to the debate.
The position is that there are three outlets for films. There are outlets for other things as well but there are three outlets for films. They are the cinema, television and video recordings. There may be more in the future but at the moment there are these three outlets for films. The film industry is in effect expected to survive financially and commercially on the receipts from only one of those three outlets. The amendments which have been proposed are designed to add the other two outlets for films to the resources for the further development of the film industry. It is for that reason that it has been so valuable to have the amendment proposed by the noble Lord, Lord Auckland.
Lord Auckland: I should like to thank all noble Lords from all parts of the House who have taken part in this debate and to thank my noble friend the Minister for his very full and, as always, careful reply, although I cannot say that I, for one, am entirely satisfied with it. However, I shall read it and I shall read all the speeches with great interest.
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It is not any part of the purpose of this amendment, or indeed of my philosophy, to bleed the taxpayer. This is not the idea. But I think that where videos are concerned there is a case for some kind of money to be extracted from them. I leave it to the experts to decide the extent to which it should be done. I quite understand that there are people employed in the video industry who take a very different view. I do not possess a video but my two daughters do. I think it is probably the young rather than my own generation who enjoy that luxury, if it can be called "luxury".
The real problem here is this. It is all very well talking about the live cinema. There are fewer and fewer live cinemas. I believe that one of the main purposes of this Bill should be to encourage more provision for the live cinema. However, I quite understand that this is an amendment which has its defects. I think we should all agree with that. But I hope my noble friend the Minister will read very carefully what has been said on all sides of the House. I do not intend to press the amendment. However, when the next stage of the Bill comes, it may well be that another amendment along these lines may have to be put down. It is an important point. With those words, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3 [Dissolution of National Film Finance Corporation]:
The Viscount of Falkland The Viscount of Falkland moved Amendment No. 4:
Page 3, line 30, leave out from ("transferred") to the end of line 41 and insert ("on the following legally enforceable conditions—

(a) that the company will itself in the production of relevant films or will make available by way of financial facilities to those who wish to produce relevant films—

(i) any income derived from rights acquired from the Secretary of State under this section

(ii) any trading profit made in the preceding year

(iii) a sum equivalent to any sum received by way of grant or loan from the Secretary of State.

(b) that the company will obtain the approval of the Secretary of State to the appointment or re-appointment of its chief executive.

(c) that the company, through its chief executive, will pay proper regard to the promotion of British film production as well as to the commercial viability of any particular film project and the commercial interests of the company.

(d) that the chief executive will report to the Secretary of State each year as to his and the company's fulfilment of the condition specified in paragraph (c) and that this report shall be laid before Parliament.

(3A) In the event that no company can be found to meet the conditions specified in subsection (3), no order shall be made by the Secretary of State under paragraph 8 of Schedule 1 to the National Film Finance Act 1981 or under this section.").
The noble Viscount said: I think we now come to the very heart of the matter. I hope the Committee will bear with me if I touch again on some of the ground we have already covered this afternoon as a background to explaining why we who support this amendment feel that it is so central to our case.
How did this whole business come about?
Lord Lucas of Chilworth: Would the noble Viscount just forgive me for a moment? May I assume that in these remarks he is speaking to the whole group of amendments. He did not refer to it. I do not want to

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pick him up on a little detail but I want to have a mutual understanding of what we shall debate over these next few minutes.
The Deputy Chairman of Committees (Lord Nugent of Guildford): It might be for the convenience of the Committee and of the noble Viscount if I explain that if Amendment No. 4 is agreed to, Amendments Nos. 5, 6, 7 and 8 cannot be moved.
The Viscount of Falkland: I am obliged to the noble Lord the Minister. I am addressing myself to these amendments together and I think that my remarks will terminate in such a way that we shall see that they are all dealt with.
Amendment No. 5: Page 3, line 35, leave out ("on a commercially successful basis").
Amendment No. 6: Page 3, line 38, at end insert—
("(c) that at least one independent director shall be appointed to the board of the company to represent film producers;").
Amendment No. 7: Page 3, line 38, at end insert—
("(cc) that it will have as a main objective the encouragement of new film makers;").
Amendment No. 8: Page 3, line 38, at end insert—
("(ccc) that the chief executive of the company shall have sole creative authority within a financial framework set by directors of the company under an independent chairman.").
One has to consider how this whole Bill came about and why, in the opinion of those who oppose the measure, it is so loosely drafted in the context of its intentions in regard to the future of the film industry. The decline in film audiences is well known. I have perhaps persuaded noble Lords that one of the main reasons for the decline has been the inability of the two major groups of cinema owners in this country to make a visit to the cinema an attractive experience. I am very much obliged to the noble Lord the Minister for reinforcing on a previous amendment my own feeling that going to the cinema in a cinema theatre is a very special experience. It lies at the whole heart of the matter. That is why we are discussing it. We want to encourage people to go back to the cinema theatres to see films made expressly for the big screen, whether or not they are shown afterwards on small screens or videos. We should take our rightful place. Most other countries in the industrialised world and many countries in the developing world have booming film industries, well supported, I might add, by their governments.
The Government have sought, rightly, to dismantle the whole idea of the Eady levy. The levy was the means of drawing something back into film production from the receipts of showing films. This has declined to a degree where the amount of money being put into the National Film Finance Corporation—the machinery by which this money was used to finance future productions—became irrelevant. One has to ask why on earth, if one takes a serious view of the future of the film industry, the existing structure was not modified to the new requirements. Why did we need to dismantle a perfectly good organisation, the National Film Finance Corporation, with its very creditable background of working for many years in very hard circumstances of declining audiences, with additional factors that made its
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operation increasingly difficult? Noble Lords, especially the noble Lord, Lord Willis, have on many occasions drawn the attention of your Lordships to the fact that much of the benefit unfortunately went across the seas to the United States. Whatever happens now, this awareness, I feel, will result in our putting double glazing on the windows to make sure that the Americans do not creep in and benefit from any arrangements that we make.
We could have had a National Film Finance Corporation with strong support from various parts of the entertainment industry and guidance from the Government. We could perhaps have created a very good vehicle for going forward into what I have called, although I fear I am boring your Lordships with this phrase, the new era—my optimistic vision of the new film era. What do we have in its place? We have an attempt to create a company—a consortium as it is now called. It took a long time for the Government to arrive at a suitable name. I noticed that honourable Members of another place were reaching a pitch of extreme frustration through having to call it "Son of NFFC" and other extraordinary names. One dreads to think what they would have arrived at if we had not found this name. I find it extremely difficult to remember what it is called now. It is so boring. But the consortium has been composed; and four members are proposed to be the structure of this new company.
6.15 p.m.
What is amazing—I have referred to this before—is that the two main parts of this proposed company are the two main groups in this country that have presided over the decline of our film audiences. Rank's performance in this field is absolutely deplorable. Rank would be out of business if it had not been for the Rank Xerox machine. It has shown no interest whatever in the film business and shows no interest now. All it has are cinemas which are declining. Its only interest in the film industry, I submit, is what it can get for the real estate on selling cinemas when they go bust.
Let us look at the other one. Let us look at Thorn. It has enormous and very profitable interests in other parts of the communication industry. I would not blame Thorn in the same way as I blame Rank. It does not have the motivation to go into a new company of this kind with the kick and the punch which is needed to build up a new British film industry. Then there is the Videogram Association, to which I have already referred. The only part of this organisation that I feel has any relevance at all is Channel 4. That is a company dedicated to the future of cinema, albeit cinema on a small screen. Many good productions have already been financed by Channel 4. I must congratulate Jeremy Isaacs on the amazing development of Channel 4. It was derided nationally in the press and run down by everyone. But clever tactical development and good taste—all the kinds of qualities we need to build up the film industry—have been shown in the development of Channel 4. There has been imagination, innovative thought and so on. I have no objection to the participation of Channel 4 in this company. I should, however, like to see it with slightly more motivated bedfellows. Channel 4's

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interest at the moment is in its own development for the small screen and for financing small films made on a very small budget.
The Government, in their vision of this new birth of the film industry, are making the change from the National Film Finance Corporation to a private company—for that is essentially what it is—and taking the hard-earned assets, or, rather, not the assets, but the income earned from the assets, which amounts to about £600,000 to £700,000 a year from royalties on films and so on. I must be careful; the noble Lord the Minister might pick up my use of the word "assets". Many of the achievements of films supported by the NFFC have been mentioned by noble Lords. We see that the two main companies, Rank and Thorn, have escaped, with the abolition of the Eady levy, what to them must be quite an onerous payment in a hard business because their cinema exhibition areas are poor. They are getting into this new company and getting cash that will recompense them for the scrapping of the Eady levy.
We have a new company that is very vaguely drawn. I fear that, if constituted in this way, it will fail. It will be underfunded and run by people who are not motivated. I do not believe that any additional money will come from outside. No one will invest because the future, with that kind of organisation, does not look bright. If, however, we assume that this is the reality, who will run the company? Rank is not interested in running it. Channel 4 is not interested in running it; it has its own fish to fry. Thorn is not interested in running it. It will be left to the chief executive of the company.
Very little is said in the Bill about the chief executive. Whose man will he be? That is what worries us. We believe that he should be a very independent man—a man who has the interests of the film industry at heart, a responsible man who has his duties enshrined in statute. After all, this man is going to be responsible for the administration of funds. One could say that they belong to the film industry, but they belong to the taxpayer. He must be a man who is independent of civil servants; he must be independent of commercial interests; he must be responsible; he must be accountable; and, above all, he must be a man of talent and vision and with the capacity of people such as Mr. Jeremy Issacs or even (dare I say his name in this Committee?) Sir Peter Hall. We need somebody with that kind of ability and with an independent nature—a man who is prepared to shout for the British film industry.
That is what we seek to achieve in these amendments. We think that various people should be represented on the board of this company and they should be similarly motivated. At present there is no provision in this Bill for this kind of creative autonomy. There is no indication in the Bill that what the Government wish to do is to go forward into the new film era, because their whole thinking behind the creation of this company is really to stand at further than arm's length—to stand right away and ultimately disengage themselves. They will disengage themselves. They will disengage themselves at the end of a disaster, because if this company is allowed to function as proposed in this Bill—in this loose way—it will surely
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founder and it will surely go bankrupt within a period of a very few years.
Then what happens to the money that has been put into it? There is no provision for that. I do not think there will be any other investors from outside, but what happens to the taxpayers' money? What happens to all the money from the assets which have been carefully built up over all these years? These things—I am sure other noble Lords will reinforce my view—are not catered for in this Bill, and these amendments, which we group together, seek through the appointment of directors and a chief executive with the proper powers, freedom and responsibility to give them at least a chance of success.
We hope that we can avoid a disaster. If the man in the post is good enough, probably he will press hard enough so that the constitution can be changed. We have to get over that hurdle, which I think is a doctrinaire hurdle put up by the Government. They will realise the error of their ways only when they begin to see the foundations crumble, as they surely will. At this stage let us try to get some sense into this new company, this new consortium, with proper accountability and proper responsibility, so that everybody can go forward with the confidence that at least it is pointed in the right direction. I beg to move.
Lord McIntosh of Haringey: I wish to say only a few sentences, because the noble Viscount has covered the waterfront extremely adequately. No doubt the Government will argue that the heads of agreement which have been placed in the Library and which we have an opportunity to see are the answers to the questions raised by the noble Viscount. I want to put it to them that if you have heads of agreement which themselves have no statutory force and you have a consortium which is itself the most unstable form of business enterprise, you are combining two sorts of instability in one. The Government will have to defend very strongly those two elements of instability if they are going to argue that there is a continued effective and adequate means of funding the British film industry.
Lord Lloyd of Hampstead: By way of supporting this amendment I should simply like to congratulate the noble Viscount, Lord Falkland, on his brilliant exposition of the deep unease that is felt on every side of the industry over the consequences of this removal from the scene of an excellent body—the NFFC—and its replacement by a purely commercial entity which seems to be totally ill-equipped to tackle the serious problems that face the film industry at the present time. I can only express the hope that the noble Lord the Minister will take very seriously indeed the devastating attack that the noble Viscount has made upon these proposals and the attempt in this amendment to reinforce the situation—so far as it is possible to reinforce it within the structure of this Bill. I think that those of us who oppose this arrangement feel that the only satisfactory way would be to scrap this whole concept of the consortium and go back to some genuinely independent body which could be expected to carry on the true tradition of the NFFC, which the Government have claimed it is their desire to maintain.
Lord Willis: I am positive that this amendment must appeal to the Government and that the noble Lord the Minister must accept it, because it would not cost the Government any money. All we are proposing in this amendment—I congratulate the noble Viscount, Lord Falkland, on bringing it forward—is simply some proposals to reorganise and tighten up a proposal the Government have already put forward about the consortium. I recognise that it is too late to go back to the NFFC, to those days. We have the consortium. What these amendments express are some very reasonable suggestions and ideas as to how it can more suitably serve the British film industry. Moreover, they are amendments which have been echoed in the cinema trade press in various articles and various forms. I hope therefore that they commend themselves to the Government.
For example, why would the Government be opposed to the suggestion that one independent director should be appointed to the board? It would do no harm to the Government. It would not lose them any votes; it might even win them a few. That seems to me to be a perfectly reasonable suggestion. Consequently, I hope that, although the Government have had to take a hard line on other matters in connection with this Bill, on this particular one they will either accept the amendment or, if they do not like the way it is worded, take it back but accept it in principle. I would certainly press very strongly that there should be a much greater independent element in this new company.
Lord Bernstein: I do not often speak in your Lordships' Committee, but I was involved in the original quota Bill. I was involved in the Eady fund legislation, and I have seen many things happen within the film industry. One thing we need, and need badly, is the opportunity for people to learn how to make films. We need a group of people who are film producers. I think the talk about the comparison between television and anything else is wrong. We produced a television-making group of people who were capable of eventually making "Jewel in the Crown". People must have training and experience. I cannot see anywhere any enthusiasm for developing a picture-making community of which we can be proud and which can make films worthy of international sales—I was waiting for the Ministers to finish their conversation.
I have been listening to the debate, though perhaps not for long enough. I cannot make out what the Government are trying to do. You have to have enthusiasm to make films. You have to have taste to select your subjects, and you have to work at it. The independent gentlemen, or the distributors of films, are not necessarily the people for that purpose. Until you can find a picture-making community and people who can train them, you will always be in difficulties.
I urge the Government—they still have time—to consider what the noble Viscount said: that the National Film Finance Corporation did quite a good little job. However, if you want to make films, you are talking about big money. The last film which David Lean made—and he had not made a film for 17 years—now represents millions. The good American films that are big successes over here cost millions. We
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have to compete with them, and we have to compete with money as well as with talent.
6.30 p.m.
Lord Lucas of Chilworth: I am obliged to the noble Viscount, Lord Falkland, for his explanation of the amendments. One matter that strikes me about our debate on this group of amendments is how much common ground there is between us, particularly when we come to discuss the successor organisation to NFFC, that is, the consortium—a word which the noble Viscount does not like. The full title is the British Screen Finance Consortium, but I shall refer to it as the BSFC. Frankly, it is the formation and the future of that consortium that should concern us. I believe that the fears expressed that it may act in a way which does not principally benefit the film industry and that the Government may not have sufficient control are not justified.
I should like to go back a little and answer the particular question that was raised by the noble Viscount. He said that the NFFC had a credible background; that it had gone along quite well, and he asked why we should dismantle it. He asked a specific question. The noble Lord, Lord Willis, said that we cannot undo it now because it is in the Bill. I should like to back track for a moment or two because it is by looking at the history that we are brought to the present.
Let me remind the Committee that the founding legislation in 1949 made provision for the NFFC to be dissolved by the Treasury if they were satisfied that there was no sufficient reason for the continuation of the corporation. In 1957 the Cinematograph Films Act added power to make an arm's length sale of the NFFC provided that certain conditions were met. The purchaser had to be a British company and had to be able to finance film making. Had the Government simply been interested in getting rid of the NFFC, an arm's length transaction under the existing law would have been the route. However, as I told the House on Second Reading, we have not in fact done that.
We were convinced of the case for retaining a way of carrying on the NFFC's type of operation when the NFFC's financial support from the Eady levy was removed. I regret that I have to repeat once again that the Eady levy has provided less and less money to the industry as the years have gone by. It has been the express wish of the exhibitors' side of the industry that the levy should be done away with. Therefore, that is what we have done. However, we believe that in this Bill we have been able to devise an arrangement that would enable the spirit of the corporation to continue in the private sector. This arrangement has brought together interests in the film, television and video sectors who espoused the purposes underlying NFFC. They themselves wanted to encourage the production of British films using largely British talent. One of the interesting differences that this Bill makes is to impose upon the BSFC, if it is to receive the NFFC's old portfolio worth some £600,000 a year, the statutory requirement that it shall use its best endeavours to encourage the production of British films—something to which the NFFC themselves have not been formally committed.

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Perhaps I may turn to the founder members of the BSFC. I was perhaps a little disappointed that the noble Viscount should have spoken in somewhat disparaging terms about Rank. Let us look at Rank first of all. In the past they have made some of the great British films including, I am told, "A man for All Seasons". Of course, they are not active now in film production, but they still have an important stake in the production sector through their laboratories and Pinewood Studios.
Thorn-EMI also have a fine reputation for film-making over the years. I am told that their successes include "Murder on the Orient Express", "Elephant Man" and "Death on the Nile". Their more recent successes include "Comfort and Joy" as well as the recent David Lean film, "A Passage to India".
I turn to Channel 4. Channel 4's history is much shorter. Oddly enough, nobody has spoken ill of Channel 4. However, certainly that organisation has rapidly gained an enviable reputation. I have spoken already about the British Videogram Association.
We must remember that it is the interests of the companies concerned in the BSFC that are important in securing the success of the new consortium. Their success lies in a successful film industry. Certainly our discussions with them have shown that the essentials of the NFFC's operations will be maintained. There will continue to be an emphasis on developing new talent. The films to be supported are much the same in terms of budget; namely, low and medium budget films, which are particularly risky ventures when aimed principally at the cinema and not at television. Moreover, the Government decided to take over direct responsibility—and we have done that in Clause 5(1)(b)—for the funding of the project development work currently financed out of Eady funds by the NFFC through the National Film Development Fund.
I turn to the remarks of the noble Lord, Lord Bernstein, which I did hear—all of them. I point out to him that in no way was the NFFC—and this applies to its successor organisation—set up to compete with the multi-million dollar super films. That is not the business. If there can be a benefit through our work—and I am referring to the more risky ventures and the low and medium budget films—then well and good. However, I suggest that that type of activity is somewhat different.
Apart from ensuring, as I believe this consortium does, the continuance of the NFFC's major functions, the consortium has tremendous advantages over the old corporation. First, it is dynamic. The NFFC was, by the very nature of its build, static. The new consortium is structured and funded for growth. One cannot ignore the fact that Rank are putting in £250,000 per annum for three years as are the British Videogram Association. Thorn-EMI and Channel 4 are putting in £300,000 a year for three years. I have already said that the Government are putting in £1.5 million for five years, plus the other supports which are available. It is not an insignificant amount of money. Indeed, it is sufficiently attractive to have encouraged other people in the industry, other companies in the industry, to make inquiries about joining the consortium and putting up their money. That must be the basis of funding for growth.
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I believe that we are laying the foundations for expansion and that the consortium will take root and will establish itself as a major force in the industry. It is that at which we are all aiming rather than at tying it down with unnecessary statutory provisions, which is what this series of amendments would do.
If the British Screen Finance Consortium does the job set out for it with the present participants' support, that will be to the benefit of the industry. If the consortium itself is also successful—and this is why I think that it needs to be in the private sector with what I have often described to your Lordships as the commercial "edge" which the private sector provides—then in all probability there will be a catalytic effect on its participants and all those others who recognise the need to foster domestic film production, and it will itself ensure that this can be a profitable business activity. We do not want BSFC to be estranged from other potential investors in films—and its chances of attracting additional finance to the film industry would, I believe, be very much diminished by imposing conditions of the sort that are set out in this series of amendments.
Lord Willis: If the noble Lord will give way, I have had assurances from Thorn-EMI that they will not interfere with the chief executive and that he will have complete independence. One has to believe in the good assurances of these people. Would the noble Lord the Minister be prepared to approach them and ask them if they would object to the appointment of one other independent director on the board? I think the noble Lord would find that they would agree. If the Minister did that, and if they did agree, that would be immensely helpful.
Lord Lucas of Chilworth: I return to the Box somewhat warily because I am reluctant to refuse the invitation of the noble Lord, Lord Willis. However, I am just wondering where he will lead me if I say "Yes". Perhaps the noble Lord will allow me to think about his invitation between now and the next stage. If I have anything further to say to him, I can either get in touch with him or we can deal with it at the Report stage.
With regard to the authority of the chief executive, I believe that the prospective participants in the consortium have made it quite clear to us that they would expect him to adopt much the same style as the noble Viscount's amendment, Amendment No. 8, seeks to impose by way of a condition. It may of course be necessary for the chief executive to seek assistance in exercising that authority, but I do not believe that that would be beyond his or her capabilities.
The Committee may like to know the terms of the advertisement for the chief executive which appeared in the week beginning 11th February. These include the statement that:
"The chief executive will be responsible for editorial and investment decisions and for the management and efficiency of the organisation. He or she will be free to operate within the framework of the policies established with the Board".
The Government think that there is no need for this to be underpinned by law. Indeed, quite frankly, I think that it would be inappropriate when we are dealing with a private sector company.

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6.45 p.m.
The Government understand and respect the sentiments which lie behind these amendments. But I must say that there would be very great danger if we accepted Amendment No. 4, which proposes to impose on a private sector company conditions and restrictions which I do not believe any company would accept. This amendment then provides that, in the predictable event of no company being found to accept the conditions, the National Film Finance Corporation shall be kept in being. I fear that the noble Viscount, Lord Falkland, has overlooked two inconvenient facts. The first is that the NFFC is funded by the Eady levy, which, for the cinema's sake, the Government are committed to remove at the earliest opportunity. The amendment does not itself propose how the NFFC would be funded. The second inconvenient fact is that under the present law the NFFC may not start any new work after the end of 1985. Therefore, for those two particular reasons Amendment No. 4 is a non-starter.
I believe that the Bill gives adequate power to impose conditions on the way in which the portfolio and the Government's contributions are used. The noble Lord, Lord McIntosh, suggested that I mention the heads of agreement. I do so. They are an earnest of our intention to exercise those powers to the extent necessary to secure the objectives on which in the Committee tonight there is certainly broad agreement.
I believe that the Bill contains all the provisions necessary for safeguarding the old portfolio and, taken together with the heads of agreement, I think that these arrangements more than adequately meet the concern which has been expressed. Were we to accept any one of this series of amendments, I believe that there would be a grave danger of stifling the products for the new venture's development and their expansion, in which we have much confidence. I am sorry to have been so long, but this is an important series of amendments and it is for those reasons that I urge the Committee to reject them.
The Viscount of Falkland: I shall be very brief. I must thank the noble Lord, Lloyd of Hampstead, for his complimentary reception of my speech. I did not mean to deliver a devastating attack—I do not like to be devastating, and I do not like to attack. That is why I sit on these Benches! Nor am I a "Man for All Seasons", if I may interject that to the Minister.
I think that there are differences between us, but I agree with the noble Lord the Minister that there are areas where we agree, and this is the problem. We have a different basic conception of the way in which we should proceed. I do not say that the Government are seriously anti the kind of vision that I have for the future, but I believe that their vision of the way in which to proceed is a disaster. I see it another way, and I know that many noble Lords see it my way. I hope that a few more noble Lords may see it my way after our deliberations. Therefore, I should like to test the opinion of the Committee on this matter.
6.48 p.m.
On Question, Whether the said Amendment (No. 4) shall be agreed to?
Their Lordships divided: Contents, 53; Not-Contents, 61.

DIVISION NO. 2

CONTENTS

Airedale, L.

Hylton-Foster, B.

Ampthill, L.

Jacques, L.

Ardwick, L.

Jeger, B.

Attlee, E.

Jenkins of Putney, L.

Avebury, L.

John-Mackie, L.

Aylestone, L. [Teller.]

Kilmarnock, L.

Beaumont of Whitley, L.

Llewelyn-Davies of Hastoe, B.

Bernstein, L.

Lloyd of Hampstead, L.

Beswick, L.

Lovell-Davis, L.

Birk, B.

McGregor of Durris, L.

Bottomley, L.

McIntosh of Haringey, L.

Briginshaw, L.

Marley, L.

Chitnis, L.

Mersey, V.

Cledwyn of Penrhos, L.

Morris of Kenwood, L.

David, B.

Mulley, L.

Dean of Beswick, L.

Munster, E.

Ennals, L.

Nicol, B.

Falkender, B.

Ogmore, L.

Falkland, V.

Parry, L.

Fitt, L.

Pitt of Hampstead, L.

Gallacher, L.

Ponsonby of Shulbrede, L.

Graham of Edmonton, L. [Teller.]

Prys-Davies, L.

Shepherd, L.

Greenway, L.

Stoddart of Swindon, L.

Grey, E.

Taylor of Blackburn, L.

Hatch of Lusby, L.

Tordoff, L.

Houghton of Sowerby, L.

Willis, L.

NOT-CONTENTS

Ailesbury, M.

Hives, L.

Avon, E.

Hornsby-Smith, B.

Bauer, L.

Lindsey and Abingdon, E.

Belhaven and Stenton, L.

Long, V.

Belstead, L.

Lucas of Chilworth, L.

Bethell, L.

McAlpine of West Green, L.

Birdwood, L.

Macleod of Borve, B.

Brabazon of Tara, L.

Mancroft, L.

Brougham and Vaux, L.

Mottistone, L.

Buckinghamshire, E.

Mountevans, L.

Caithness, E.

Norfolk, D.

Campbell of Alloway, L.

Nugent of Guildford, L.

Carnock, L.

Orr-Ewing, L.

Chelwood, L.

Rankeillour, L.

Constantine of Stanmore, L.

Reigate, L.

Cork and Orrery, E.

Rochdale, V.

Craigavon, V.

Rodney, L.

Craigmyle, L.

St. Davids, V.

Croft, L.

Skelmersdale, L.

Denham, L. [Teller.]

Soames, L.

Dilhorne, V.

Strathclyde, L.

Elton, L.

Swinfen, L.

Ferrers, E.

Swinton, E. [Teller.]

Fraser of Kilmorack, L.

Teynham, L.

Gainford, L.

Thomas of Swynnerton, L.

Gridley, L.

Thorneycroft, L.

Hailsham of Saint Marylebone, L.

Trefgarne, L.

Trumpington, B.

Hardinge of Penshurst, L.

Vivian, L.

Hemphill, L.

Ward of Witley, V.

Henley, L.

Whitelaw, V.

Resolved in the negative, and amendment disagreed to accordingly.
6.56 p.m.
[Amendments Nos. 5 to 8 not moved.]
Clause 3 agreed to.
Clause 4 agreed to.
Clause 5 [Financial assistance by Secretary of State in connection with the production of films]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 9:
Page 6, line 9, leave out ("with the consent of the Treasury").
The noble Lord said: These amendments may seem churlish in that they are amendments to concessions given by the Government in another place. We appreciate the attempt of the Government to provide some format for further financial assistance to particular causes within the film industry. Nothing that I say now—and I shall be very brief, I promise your Lordships—is intended to attack the intentions of the Government in protecting, for example, short films and in taking preliminary steps for the production of relevant films—"relevant films" being, as I remind the Committee, those as defined in Clause 3(7) regarding British films. The Committee will notice that no amendments have been put down at this stage to Schedule 1 on the definition of "British films". It is possible, in the absence of any suitable remarks from the Government, that it may be necessary to move amendments to Schedule 1 at a later stage in the debate.
Our purpose in all of these amendments is one and the same. It is to extend the powers of the Secretary of State under Clause 5 to give financial assistance to a wider range of films and to do so without some of the restrictions which we believe to have been wrongly inserted in this clause. May I apologise to the Committee for Amendment No. 11 which is in conflict with other amendments in the group. It came from a difference source in another place and it should not have been included. I am sorry to deprive the noble Lord, Lord Lucas, of his legitimate chance to crow at me for the inconsistency.
Nevertheless, the issue is important, even though the sums of money have not been specified. The issue here is that there may be at some time in the future a Secretary of State who does not have the same rigid theoretical approach which this Govenment have to the funding of one of our national, cultural and business heritages. It may be that there will be a Secretary of State who does wish to give significant financial assistance in place of financial assistance which I insist is insignificant in the light of the needs of the industry, and it would be a pity if such a Secretary of State were to be debarred from making such assistance available on as wide a scale as possible, if that were his wish and the will of the people, without further legislation.
With those words, I am really moving these amendments to see how far the Government are willing to commit themselves to further financial assistance. In view of the hour, I think it would be appropriate if I did not speak to the textual detail of each of the amendments concerned but invited the Minister to make such response as he can, to enable us to make progess. I beg to move.
Lord Willis: I want briefly to support Amendment No. 9. When I first read the draft of this Bill there was a phrase there that struck terror to my heart, and I am
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sure that it strikes terror to the hearts of all good British people:
"with the consent of the Treasury".
I cannot remember any time when the Treasury has given consent under a period of about 10 years, and then only after tremendous pressure; so I would certainly support at least Amendment No. 9.
Lord Lucas of Chilworth: Let me thank the noble Lord, Lord McIntosh, for his charming persistence in describing in such brief terms this series of amendments. I am grateful to him for the manner in which he did that, and of course I am sorry that he deprived me of a little fun I was going to have at his expense.
The Committee will be aware of the White Paper, in which we stated that it would be inappropriate for a project development scheme requiring specialist knowledge to be operated by the Government and that the new body replacing the National Film Finance Corporation, the British Screen Finance Consortium, seemed an appropriate place for the work to be carried out. Clause 5(3) refers to the operation of the project development scheme and to the agent who will operate it. As the Committee will be aware, the term "person" may also cover a body.
Having, I hope, clarified our intentions in regard to this clause, I should say that of course I recognise the concern which the noble Lord expresses and particularly that there should be a distinct element of independence in the operation of the scheme. Let me emphasise that the Government intend to make it a condition of the agency contract with the consortium that they use an independent consultant with no financial interest in the consortium or in its component companies.
I think that perhaps I should also draw the Committee's attention to a further guarantee of the scheme's independence. That is contained in the heads of agreement between the consortium and the Secretary of State. Particularly, this is that the administration of the scheme will be placed under an officer whose appointment will be made with the consent of the Secretary of State. Although the officer will be an employee of the consortium and, I suppose, as such ultimately responsible to the chief executive, he or she, I confidently expect, will enjoy considerable autonomy. I should also say here that if either the Secretary of State or the consortium is dissatisfied with the operation of the scheme the Secretary of State will withdraw the scheme from the consortium.
I think I have described the general feeling of Government in response to this series of amendments. Perhaps I ought to say just one word in response to the noble Lord, Lord Willis, in regard to Amendment No. 9. Amendment No. 9 seeks to ensure that the prior consent of the Treasury would not be required before financial assistance was given. I am sure the Committee will be aware that it is an accepted convention that where the Secretary of State has discretionary power to give financial assistance, he must obtain the consent of the Treasury before that power is exercised. That is designed to enable the Treasury to ensure that the intentions which Ministers have expressed to Parliament are observed when these discretionary powers are used.

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There is also the practical consideration that the supply estimates through which these sums are provided have to be presented to Parliament and signed by a Treasury Minister. He would, of course, be unlikely to provide his signature if he were not generally content with the way in which these discretionary powers were being used.
If the Committee so desire, I should be quite happy to address myself to individual amendments, but I hope that what I have said will persuade your Lordships that the Government (and, to do them justice, the consortium also) understand the spirit behind these amendments and are taking practical steps to ensure that the project development scheme is operated in a way which will meet the legitimate concerns which have been expressed both here today and earlier in another place. I hope that, with those fairly short remarks, noble Lords who have tabled the amendments will feel able to withdraw them.
Lord McIntosh of Haringey: I am grateful to the noble Lord. He has, I am afraid, gone no further than the assurances given by his honourable friend in another place, which were not entirely satisfactory to my friends there, as he will know. However, I think it was necessary to bring these issues into the open again, and we shall read his remarks very carefully before deciding on our course of action at a later stage. On that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 10 to 13 not moved.]
Lord Lloyd of Hampstead Lord Lloyd of Hampstead had given notice of his intention to move Amendment No. 14:
Page 6, line 44, at end insert—
("( ) With respect to provisions made under the Films Act 1970 and re-enacted in the Film Levy Finance Act 1981, whereby payments from the British Film Fund could be made to not more than one body incorporated after the passing of the said Films Act and approved by the Secretary of State, being a body having among its objects the carrying on of a school in Great Britain for the training of persons employed or to be employed in the making of films, and in pursuance whereof the National Film School has been so approved, the Secretary of State shall use his best endeavours to secure annual payments from the film and the television industries to the National Film and Television School to assist it in pursuance of its objects.").
Lord McIntosh of Haringey: The noble Lord, Lord Lloyd has asked me to apologise to the Committee because he had to leave for an urgent appointment. On the basis that this is an amendment which is very personal to him, he would wish me not to move the amendment.
[Amendment No. 14 not moved.]
Clause 5 agreed to.
Remaining clauses and schedules agreed to.
House resumed: Bill reported without amendment.

Tay Road Bridge (Scheme) Approval Order 1985
7.10 p.m.
The Earl of Caithness: My Lords, I beg to move that the draft Tay Road Bridge (Scheme) Approval Order
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1985 laid before the House on 24th January 1985 be approved.
The Tay Road Bridge, like a number of other estuarial crossings, was promoted by private legislation and on the basis of special financial arrangements. It included provision for a Tay Road Bridge scheme, under which is prescribed a limit of capital expenditure which may be incurred. This limit has been increased by order on two previous occasions, in 1966 and in 1969, and the present capital expenditure limit is £7·25 million. The order that we are considering today raises the ceiling to £9 million.
The need for this arises because the Tay Road Bridge joint board has to incur exceptional expenditure to replace the bridge maintenance gantries and their overhead runways. The cost of this is currently estimated at £1·25 million. This cost will in due course be recovered through tolls, but the work cannot wait until the revenue from tolls has accumulated. It needs to be done now. Therefore, the board needs to borrow temporarily in the meantime. It would like to start the work this year. Therefore, as I have said, the main purpose of the order is to raise the Tay Road Bridge joint board's borrowing limit to £9 million.
The remaining provisions of the order are consequential and, in particular, simply restate the existing arrangements for repaying borrowing, including setting out an order of priority for the different creditors. Your Lordships will no doubt be gratified to know that the repayments to local authorities take precedence over those to the Secretary of State. It hardly needs saying but, for the avoidance of doubt, it may be convenient for me to point out to your Lordships that this order has nothing to do with increasing tolls. The Tay Road Bridge joint board itself instigated an increase in toll levels on the bridge last year. The new levels of tolls were fixed taking account of the expenditure that is now required for the repair and maintenance work to which I have referred. In other words, the need to carry out this work should not give rise to any further requirement to increase tolls and, on the basis of the figures prepared by the board last year, it should be able to repay its loans within the required period. My Lords, I commend the order to your Lordships.
Moved, That the draft order laid before the House on 24th January be approved. [9th Report from the Joint Committee.]—(The Earl of Caithness.)
Baroness David: My Lords, I thank the Minister for explaining this order, and as the safety of the bridge is obviously of paramount importance, one has to agree with what is being done. I was pleased to hear that the repayments to local authorities take precedence over those to the Secretary of State, as that is particularly important at this moment, and that there is no intention to increase the tolls. I understand that there is a good deal of feeling that perhaps at some point tolls could be taken away altogether. As the users of motorways do not have to pay for their expenses, why should people have to pay for going over estuaries? I wonder whether the Minister could comment on what will eventually be proposed in regard to tolls. Are the Government hoping to get rid of them altogether? As

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I said, we shall of course support the order for safety reasons.
The Earl of Caithness: My Lords, I am grateful to the noble Baroness, Lady David, for her welcome of this order. She spoke about tolls. As she will appreciate, it was part of the original legislation that tolls would be put on such bridges as this across estuaries. As she will doubtless be aware, the tolls are not so high. I know that they were subject to investigation in an order last year, but I have done a little work on the matter and I have found that the original toll for a motor car in 1966 was 2s. 6d. (or 12½p). Taking into account inflation, in today's money terms that would be equivalent to 73p, when in fact the toll is only 30p. So the charge is not too bad.
As regards the policy on tolls, the Government reviewed and confirmed current tolls policy shortly after they took office in 1979. This policy, which has been endorsed by successive Governments since 1955, is that tolls should be charged on major estuarial crossings which confer exceptional benefits on users in terms of time saved and journeys shortened. It is considered right that the users of the crossing and not the taxpayer or local ratepayer should pay. The Tay Bridge and other toll bridges in Britain were built on this explicit understanding and with the agreement of the authorities concerned that the cost should be recouped through tolls. This agreement is enshrined in legislation. Without it, the bridges might not have been built at all and would certainly not have been built when they were. I hope that that, to some extent, satisfies the noble Baroness. We shall of course keep the matter of future toll bridges under review.
On Question, Motion agreed to.

Companies Consolidation (Consequential Provisions) Bill [H.L.]
Returned from the Commons agreed to with amendments.
House adjourned at a quarter past seven o'clock.