Films Bill

HL Deb 07 March 1985 vol 460 cc1449-69

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 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 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". 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 "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 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. 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 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 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 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 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 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 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 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 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 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 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 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 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.

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.